Waste Management is America's biggest trash hauler, but amidst the current environmental climate, where organizations such as Subaru, Wal-Mart, and various city governments embraced the idea of zero waste, the company is facing a threat of reduced waste. Indeed, in a world where people throw less stuff away, the future of a traditional garbage company looks bleak.

That's why David Steiner, Waste Management's chief executive, is turning the company in a new direction. Instead of simply trucking trash to the dump, the Houston-based firm will look for ways to extract value -- energy or materials -- from the waste stream. "Think green," is now Waste Management's tag line.

"Picking up and disposing of people's waste is not going to be the way this company survives long term," said Steiner. "Our opportunities all arise from the sustainability movement."

The company is shifting capital investment away from landfills and toward recycling plants, known as MRFs (materials recovery facilities), that enable "single-stream recycling." It allows consumers to place all recyclables into one bin; paper, cardboard, glass, plastic, and metals are then separated using forced air, optical scanning, and heavy-duty magnets.

As well, of particular interest to Waste Management is organic materials -- food scraps, yard trimmings, and wood. Organic materials account for about 30% to 35% of the waste stream and represent its single largest untapped resource.

To better capture the value of the rotting tomatoes, banana peels, and chicken bones that now end up in landfills, Waste Management has invested in a number of companies that are trying to turn organics into cash. In September it bought a majority interest in Garick, a 30-year-old Ohio-based company that makes compost and mulch at facilities in six U.S. states.

This year Waste Management took a stake in Harvest Power, a Massachusetts-based startup that turns organic waste into compost and biogas, which can then be burned to generate electricity.

Two other companies backed by Waste Management -- Terrabon and Enerkem -- are generating transportation fuels from waste, albeit on a very small scale. Houston-based Terrabon is making green gasoline from paper waste and chicken manure at a pilot plant in College Station, Texas, while Enerkem, a Canadian firm, is developing a commercial-scale facility in Edmonton, Alberta, to turn mixed solid waste into ethanol.

Unlike the traditional collection and disposal business, all these ventures depend on proprietary technology or the kind of scale that gives Waste Management an edge over its competitors. "This is not David Steiner on some quest to save the planet," said the CEO. "I don't get paid to do that. I get paid to generate shareholder value." Now you know what Waste Management means by "Think green."

(Source: Waste Management's new direction [Fortune])