08/01/2008 05:12 am ET Updated May 25, 2011

Toyota/Pew Collaboration Teaches Businesses How To Be More Sustainable

NEW YORK -- Toyota and the Pew Center on Global Climate Change are launching a three-year, $1.4 million research effort to teach businesses how to lower their greenhouse gas emissions.

But how do they plan on doing that while helping businesses -- especially small ones -- remain profitable? That's the basis for a report that will come out next year. Pew will research and provide a rundown of which energy-efficiency strategies work best in operations, supply chains, and production of goods and services.

This news is coming at a poignant time. Carbon cap-and-trade initiatives are being considered at the federal level. Because the federal government has been lagging behind, states, regions and local governments have been creating their own programs to require emissions reduction. The U.S. Environmental Protection Agency also is expected to mandate emissions reporting soon.

"Most people know that if you (do) any sort of engineering analysis, it looks like it would be really cost-effective to do any sort of energy efficiency," said Judi Greenwald, director of innovative solutions for the Pew Center on Global Climate Change. "Efficiency is kind of your first option to deal with climate change."

But she said the challenges to reducing greenhouse gases are two-fold. First, it may not be in a building owner's interest to make it efficient because he or she may be renting it to people who pay the power bills.

Second, opportunity cost -- the financial loss associated with divestiture in one area to invest in a less-profitable one -- may be too high for small companies, said Jim Sweeney, professor of management science and engineering at Stanford University and director of the university's Precourt Institute for Energy Efficiency.

That's why their challenges also will be studied, Greenwald said. But why is Toyota so interested in funding this kind of research?

"Toyota has been a very forward-looking company in trying to deal with environmental problems," Sweeney said.

The Japanese automaker, which also plans to participate in this study, has touted its philosophy of reducing emissions in every aspect of its operations, from building more efficient manufacturing plants to aiming for completely recyclable vehicles (right now they are 85 percent recyclable).

By the way, the $1.4 million grant is just a drop in the bucket for Toyota. Last year, it gave $56 million to other groups to fund environmental education and other initiatives, according to spokesman Daniel Sieger.