In a 2008 report, Ernst and Young compiled data from surveys of business leaders to learn more about green business strategies. The results revealed that executives understand the impact of green awareness on business. Forward-thinking business leaders recognized that changes served the interests of the growing numbers of green-aware customers. In addition, leaders accepted that climate change is pushing businesses to lower carbon emissions. Rising energy costs are dictating efficiency changes. In addition, environmentally aware businesses recognize revenue opportunities.
Since this report was issued, sustainability continues to be a top business consideration. Increases in concern about rapid climate change as well as the pressing need for regulation and cost efficiency are key drivers of strategy development and change.
Regulatory Uncertainty
Executives surveyed by Ernst and Young believed that regulatory uncertainty was holding down the development of green strategies. Other business leaders have echoed this and in the year since the Ernst and Young report, economic uncertainty has ballooned, further limiting planning and investment in green strategies.
It is interesting that businesses want regulation, although perhaps it’s not regulation itself that they want so much as certainty about regulation. Businesses need clear rules and the knowledge that the rules will be consistently applied. In order to manufacture, sell, and make money on initiatives that reduce carbon emission, businesses increase their costs. They must know that their competitors will be in the same boat.
Google regulatory uncertainty and lots and lots of hits come back that say something like “regulatory uncertainty leads to firms delaying investment decisions in order to gather information and assurances about future change in regulations.” For example, an article appeared on SustainableBusiness.com in May 2009 explaining that the results of a Johnson Controls survey of 1,400 executives named energy and climate legislation as a barrier to investment in energy efficiency. But, that doesn’t stop them from thinking about it. The survey results reported that 71% of business leader are paying more attention to energy efficiency than they did one year ago.
Changes are Being Made
In spite of regulatory uncertainty, not to mention economic uncertainty, businesses are greening. The Johnson Controls survey revealed that 45% identified increasing energy efficiency in buildings as their top carbon reduction strategy. They also seek green building certification such as the Leadership in Energy and Environmental Design (LEED) program designation, but 45% of those surveyed incorporated green elements in buildings even without certifying them.
Johnson also discovered that leaders were considering a range of renewable energy technologies with solar electric and geothermal receiving top honors for “consideration.”
Efficiency and Sustainability
Efficiency changes that don’t require retrofitting and marketing expenses are changes businesses are making rapidly. These include everything from using email marketing instead of direct mail, reducing business travel to encouraging employees to go green by recycling or reusing, copying on both side of the paper and telecommuting.
In 2009, eco-efficiencies will be talked about like never before. Few companies will be able to make investments in greening due to the economic downturn, yet they can cut costs. They will also look sharply at the risks involving in sticking to policies that ignore public awareness of pollution of water and air and the danger and instability to lives and property that they portend.
2009 Will Be a Very Green Year
Andrew Winston, author of Green to Gold, believes the “underlying forces driving the green wave will continue over the coming years,” although the intensity of the business focus on green will lighten. Going green will drive innovation and create value. Business giants like Wal-Mart have made it clear that the green agenda is not going away and they are pushing green to suppliers and customers alike. Winston continues to use the Wal-Mart example in recent Harvard Business School articles and in previews of his new book to be released in August 2009.
It’s the Customer …
More than ever, consumers understand climate change and feel the impact of shrinking supplies of natural resources. Consumers expected corporations to show their commitment to the environment through direct action. As always, they ignore the customer at their peril.
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