Business responds to the new environmentalism



Private innovation is the wellspring of progress on environmental matters. Where once environmental policy inherently mistrusted markets and punishment was pursued more vigorously than progress, today wealth creation, appropriately harnessed, is the main engine of environmental progress. This is the new environmentalism.

This is the second installment of a two Part review of the ‘New Environmentalism’. This segment focuses on how the business community is responding to the changing world of environmentalism.

Many business leaders were quick to realize that responding to the new environmentalism mindset can also improve the bottom line and began actively promoting ‘green’ products and services in the marketplace.

'The growing demand for more sustainable products and services could translate into one of the biggest new markets in recent memory,' said Bruce McIntyre, leader of Pricewaterhouse Cooper’s sustainable business solutions practice in Canada.

While the touting of green values quickly became a marketing ploy (‘green washing’), it is significant that the public in general and enlightened consumers in particular have been equally quick to condemn companies that failed to live up to their environmental and social pronouncements (See GLOBE-Net article The Six Sins of Greenwashing).

But more progressive business leaders are looking well beyond the short-term impact of green marketing on the bottom line and are working towards long-term economic and environmental returns. As many have trumpeted in the past, the cornerstone of a strong economy is a healthy environment.

General Electric Corporation is quickly becoming a world leader in the new environmentalism because it has made sustainability the cornerstone of its long term corporate strategy. In 2005, GE launched its Ecomagination strategy, at that time intended to increase sales from environmentally friendlier products and services to $25 billion in 2010, from a base of $6 billion in 2004.

The company is already ahead of the game. GE announced recently it is expanding its Ecomagination strategy, and committed to reduce its global water use by 20% by 2012. The Company reports revenues from its portfolio of energy efficient and environmentally advantageous products and services crossed $14 billion in 2007, up more than 15% from 2006. The Ecomagination order book has surged past $70 billion and GE’s own 'cleantech' fund - investment in cleaner technology research and development - has passed $1 billion for the first time.

'Ecomagination is one of the most successful cross-company business initiatives in our recent history,' said GE Chairman and CEO Jeff Immelt. 'It is a clear amplifier of our strong reputation for innovation and execution, harnessing the strength of every GE business to maximize returns for GE investors while minimizing our own energy use and greenhouse gas emissions.'

What has made GE’s commitment to 'greenness' so successful is its corporate commitment to a rock-solid environmental management system that emphasizes unwavering commitment to letter-of-the-law regulatory compliance, and forward-looking anticipation of products and services that are as economically advantageous as they are ecologically sound.

Few companies have made the same level of commitment to environmentalism as has General Electric. Toyota, Dow and Dupont are among the large Fortune 500 companies that have moved to place sustainability at the core of their long term corporate strategies. (See GLOBE-Net article Corporate Environmental Leadership: Green is the Colour of success!)

Wal-Mart, the world’s largest retailer launched its environmental initiative in 2007 with three ambitious goals: (1) to be 100 percent supplied by renewable energy; (2) to create zero-waste; and (3) to sell sustainable products.

Wal-Mart CEO Lee Scott stated then that he expected to save billions in costs through energy efficiency, and would seize upon growing markets for energy efficient appliances, compact fluorescent light bulbs, organic foods, and other environmental products. So far, Scott’s strategy appears to be paying off. Wal-Mart’s green initiatives are doing more than helping to save the environment; they are also making the company money.

Shades of Green

Not every business has the size of GE or the marketing power of Wal-Mart, but the same dynamics of the new environmentalism apply. As noted in the Harris/Decima survey for Canada Post, 'consumers are looking for demonstrable, verifiable environmental progress from businesses. They want companies to make commitments that they can meet, and then exceed, starting in their own backyards, in their own business processes and practices.'

Moreover, according to the Survey, some consumers are prepared to pay more for environmentally friendly products or services, for reasons that go beyond 'doing the right thing'.

The reason for this is the fact that the economics of making environmentally-sound choices are chang­ing and this will continue to spur environmental behaviour change. The principal reasons according to the report are:

  • The cost of making environmentally-friendly choices is falling: Environmentally-friendly versions of products are typically more expensive than less environmentally-friendly versions, but for most people paying 10% more for many products does not seem like too high a price to pay to make the right choice.
  • The availability of environmentally-friendly choices is expanding: There are now environmentally-friendly substitutes available in a wide range of products.
  • There is growing recognition that the amortized costs of environmental choices can end up being an economic benefit to the consumer: When consumers think about bigger-ticket products that have environmental benefits, like high-efficiency furnaces, hybrid cars, and home insulation, instead of instinctively being pushed back by the sticker price of such purchases, many are employing an economic calculus that involves consideration of the long-term savings that those choices might yield.

The New reality

The GLOBE Foundation of Canada, which has been at the forefront of the new environmentalism for well over a decade, has strived to show businesses large and small that this is not a passing fad, but a new reality that is reshaping not just the business of the environment, but the environment of business.

The internalization of environmental values at the level of the individual, which translates into a willingness to become engaged in issues that have meaning at the community, society or global level has become a force for change that is more powerful today than ever before.

Whether this translates into aggressive activism or the simple exercise of choice in purchasing power, this is the new reality of society and the marketplace.

Tangible evidence of the power of consumer influence on the greening of business was evident at EPIC: The Sustainable Living Expo, which took place in Vancouver, BC on April 18-20, 2008. (See GLOBE-Net Special Feature: EPIC: Another Huge Success).

Thousands attended the three day event demonstrating their power as enlightened, environmentally conscious consumers to bring about positive environmental and social changes in the marketplace,

And as has been noted in an earlier GLOBE-Net article (The Rising Power of Green Spending) buying green is more than purchasing environmentally friendly products and services. Green consumers are concerned also about the values these products represent. In effect, they are buying what went into the product and everything that will result from its use.

They are sensitive to ethical and social issues, such as the treatment of those who grow the food or make the product being offered. They are concerned about possible effects on the natural environment from the point of manufacture through to eventual disposal.

And as noted in the Harris/Decima survey, consumers are coming to terms with this new reality faster than many business or political leaders appear to be. Harris/Decima published two weeks ago the results of a survey on the Cooling Feelings for the Harper Government.

It noted there are 9 areas where ratings are below the current 32% voting intention for the Conservative government, including: showing strong leadership on critical issues (Bad Job 59%), environment (66%), integrity (61%), and accountability (65%). That should serve as a wake up call in Ottawa.

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