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11.25.2008 - 03:57pm ET
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Why This Downturn Has a Green Lining
CSR Commentary by Andrew Winston of Harvard Business
(CSRwire) I recently wrote the opening chapter for a collection of essays from Awareness Into
Action called The Sustainable Enterprise Report (it will be published
in paper format soon, but you can get it now in digital format -- free --
by signing up for their newsletter). The piece was about the five forces I
see bearing down on companies and making green strategy not optional
anymore. I'll post more on these later, but in short, the five forces I
outline are 1) resource constraints/commodity prices in the medium and
long run, 2) transparency, and pressure from 3) business customers, 4)
consumers, and 5) employees.
But right before going to press with the book, the market collapsed, so
the publisher decided to wait a bit and see how things panned out. They
also asked me to write an additional piece about going green in hard
times. It's hard to avoid this topic right now. Here's what I said...
"Do you think this green thing will take a back seat now that money is
tight?"
I now hear this question more than any other. Times are uncertain, so who
really knows what corporate priorities will be over the next year or two?
But at the risk of being dead wrong very soon, I'll venture some opinions.
First, if there's a deep, prolonged recession, the green movement slows
down because everything slows down. Of course some parts of the economy
will lose momentum slower than others (the growth of renewable energy, for
example, will likely continue but perhaps at a slower pace of growth, much
like China's recent 9 percent GDP rise was oddly seen as recessionary).
Aside from the macro issues, the critical point is that delaying action on
sustainability plans may be the absolute wrong thing to do for your
business. Being far more efficient and effective with resources remains
one of the main pillars of going green. As Dave Steiner, CEO of Fortune
200 company Waste Management, said recently, "When things are this tight,
people see that it's about saving jobs and money. There's no better time
to take action." This instinct to dive in head first runs counter to the
visceral need to batten down the hatches and ride out the storm. But as in
most recessions, the companies that have the means to invest in smart ways
during down times rebound the fastest when the economy turns around.
A second pillar of green business - using the environmental lens to create
new ways to design, manufacture, and provide goods and services that use
drastically less resources - still generates lasting value. A
sustainability focus helps companies provide customers with better
products and to some extent a better life. Is there a better time for
product and service innovation than when consumers and business customers
are stretched thin? What business wouldn't want to create a more
profitable and innovative enterprise, all while building stronger
relationships with customers, employees, communities and even
shareholders?
These "carrots" of profitability and innovation are important, but the
fundamental forces driving the Green Wave make up a powerful "stick" as
well. All five of the pressures I outline are still building, as well as
the underlying natural forces such as climate change. (The planet doesn't
much care whether we're in economic freefall.)
The economic recession won't stem the tide of the Green Wave. Take the
issue of business-to-business pressure (or "greening the supply chain").
Wal-Mart recently assembled all its Chinese suppliers in Beijing to lay
out the company's expectations and standards on environmental and social
issues (see my post on this meeting here). The world's biggest company -
and China's seventh-largest trading partner (ranking among countries) -
made clear that noncompliant suppliers will be, in the words of CEO Lee
Scott, "banned from making products for Wal-Mart." Those are tough words
and don't indicate any slowdown in the company's focus on
sustainability.
So the Green Wave is here to stay. The recession brings one positive
development: The drop in energy prices gives companies and our economy a
bit of breathing room to find efficiencies and get off of oil as fast as
possible. So take advantage of the reprieve, push your people to do more
with less, and innovate to set your company up for rapid growth and
success when times get better. They always do.
This blog was first published on Harvard's Business
Blog, which provides ideas that will help fuel "green thinking" by
covering leadership, innovation, strategy, execution, marketing and so on
all from a green perspective.
About Andrew Winston
Andrew
Winston helps companies use environmental thinking to grow and
prosper. He is co-author of the best-seller Green to Gold, writes a
monthly e-letter Eco-Advantage Strategies, and regularly blogs on green
business.
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