Sustainable Corporate Living with Frito-Lay's Al Halvorsen

As more companies strive to greenwash their consumers, Frito-Lay has consciously taken an alternative path. Whereas most companies make green investments to boost PR, Frito-Lay is seeking self-reliance.

To a standing-room-only audience, Al Halvorsen, Director of Environmental Sustainability for Frito-Lay, discussed how his company has put sustainability at the center of its business. "You see a lot of companies going green to change their image. For us, sustainability is about increasing productivity, improving the environment, and preparing for the future." Halvorsen leads Frito-Lay's energy and utility management program for 39 manufacturing plants and 195 distribution centers. Halvorsen sees sustainability influencing the entire business landscape. "If done right, we will be sending a signal to businesses around us that it's possible."

Frito-Lay has not set the bar low, either. In 1999, Frito-Lay, a wholly-owned subsidiary of PepsiCo, set out to achieve the unimaginable: a corporate-wide manufacturing reduction of consumable resources, including a 50% reduction in water, 30% in natural gas, and 25% in electricity. Nine years later, the company has nearly reached its goals. Without the reductions, "[Frito-Lay] would have spent $55 million more this year on water and energy," Halvorsen said. "The water savings alone are enough to fill 4,500 Olympic-sized pools."

So just how did Frito-Lay make these quantum leaps in sustainability over the last decade? "Initially, our green teams were dedicated to making sure our manufacturing facilities complied with environmental regulations," Halvorsen explained. "We then looked at ways to improve our manufacturing productivity. and more recently we've invested in green technology."

Frito-Lay became the largest purchaser of renewable energy credits, purchasing more than 1billion kilowatt hours of green power in 2006. That's equal to the amount of energy needed to power 90,000 residential homes for a year. However, Frito-Lay didn't stop there. As the owner of the 8th largest trucking fleet in the world (14,000 route vans and 3,000 box trucks), Frito-Lay has worked hard to convert its fleet to hybrid technology. Other manufacturing improvements, including more natural lighting, 24-hour utility boards to monitor real-time energy usage, boiler upgrades, and high-efficiency burners were all part of the master plan.

Now that Frito-Lay has met its goals, Halvorsen shared with Ross students what lies ahead. Frito-Lay currently has a project underway that is designed to take their Casa Grande, Arizona, facility almost completely off the grid (i.e. rely totally on renewable energy sources). Ninety percent of the water will be recycled, electricity will be generated with photovoltaic cells, and methane gas will be obtained from landfills.

Several in Thursday's audience criticized this project as an unnecessary use of company resources. Halvorsen replied by saying that the expense will be justified by what they learn about conservation (not by what they save in productivity). "If part of the U.S. comes into a heavy drought and the government says we can't use any water in a month, are we ready to respond to that?" Halvorsen asked. For Frito-Lay, they're well on their way.

Marc Whetherill, current Ross MBA student and organizer for the Frito-Lay presentation, talked about Frito-Lay's approach to sustainability. "There are enormous opportunities for companies to reduce their resource consumption in ways that will lead to greater profitability. The fact that Frito-Lay took this approach made it stand out to me as a really interesting story with a lot of good lessons in it."

In its Modesto, California facility, for example, Frito-Lay recently turned a major profit with one of its energy-saving initiatives. 192 solar concentrators with 54,000 square feet of concave mirrors were installed to superheat water to over 500 degrees; the steam produced is then used to cook the oil to make SunChips. It's one of the largest solar panel fields in North America, and it is reducing CO2 emissions by two million pounds annually. Consumers in the surrounding areas were so interested in the environmental impact that they began purchasing far more product than the plant could produce.

How's that for sustainability!

If you would like to learn more about Frito-Lay's sustainability initiatives, go to fritolay.com.