In the wake of the failure of political solutions, the business community can lead the war on climate change. There are tremendous opportunities for businesses that show leadership in emissions reductions. Business has contributed greatly to environmental degradation and now the same capitalist system that drove the industrial revolution, is beginning to play a vital role by solving the problems it created.
Businesses are taking action on climate change in ever increasing numbers for many reasons including benefits to the corporate image and alignment of the corporation with the environmental interests of owners, employees, suppliers, and customers. Sustainable initiatives can also reduce costs, increase return on investments, and reduce dependency on uncontrollable costs like fossil fuels.
There is a powerful logic driving the growth of sustainable business. Many large corporations are showing leadership with sustainability initiatives that both reduce the size of their footprints and decrease their long term costs. Overall, a cost benefit analysis reveals the merits of sustainable practices. Although it is clear that some are faring better than others, Companies like Xerox, PUMA, HP, Walmart and even smaller companies like Zotos are successfully incorporating sustainability initiatives and reducing their footprints.
Business is well suited to finding innovative approaches as it is always looking for cheaper, faster, cleaner, more efficient and more effective solutions. Business is also more likely to find these opportunities than a government planner.
The combination of high energy prices and increasing consumer pressure are coalescing to drive businesses to adopt more sustainable practices. The general public increasingly expects companies to be sustainable. Social media is making it easier to coordinate mass campaigns and social action is making it harder for companies to ignore their footprint. Positive social actions like Carrot-Mobs and the powerful incentive of consumer loyalty are driving ever increasing levels of sustainability. Private incentives like the one million dollar X-Prize award, are also driving creative sustainable innovation.
As sustainability is still very young, the emissions reductions possibilities for business are massive. The vast majority of businesses have yet to adopt sustainable practices. According to the Sustainability & Innovation Survey by MIT’s Sloan Management Review and Boston Consulting Group, 82 percent of small companies have yet to go green, and 66 percent of large companies have yet to embrace sustainability. That leaves room for major emissions reductions.
Loss of competitive positioning and public ire are two powerful disincentives that are also driving businesses to embrace sustainability. The number of sustainable businesses will continue to grow because it is an unstoppable mega-trend. To assist companies in their efforts to go green, new alliances are developing including new partnerships between corporations and environmental organizations. Although consumers are still woefully ignorant about the environment, there can be no doubt that the green consumer is on the rise. Consumers have shown a steady and growing demand for green goods and services for several years now.
Increases to employee productivity and benefits to the brand are just two reasons why businesses will keep integrating sustainable practices to serve the company’s best interest. Public pressure and customer loyalty will also add to the forces pushing companies to go green.
However the single greatest motive that will drive businesses to reduce their footprints is the profit incentive. As the most powerful of all incentives, profit will continue to be attractive to decision makers.
The green market is now estimated to be worth $5.27 trillion (£3.2 trillion) worldwide and in the next couple of decades the clean energy market alone is expected to be worth more than $13 trillion. With trillions at stake and ominous disincentives, businesses cannot afford to ignore the green market.
In today’s business environment, sustainable practices are becoming a strategic priority. Although some businesses will need to cajoled to look beyond the short term profit cycle, there is ample incentive to expand their time horizons for a return on their investments.
In the absence of an environmental policy framework, leadership will come from visionary businesses that see the writing on the wall.
© 2011, Richard Matthews. All rights reserved.
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