Among multinational corporations there has been a growing trend to become “green,” but what does this mean? This generalized term is used to describe corporations that undertake any number of actions (or not) to reduce environmental impacts, lessen waste and conserve natural resources.
Driving factors to become more “green” include market pressures caused by labor crises and shifts in management, waste in production materials, escalating material costs and the threat of environmental regulations. Large players such as Nike and GE have worked to initiate green practices that have been very successful; with sustainability initiatives integrated into the business strategy instead of taking a supplemental role. For example, Nike made changes directly to the design and assembly of products as well as the materials used in the manufacturing process. In 2011, Nike sent 70 percent less solid waste to landfills compared to 2005, even though production volume has increased by over 50 percent.
The idea that the adoption of sustainable initiatives is not just environmentally responsible, but also crucial to developing a stronger bottom line, has paid off for GE. It established its Ecomagination business unit in 2005 with the express purpose to provide innovation and services in the environmental sector. In 2013, GE reported that the program had generated twenty-five billion dollars-worth of revenue in the past year alone.
However, green does not automatically guarantee more profits. If consumers do not buy more environmentally-friendly products placed on the market, a corporation could lose money even if greener practices made the manufacturing process cheaper. In addition, unsuccessful green practices can be more than just losing money on a new product; it can also result in the corporation being accused of green-washing. This occurs when a product or practice by a company is falsely promoted to be a green or sustainable as a way to attract customers.
The accusation of green-washing and the bad press that follows is used as an incentive to keep corporations honest about their practices. Proctor and Gamble was taken to task by Greenpeace after they revealed that its supply chain featured oil from cleared forests. According to a report by The Guardian, P&G is a member of the Roundtable on Sustainable Palm Oil (RSPO)—a certification standard that ensures manufactures who use palm oil do so without cutting down rainforests. In response, P&G said it is committed to rainforest preservation and is working to make its supply chains more transparent. 'We agree that deforestation in the supply chain is not acceptable,' said Paul Fox, director of corporate communications.
Greenpeace has gone after other multinationals about green-washing, including Johnson & Johnson and Nestlé. While their watchdog status makes them unpopular, Greenpeace’s complaints about supply chains can successfully lead to greener practices in the long run. 'If a well-known company like Procter & Gamble can show leadership to clean up supply chains, we expect other companies will follow,' said Bustar Maitar, global head of Greenpeace's Indonesia Forest Campaign.
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