New Study Examines the Value of Green Tires to Corporate Profitability

Market Wire, May, 2008

In light of the growing market for green products, many industries are re-examining the materials and processes used in manufacturing. Today, two experts on sustainability have released the results of their recent study on the use of engineered rubber powders derived from post industrial and consumer tire rubber in the manufacture of new tires. "The Value of Green Tires to Corporate Profitability," was written by Tamara Bekefi and Marc Epstein. A copy of the paper can be downloaded at: http://www.daedalusadvising.com/Value_of_Green_Tires.pdf

Bekefi, a principal of Daedalus Strategic Advising, and Epstein, a professor of management at Jones Graduate School of Management at Rice University in Houston, Texas, contend that the tire industry ought to capitalize on the green product trend by offering green tires, of equal quality and price to current products, formulated from engineered rubber powders derived from post industrial and consumer tire rubber. Producing green tires with engineered rubber powder will enable auto manufacturers, governments, and fleet owners to compete more effectively on environmental issues and aid them in meeting their environmental responsibility goals, if the tires meet or exceed performance and quality standards. In an age of skyrocketing oil prices, engineered ultra-fine recycled rubber powder also offers tire manufacturers a high quality replacement substance to drive down the cost of its main raw material. Ultra-fine recycled rubber powder also has a positive effect on a tire's air permeability and roll resistance. This translates into greater fuel efficiency, which is good for the environment, society, and consumers looking to save on gasoline costs.

"The use of recycled materials, such as rubber powder, is a critical component in a company's broader sustainability model and the effort offers not only 'green' benefits, but societal, stakeholder and even economic benefits that are far-reaching," said Tamara Bekefi, principal of Daedalus Strategic Advisors and co-author of the study.

The study concludes that a tire manufacturer can build shareholder value in several ways. First, by enhancing the environmental profile of its products, the manufacturer can grow market share, especially in its government and large fleet accounts. Second, by augmenting oil-derived synthetic polymers with recycled rubber, the manufacturer can cut its raw material costs dramatically. Finally, given that being green is linked to a brand's perceived level of quality, the manufacturer can increase the value of its overall name and image.

"This study is a call to action to tire and automotive manufacturers. These companies should incorporate high-quality recycled materials in their products as good environmental and business practices, as long as it can be done at the same level of quality and safety as conventional tires," said Marc Epstein, professor of management at Rice University and co-author of the study. "Not only will they help to conserve oil and other natural resources and lower greenhouse gas emissions, but they will build real economic value for their shareholders. Once materials like recycled rubber powder are accepted in the marketplace, the applications for their use will grow exponentially."

About the Authors

Tamara Bekefi is Principal of Daedalus Strategic Advising, a firm focused on sustainability and corporate social and political risk management. Until recently, Ms. Bekefi was the manager of business and international development research and a Research Fellow at Harvard University's Kennedy School of Government. With expertise in corporate responsibility, corporate political and social risk measurement and management, and sustainable private sector development, Ms. Bekefi has worked with Fortune 500 companies, industry organizations and social investment firms. These include Starbucks Coffee Company, Campbell Soup Company, ExxonMobil, Phillips-Van Heusen, IPIECA (International Petroleum Industry Environmental Conservation Association), and KLD Research & Analytics. Author of numerous papers, articles, reports, and management guidelines, Ms. Bekefi has lectured at leading universities and corporate forums. She has a Masters degree in international business and political economy from the Fletcher School of Law and Diplomacy (Tufts University) and graduated with a BA, summa cum laude, from McGill University.

Marc J. Epstein is Distinguished Research Professor of Management at Jones Graduate School of Management at Rice University in Houston, Texas. Prior to joining Rice, Dr. Epstein was a professor at Stanford Business School, Harvard Business School, and INSEAD (European Institute of Business Administration). He has focused extensively on sustainability, environmental, and corporate social responsibility and the measurement of corporate social, environmental, and economic impacts for most of his career. In both academic research and managerial practice, Dr. Epstein is considered one of the global luminaries in the areas of corporate sustainability, governance, and accountability. His 18 authored or co-authored books and over 100 professional articles include many award winners including "Measuring Corporate Environmental Performance: Best Practices for Costing and Managing an Effective Environmental Strategy" and "Counting What Counts: Turning Corporate Accountability to Competitive Advantage." His most recent book, "Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts," was released in January, 2008.