The ROI Associated With “Going Green”
A friend sent me this white paper called Go Green: It’s a Better ROI Than You Might Think, and suggested that I might find it interesting.
Yes, it’s interesting, but it’s ironic that it’s sponsored by Staples, who accepted a $60 million check from HP for Staples’ agreement not to install machines in its 1900 stores worldwide (1300 in the U.S.) that recharge/reuse printer cartridges. (This machine is manufactured by a client of mine, so I’m 100% confident in the veracity of this story.)
As it stands now, Staples has $60 million, HP has an incredibly lucrative business, the consumers are paying $30 for something that costs less than $1 to manufacture, and the world has metals from landfilled printer cartridges leaching into its groundwater. That’s not exactly what I’d call “going green.”
Craig,
I’m a little alarmed by the wisdom in choosing some pretty dubious clients to further your new career as a publicist/salesman.
After reading your claim, ” Staples, accepted a $60 million check from HP for Staples’ agreement”, I was amazed at how such a large sum failed to appear in the accounts of either company.
Hmmm…, so was any such payment ever made ?
Not according to HP and Staples !
So where’s this “evidence” of a cheque for $60 million?
It would appear the $60 million arose from a claim made by a blogger on Computerworld, who speculated ;
“Staples have an annual turnover of about $18 billion. Everybody knows companies like HP give their retailers discounts, rebates and market development funds, which usually amounts to about two percent.
“What do you think would happen if HP went to Staples and said ‘we will give you five percent if you discontinue your own brand of re-manufactured cartridges?’ That means they will get three percent more on $2 billion, which is worth about $60 million.”
So, no cheque, but maybe a “wink wink” discount deal ?
Well, not really. The whole “conspiracy theory” was comprehensively thrashed out in the US District Court of Massachusetts, when a disgruntled rival of HP, Ranjit Bedi charged Staples and HP with breaking antitrust laws by collaborating on the sale of re-manufactured cartridges.
Naturally, HP and Staples denied the accusations.
The US District Court of Massachusetts agreed with HP and Staples dismissing the action and admonishing Ranjit Bedi for launching a case devoid of any creditable evidence and reliant upon conjecture and unsubstantiated rumors.
So, no chegue and no sly “deal” !
On the other hand both Staples and HP have been pioneers in developing cartridge re-cycling technology and encourage other companies to avail themselves of the technology at a no cost.
To date HP’s pioneering recycling efforts has resulted in saving billions of cartilages for becoming landfill.
I hope you don’t think me impertinent when I suggest a little more due diligence about whom you believe, might save a lot of embarrassment.
I was a consultant to a major company that builds printer cartridge refurbishing machines. Its lead investor, a man of impeccable integrity who had hired me three times over a 20-year period, told me that story; this was the explanation he gave me when I wanted to put on a full-court press on Office Depot, Staples, etc.
Believe what you will.
Craig,
It’s not a matter of “belief “.
Regrettably, many urban myths and conspiracy theories are earnestly believed by individuals who want them to be true.
That’s understandable.
What’s not excusable is to knowingly persist in propagating a fabrication to the detriment of an organization or individual without any evidence, and when you have been presented with irrevocable evidence to the contrary.
Again Craig, and with wishing to cause offense, for a person who is proud of your scientific training you seem remarkably willing to believe a demonstrably false story from a party with a high level of self-interest, just because you like that person (and they pay you) than objectively analyze the veracity of the information,
Reading over the previous sentence, I realize the criticism may seem unduly harsh, and i don’t mean it unkindly or to create deliberate offense.
However, I believe it’s important to remain even more objective when accusing organizations and individuals we dislike of wrongdoing. If we are to remain credible we must strive for greater accuracy and fairness to guard against appearing biased, prejudiced or acting out of self interest.
Your client does himself a disservice by maintaining such falsehoods. Perhaps he would be better served concentrating on extolling the advantages of his own product, rather than spread false rumours about his opposition.
Just a suggestion….
David Hume said, “We always disbelieve the greater miracle.” To me, it would be FAR greater miracle if my client was misinformed.
Craig,
WTF !?
You astonish me! That’s the sort of logic I would expect from a Creationist or similar faith based believer.
You made two assertions based on information supplied by your client.
1) “Staples, who accepted a $60 million check from HP for Staples’ agreement”
2) HP is responsible for metals from landfilled printer cartridges leaching into groundwater.
You have no facts to support the first assumption, which is totally inaccurate, having been tested and proved inaccurate and erroneous in court.
Your second assumption is also inaccurate and just a blatant falsehood since HP’s pioneering recycling service has existed for many years and recycled billions of of cartridges.
C’mon, is time to admit you’re believing what you want to believe, not what true.
Can you show me where this was disproven in court? If my client was wrong, he (and I) are wrong. I don’t cling to beliefs that I know are incorrect.
Craig,
I thought I did !
“US District Court of Massachusetts, when a disgruntled rival of HP, Ranjit Bedi charged Staples and HP with breaking antitrust laws by collaborating on the sale of re-manufactured cartridges……” ?
[ Bedi v. Hewlett-Packard Co. et al., case number 1:07-cv-12318 in the U.S. District Court for the District of Massachusetts.]
The originator of the complaint outlined the nature of the allegations against HP and Staples. As I explained, these allegations maintain HP’s complex system of discounts for volume, marketing assistance, advertising incentives etc constitute an illegal arrangement and violate the Sherman Act .
No $60 million chegue is mentioned because it never existed. That myth arose from a misinterpretation of the proceedings by a blogger contributing to Computer world, and just got repeated.
Basically, Judge Judge Rya W. Zobel of the U.S. Court for the District of Massachusetts dismissed the case against HP and Staples.
While the Judge was critical of the plaintiffs lack of hard evidence, his principal reason for dismissing the case was that the defendant had rested his entire entitlement to relief on a finding that the agreement was unlawful.
The Judge held that such an agreement wasn’t “per se” a violation of the Sherman Act, and in the absence of any evidence establishing any illegal, or illicit activity, dismissed the action.
The Judge reserved his most scathing comment for the subsequent costs hearing, particularly in reference to the conduct of the plaintiffs lawyers Kamber Edelson LLC and Boni & Zack LLC.
An appeal was also dismissed.
As I said, your client’s information is a mixture of self-interest, misinterpretation,media distortion, exaggeration, combined with natural disgruntlement in dealing with a the marketing methods of a large and formidable competitor defending its turf.
The argument about whether or not originators of technology should be able to continue benefiting from the fruits of their inventions and at what point should generic brands be allowed to compete, will always be contentious and emotive.
Obviously, in such a debate merit exist on both sides. However, the facts in such a debate should be accurate and objective, not based on myth and supposition.
Participants in any debate must be prepared to admit the other side may have merit.
Your client may have merit in claiming HP and other manufacturers are not justified in continuing to sell products at inflated prices, and can only do so because of expensive marketing methods.
That’s not an unreasonable assertion, one which HP, and Staples should be required to either rebut, explain or admit.
My objection is to your willingness to make allegation of a very specific nature, unsupported by any other evidence except loyalty to the person who told you, and with whom you have a commercial relationship.
If Donald Trump made a false assertion that someone received a $60 million cheque, and couldn’t provide any evidence for the cheques existence other than someone he had a commercial relationship with told him it’s true, you’d be complaining very loudly wouldn’t you ?
Yet, here you are doing just the same thing.
Regardless of HP or Staples policies, consumers will figure out how to minimize their printing costs. I get Epson inkjet refills for under $1 each. 14 for $12 with free Amazon shipping.
Thanks very much for this. I’m done with HP printers. I hate printing stuff anyway, for obvious reasons, and I REALLY hate paying a fortune to do it.
Robert Sheperd
Your quite correct, each consumer must figure out for themselves the value of paying more for the extra quality and reliability original cartridges or buy cheaper refills that probably satisfy their requirements for a much lower cost.
I guess it depends on the type, quality and quantity of your printing needs.
I realize my criticism of Craig’s comment may seem a little harsh, but Craig tends to get very passionate and very “black and white’ about some organizations and individuals.
I admire Craig’s passionate advocacy about issues where he has formed deep moral convictions, and his loyalty to those he likes.
Those are very commendable qualities.
On the other hand those same qualities can create a lack of objectivity and lead advocates like Craig to support some very dubious causes and contentions, albeit with the best of intentions.
To get back on topic, The ROI Associated With “Going Green”, If mortgage companies understood green building, then when someone applied for a mortgage they would require that an energy model be done of the proposed building then they would offer to loan more money so the builder could spend more for insulation and air sealing so that the building would use 90% less energy for heating and cooling. The amount spent on insulation in an average house is 2% of the cost to build the house. (according to NAHB studies). Tripling that to 6% (and adding another 2% to go from 2X4’s to 2X6’s to fit in more insulation)reduces heating and cooling costs by around 90%. Add proper solar orientation and south side shading and it is pretty easy to build a net zero ready house. The extra costs are more than offset by the reduced heating and cooling costs.
Another study shows that owners of high performance green homes have a lower rate of foreclosure,in part because of the reduced costs for energy, so it would reduce the lenders risk to insist on loaning more money to make the building more efficient.
Great point.
Bruce,
Conceptually your post is a good one but I think that the numbers you have used are unrealistic. My house, completed in 2009, does have 2 x 6s on the exterior walls for thicker insulation even though that was not required by the code. But reducing energy use by 90%, while possible, would be unreasonable to expect. The insulation in the exterior walls would have to be much thicker than 6″. Also, many of us want far more glass area than would be possible if energy use were reduced by 90%. It is questionable whether the actual cost of super super insulation could be recovered; I haven’t actually seen the numbers. Also, when houses are built in a city, there is limited choice on how the house is oriented.
A 50% reduction in energy requirements may be reasonable, but I doubt that 90% would be accepted, at least here in the U.S.
Bruce Wilson,
I’m not sure you understand mortgage lenders criteria. (sometimes I wonder if they understand !).
If high performance green homes have a lower rate of foreclosure, it would have more to do with the nature and stability of the home owner, than any savings on reduced energy costs .
Sadly, “high performance green homes” are not more valuable on the market, nor easier to sell. In fact,as any real estate agent will attest, it’s very difficult to recover the cost of green home technology when selling,
It true there’s a small market for “high performance green homes” especially in newer, more affluent locations, but “green’ isn’t really much of a motivating factor in the purchase of existing homes.
New home construction is a different story. Costs of installing ‘green’ technology are considerably less and can prove an added attraction for new home buyers.
Most home buyers are more concerned with the aesthetics of their homes than energy costs. A beautiful kitchen, bathroom, walk in robes, lots of storage space, are greater selling points than green technology which is largely seen as a necessity or expense.
Mortgage lending is just about risk. Mortgage lenders don’t make money foreclosing. Mortgage lenders only make money from regularly performing repayments which allow lenders to take advantage of compound interest and lower borrowing costs.
Some Mortgage funds specialize in “ethical lending”. These funds are more amenable to funding “”high performance green homes” and may provide mortgages that favour “green’ features.
Some State and Government incentives may also be available, depending on where you live, helping in bring down the costs of “going green”.
Exterior insulation reduces thermal bridging through the framing and High performance windows further reduce energy use. Air sealing is critical reducing the air flow to less than 1 an hours at 50 pascals (about the equivalent of a 40 mile an hour wind) In the eighties our houses cost $100/year/1000SF to heat
It is true that high performance windows reduce energy use. But even the highest performing windows lose far more energy than the same area of wall space. The figures are readily available.
Also, one must define high performance windows. Very few windows are now single glazed; most are double glazed. Triple glazed windows are available but far less common because it is questionable whether the added cost can be justified. Having argon instead of air between the panes also reduces energy loss, but costs far more than it should considering that argon is not really very expensive. Argon is commonly used for welding and probably would not be if it were very costly. There is some question about how long argon stays in windows since there is some diffusion. A low emissivity coating also improves efficiency.
Years ago I check the efficiency of glass block and was disappointed to find it less efficient than good windows.
Marco, after years of lobbying by the energy raters and auditors Appraisers are starting to learn about HERS ratings and incorporating the rating into the appraisal process so that there is a way to monetize the value of the energy efficiency features.
Frank, the windows allow in the sun and are how we heat our passive solar super insulated houses. In fact triple glazed windows pay for themselves so long as your building is already tight. Windows are made that have up to an R 11, but they cost a lot more than code windows which have an R value of about 3. Every time you double the efficiency of a window you double the cost of the window.
Bruce,
The problem doesn’t lie with energy Appraisers but consumers.
The appraisal process should reflect only market price. If the buying public are unwilling, or just don’t care enough about energy efficiency features to pay extra, then it not the job of valuers to distort the process.
The lender must be able to reply on a realistic, not idealistic appraisal.
Marco, though entitled to your opinion, you are wrong here, and you are confusing appraisers with energy raters.
Yes in general real estate is appraised using comparisons with similar nearby buildings based on market price, but everyone in the business, lenders, appraisers and owners have known for a while that unless the building owner is willing to share energy use data before the sale the new owner may be in for quite a shock when the first heating bill comes due. So after working for years on a solution the use of a HERS rating was arrived at as a fair way to evaluate the energy use of a building. The appraisers have a special form for this and several states have adopted regulations requiring a HERS rating before each sale so that prospective owners understand what it will cost to heat and cool their new building. This value is not based on idealism it is based on real analysis of how a building works using building science. This incorporation of the HERS index into the appraisal process took more than a decade of work by all involved parties to level the playing field so home buyers could make informed decisions. To learn more about the HERS index go to https://www.resnet.us/hers-index
Bruce,
We seem to be misunderstanding each other. An appraiser for a Mortgage lender has only one duty. The appraiser’s (Valuer) duty is to as accurately as possible assess the market value of a property, including anything that may affect a future value, so the lender can make an informed decision.
The cost of heating and cooling in some instances could be relevant, but in general a very minor considerations.
In commercial buildings the most important factors are rental yield, location, development potential etc.
In domestic homes, factors such as neighborhood location, schools, transport, aesthetics, scenery, condition, and features are more important than energy efficiency.
Again, it may depend on the location and type of buyer. in some areas, eco-homes and energy efficiency might be a selling factor, while in others such considerations don’t affect values.
The same applies to automobiles. Despite all the hard work by authorities, even ardent greenies like Craig, still don’t drive an EV ! (yet sales of the V8 Mustang, are red hot).
Hopefully, in the future maybe energy efficient homes will be more sought after. as young people become more eco conscious