Innovation Spotlight: Rheem Manufacturing Company — American Conservation Coalition

Many Americans are skeptical of the environmental records of large manufacturing companies, and indeed, sometimes these concerns are justified. To some businesses, just as to some individuals, the environment is little more than a buzzword, and has no intrinsic value. 

But, there are other true industry leaders that had the foresight to preemptively recognize the value of the environment before it became an industry buzzword. These businesses rightly knew weaving sustainability into company practices made good business sense and good common sense. They had a good read on the pulse of consumers, and recognized the increasing importance of environmental stewardship. One such leader is Rheem, a nearly 100 year-old, privately held business. Not only is Rheem an incredibly successful global air and water industry leader, but it is also setting the industry standard for excellent environmental stewardship. 

In 1925, brothers Richard and Donald Rheem founded the company in Emeryville, California. During its 95 years in business, Rheem has produced a wide range of products, including oil, military aircraft, and even musical instruments. Developing true expertise in manufacturing, Rheem eventually honed in on heating, cooling, water heating, pool and spa heating, and commercial refrigeration. The company distributes products across vertical markets, from residential to commercial, and is currently the largest manufacturer of water heating products in North America with a full spectrum of water heating, heating & cooling and refrigeration products. 

According to Sara Corbett, Senior Manager, Brand Strategy, Rheem has always had an internal culture that celebrated innovation and efficiency, as well as placed a high value on good stewardship of its resources. Rheem internally believed environmental stewardship was the right thing to do, but in recent years began looking to expand its leadership in this area. So in 2017, several stakeholders within the organization began looking at expanding sustainability as an official business strategy. In January 2019, Rheem’s leadership announced ambitious sustainability benchmarks the company aimed to meet by its centennial in 2025. The rest of 2019 was spent laying the solid foundation necessary to meet these goals, focusing on rolling strategies out in North America first. And, most recently, 2020 has been a year focused on expanding Rheem’s sustainability initiative globally to scale progress towards the 2025 goals. 

“We realized that, because 67% of the energy going into a home goes into one of our products, that comes with a huge responsibility,” said John Fitzgerald, Executive Vice President of Global Operations, who jokingly calls himself the ‘grandfather’ of Rheem’s sustainability program. 

Rheem takes its role as an industry leader seriously and knows this comes with a responsibility to both consumers and the environment. “To consumers, we represent trust and reliability. As a leading air and water manufacturer, we have a responsibility to provide products that align with global sustainability standards,” Corbett said. 

The company’s bold sustainability goals for 2025 are centered around a three-tiered framework: intelligent products, innovative processes, and inspired people, which each correlate with one of the UN’s Sustainable Development Goals. 

By 2025, Rheem will:

-Launch a line of heating, cooling and water heating products that boast a 50% reduction

in greenhouse gas footprint (correlates with UN SDG 7, Affordable and Clean Energy).

-Reduce greenhouse gas emissions by 50% and achieve zero waste to landfill in its global

manufacturing operations (correlates with UN SDG 12, Responsible Consumption and Production).

-Train 250,000 plumbers, contractors and key influencers on sustainable products or sustainable installation and recycling best practices (correlates with UN SDG 4, Quality Education).

Although the UN’s goals helped Rheem focus its sustainability goals, no government forced the company’s hand. “It’s always smart business to be proactive rather than reactive when it comes to regulation,” Corbett said. 

When asked what really motivated Rheem to reach for these goals, both Fitzgerald and Corbett spoke about consumer demand, reinforcing the idea that the free market works hand-in-hand with the environmental movement. Consumer demand for smart and sustainable products is increasing, and this gives Rheem the opportunity to lead the industry in developing them. 

“This is not a philanthropic effort,” Fitzgerald said. “This is fundamental to consumers, and they are willing to pay a premium for it. It’s really a testament that Rheem is a company that will listen and alter its path… This is good for the environment and good for business.”

Corbett referenced one of her favorite product offerings, EcoNet, as something she is most proud of. This is a smart system homeowners can connect to Rheem’s products, so that the homeowner has the ability to control the carbon footprint produced by their home. She also spoke of some of Rheem’s other sustainability successes, including the water-saving tankless water heater line, a modulating furnace that only runs when needed and an ultra-efficient hybrid electric water heater that saves an incredible amount of energy. 

The future is looking bright for Rheem, as the company continues to push forward toward its 2025 centennial benchmarks for sustainability. To continue its focus on transparency with consumers, Rheem released its first sustainability progress report this month, and going forward will release one annually. 

Rheem stands out as a shining example of how the free market powers environmental action. The company is a perfect example of how consumer demand for sustainable solutions benefits both the environment and the business. Rheem’s passion for consumers, conviction about good stewardship, and culture of innovation have powered its employees to produce incredible results for the market and the earth. By 2025, Rheem will meet incredibly bold sustainability goals completely on its own, without government intervention but with inspiration from global leaders, local stakeholders, and passionate employees. Rheem’s commitment to innovative excellence is something that all people benefit from, whether directly or indirectly, and it is something the company should be immensely proud of.