Why sustainability and going Green makes perfect sense?

Well, my good friend Shashi Shekhar wanted me to write an article for his college magazine on Sustainability and Green Initiatives. After procrastinating for 2 weeks, i finally had to concede to his request. I decided to write the article in a case format. So here I paste the contents.

What is the one of the questions that is one the top priority of all executives across the globe apart from the economic scenario? According to a recent ‘Top of the Mind’ study by ‘The Consumer Goods Forum’, sustainability and corporate social responsibility feature amongst the top three priorities of the consumer goods industry. A similar finding is resonated in the IBM Institute for Business Value study.

Many of us would be thinking why companies and businesses are thinking about Green Initiatives, when they should be focusing their energies on growth and other strategic issues. Energy and water efficiency not only helps the planet, but also saves on bills. The technology employed to optimize logistics not only reduces fuel usage and toxic emissions, but makes for a leaner, more efficient and cheaper supply chain. Aligning an organization’s “green strategy” with its overall business strategy is paramount. This begins with a clear understanding of the overall corporate objectives and priorities, followed by carefully defined programs, goals and tasks that address environmental and stakeholder views. It creates a positive perception about the company and companies are better prepared to meet the regulations as and when they come. Sustainability makes perfect business sense!!

By driving operational efficiencies and adopting Lean and Green Supply Chain Management practices, companies are trying to reducing their carbon foot print. Below are the key areas where companies are channeling their efforts to turn their supply chains greener:

Product Design and Redesign – Companies are redesigning products to reduce energy consumption in the production and distribution. Innovations in product design are leading to reduction of some of the processes leading to Greener products.

Green Manufacturing – Reduced energy usage through streamlined production and greener supplier networks are helping companies be manufacturing Greener products.

Route Planning and Shipment Consolidation – By consolidating logistics and shipment dispatch companies are reducing their carbon foot print. Route planning has made the supply chain greener.

Well, how does all this translate into business and what have been the results so far. Let us examine a few examples on how companies have used Sustainability, Green initiatives and CSR to achieve spectacular business results.

Many times sustainability helps you beyond the usual cost saving. When a company champions of a cause, customers associate it with something good and are willing to pay premium price for your products. Consider the case of US clothing and adventure gear maker, Patagonia. Patagonia turned its fortunes by adopting an eco friendly product range by switching to organic cotton and changing the packaging to reduce impact on environment and a lot of other such initiatives. Patagonia’s products not only became a big hit with the consumers but also allowed the company to charge a premium price. This strategic change turned Patagonia from near bankruptcy in 1996 to a company with thirty nine stores in seven countries and $ 270 million in revenue in 2006.

In US, Wal Mart has redesigned its stores to reduce energy and water consumption. It has started harvesting sunlight to reduce the usage of electricity in its stores. This has not only made the stores Greener but also has helped Wal Mart in reducing the overall cost of its operations.

IT companies have also joined the bandwagon and are coming up with innovative products which have reduced energy usage. IBM through its smarter planet initiative is working with organizations both public and private to help them turn smarter and more efficient.

Sustainability and CSR can also help companies in creating a brand presence. Consider the example of the ‘Save our Tigers’ campaign by Aircel. By associating itself with the noble cause of saving the tigers, Aircel has created a unique brand presence in the minds of the consumers. So when we think of saving the tigers, Aircel’s name is always there in the back of our minds.

In Bihar’s rice belt, a group of individuals have founded a company, Husk Power Systems, which caters to the energy needs to the villages. The company uses rice husk to produce sustainable and renewable energy and is electrifying the remotest villages in Bihar.

Sustainability and Clean Tech have become the focus of the governments and enterprises worldwide. From energy efficiency and renewable energy to efficient and lean manufacturing and supply chains, clean tech has opened huge market for innovation. The entire Clean Tech industry is estimated to be worth more than trillions of dollars. Organizations and countries which are prepared to take on this new opportunity will emerge as leaders in the coming decades. So, start thinking how you can contribute and catch up on the business opportunity that is good for the world.




References:
Getting to plan B, John Mullins and Randy Komisar, Harvard Business Press.
The Consumer Goods Forum, Top of Mind 2010 Survey.
Green and Beyond, IBM Institute for Business Value .
Wikipedia.