Caledonia Wealth Management

EcoLuxury homes are not new, particularly in a town such as Boulder, however this showcase home represents a leap forward in design and construction.

It starts with a 100-year perspective. Unlike most American homes that are designed to last only decades, every aspect of this house is built to 100-year standards.

Built through a partnership between Boulder-based Vireo LLC and WeberHaus GmbH & Co. KG, this home was manufactured in Germany to precise tolerances (1/2 inch over a 100-foot span) and then shipped to the U.S. Once it arrived on site, assembly took a matter of days as there was no additional fabrication required.

See video below for a time lapse:

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A standard incandescent bulb will use almost five times the energy of an LED bulb, a German study concludes.  On its face this hardly seems significant since it’s well known that an LED is about five times as efficient as an incandescent bulb from a use standpoint.  However this study, conducted by Osram, looks at energy efficiency from a life cycle standpoint.  This is important since it refutes the notion that the efficiency of LED bulbs is compromised by an energy intensive production process.  In fact, the study finds that the primary energy used in the manufacture in an LED is less than 2% of the total energy consumed over the life of the bulb.  Compelling stuff.  Even mainstream media such as the NYT has been quick to publish the results.

However a closer examination of the study is revealing.  While 2% may sound impressive and further the study highlights how the energy consumed in manufacture is actually less than that of an incandescent, it’s important to understand the assumptions.  While it may be true to say an LED is 35% more efficient to manufacture than an incandescent, this calculation is based upon a 25,000 hour versus a 1,000 hour expected life.  That a factor of 25.

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Southwest Airlines (Ticker: LUV) is implementing measures that will not only further its positioning on sustainability but will improve its efficiency and therefore its profitability.

Weight is a critical element in any aircraft and corresponds directly to flight performance, including fuel efficiency.  Over the past two years Southwest has been experimenting with a “green plane” where numerous small improvements in the design and materials used in the seats and the cabin have been tested.  The result is a lighter aircraft (by about 472 pounds) that burns less fuel (9,500 gallons less fuel per year).  Multiply this approach over Southwest’s fleet and the savings really add up.

“Considering that Southwest flies more than 3,300 flights a day an average distance of 635 miles per flight, the savings would be dramatic. Southwest calculated that it could save 90.6 million gallons of fuel and reduce carbon dioxide emissions by 1.9 billion pounds a year.”

Extrapolate those figures to the aviation industry nationwide, fuel consumption could be cut by 760 million gallons and carbon dioxide emissions by 16 billion pounds a year.

It’s easy to be cynical about the aviation industry from a sustainability standpoint.  Planes consume lots of fuel and generate large amounts of carbon dioxide.  However we at Caledonia are always excited to see sustainability and profitability complement each other.  As Southwest claims, it makes good business sense.  Expect other carriers to follow.

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Auto factories normally conjure up images of smoke stacks and waste pipes spewing filth indiscriminately into their hapless surroundings. Subaru on the other hand has achieved “Zero Landfill” status with its Subaru of Indiana Automotive, Inc. plant. In fact, the manufacturing site itself is a natural wildlife refuge and this from a facility that can produce up to 200,000 vehicles per year.

Not surprisingly, Subaru has bandied its achievements in environmental stewardship in its advertising. Subaru cheerfully makes bold statements on its own website:

“Here’s something to think about: next time you take out your trash at home for collection, you’re sending more trash to landfills than the entire Subaru manufacturing plant in Lafayette, Indiana (SIA) does in a year. The Subaru plant was the first auto assembly plant to achieve zero landfill status – nothing from its manufacturing efforts goes into a landfill. It’s all reused and recycled. Each year, SIA actively recycles 99.3% of excess/leftover steel, plastic, wood, paper, glass, and other materials. The remaining 0.7% is shipped to the city of Indianapolis and incinerated to help generate steam. In 2006, SIA recycled 11,411 tons of scrap steel, 1,537 tons of cardboard and paper, and 963 tons of wood. That’s equal to conserving 31,040 mature trees, 31,572 cubic yards of landfill space, 711,631 gallons of oil, and 10,759,000 gallons of water.”

Now passionate environmentalists might argue that recognizing Subaru’s efforts are akin to congratulating the tobacco industry were it to produce a less poisonous cigarette.  After all, much of Subaru’s line up is composed of inefficient vehicles such as the Tribeca SUV.  Furthermore, Subaru’s positioning within the marketplace with its standard AWD is an efficiency trade-off as the extra weight, cost and complexity of an AWD drivetrain will always be at odds with good fuel economy.  And to make matters worse, while AWD does offer specific benefits, to tout it as a necessity, particularly for safety, is a consumer rip off right up there with high octane gas.

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In this second article highlighting the work PepsiCo is undertaking to promote sustainability, we take a look at a few of the cultural, social and management practices that have been successfully implemented within their corporate structure.  For Part 1 click here.

Workplace Policy

A critical component in evaluating companies from a financial and investment perspective is the inextricable link to the employee workforce.  Whenever we look forward at the future prospects of a firm, examining the corporate culture becomes a key indicator in what we may foresee with regard to the success or failure of a company.  An employee base  fostered by upper management to add value and creativity, and motivated around a framework providing exceptional support and career options is indicative of a healthy working environment.  PepsiCo expands its social influence both inside and outside its corporate walls through a number of initiatives that positively support this trend.  Read more…

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It is always with some hesitation that I look at large corporations to investigate  sustainability initiatives and programs they are implementing within their corporate cultures.  Green and Eco-marketing has now become such an essential part of a business plan that you are sure to lose out on some market share if you don’t have a green initiative in your operations.  Separating the green-washing from practices that are genuinely implemented by firms to truly benefit communities, employees, and the environment has always been a tricky task.  It traditionally takes a lot of effort, time and energy on behalf of the company to be able to break through the first wave of skepticism in order to get the message across.

One such firm that has taken noteworthy steps is PepsiCo.  One of the world’s largest food and beverage firms, with over $39 billion in revenues and employing over 185,000 people world wide, PepsiCo has the size to effect a substantial difference not only in how it runs its operations and manages its corporate responsibility, but also as a role model for other multi-national companies facing the challenge of changing their internal controls.

Here, in part 1 I will take a look at the environmental focus PepsiCo is taking with many of its initiatives; in Part 2 examine some of the social and community based projects the company is tackling. Read more…

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Schritt Tempo: Walking Speed

Practically every community and housing development since WWII  has been designed around the automobile.  The post war dream of a car (or two) in every garage has been established as a sign of progress and prosperity.  So deeply ingrained is this notion,  most most U.S. cities have zoning laws  actually requiring that every residence be provided two parking spaces.

Today’s changing ideals beg the question, however: can “smart planning” separate suburbia from the SUV? Elisabeth Rosenthal wrote an interesting article in The New York Times recently about Vauban, Germany, where residents have largely given up their cars altogether.  Read more…

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A poster advertising "Veggie Day" shows a sailor rowing an aubergine

At Caledonia, this story couldn’t escape our attention.  According to BBC News, the Belgian City of Ghent is about to become the first city in the world to go vegetarian.  Starting this week, civil servants and elected councillors will opt for meatless meals with a weekly “veggie day”.  Schoolchildren will also celebrate their own veggiedag starting in September.

Aside from helping to curb obesity, the goal of the measure is to reduce Ghent’s environmental footprint, given livestock contributes more than automobiles to global greenhouse gas emissions, according to the U.N.

There is also a rumored i-Phone application under development to help the citizens of Ghent remember the day and further to direct them to restaurants and eateries that offer vegetarian dishes.  We will keep you posted.

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A number of lighting manufacturers have been scrambling to produce a cost effective LED light bulb for the broad market.  Now, Netherlands-based Lemnis Lighting, claims  its new 6-watt Pharox LED bulb is ready to take the spotlight on the lighting market.

At Caledonia, we’ve been interested in bright ideas like LED light bulbs for some time.  We first sampled some in 2008 and were impressed by the energy efficiency and the warm quality of the light, even as compared to compact flourescents (CFLs).  LED bulbs also enjoy a considerable environmental advantage over CFLs as they are mercury-free.  However,  with retail prices then over $100 per unit, the biggest obstacle has always been cost.  Although LED technology is nothing new, engineering a cost-efficient, “white light” LED in the form of a traditional incandescent light bulb is no easy task

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Clayton Homes‘ i-house officially went on sale Saturday. Not only is it much cheaper than traditional stick-built homes (starting at $100 a square foot), its eco footprint from manufacturing to energy consumption will set new standards in an industry not noted for  environmental stewardship.

Clayton Homes was acquired in 2003 by Berkshire Hathaway and Buffet himself wrote in this year’s letter to shareholders, “This innovative ‘green’ home, featuring solar panels and numerous other energy-saving products, is truly a home of the future.  Estimated costs for electricity and heating total only about $1 per day when the home is sited in an area like Omaha.” Read more…

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