by: Joel Makower
The media calls and e-mails have been arriving fast and furious — a dozen or more each week, even now that Earth Day is over. CNN, the New York Times, Business Week, Advertising Age, "Good Morning America," the Sundance Channel, Reuters, the Discovery Channel, Marketplace radio, and a slew of local papers. And a surprising number seem to have some variation of the same two questions:
Is all of this focus on the greening of business merely a fad? When will the bubble burst?
Such questions are understandable, albeit misguided. The world of green business appears to have come out of nowhere to grace the cover of every major magazine, business and otherwise, not to mention scads of other stories on inside pages. Where stories about business and environmental issues used to appear sporadically in the New York Times, Wall Street Journal, and other major publications, they are now daily fare, with sometimes as many as a half-dozen news stories, feature articles, and opinion pieces in a single daily edition.
For those of us who have been toiling in these fields for a long time, the greening of business is viewed as an "overnight success story" that was twenty years in the making.
Given our society's microscopic attention span, and the apparent need of the media to deflate trends they've helped pump up, coverage of green business would seem likely headed for a fall. And that might indeed happen, for any number of reasons. From the public's perspective, this would make it seem like the greening of business was yet another cynical fad that's now faded into the woodwork.
Such perceptions aside, the topic isn't going away any time soon. Here, in no particular order, are ten reasons why I think the greening of business will be an enduring issue for years to come, regardless of the media's attention span:
- The problems aren't getting any better. This is fairly obvious, especially if you've seen The Movie. The environmental movement, it's been said, is rapidly morphing into the climate movement, and there's a parallel shift taking place on the business side. The motivations may be different — for activists, climate has become a rallying cry that gives disparate groups a singular focus; for companies, it's about the need to squeeze efficiency out of every operational nook and cranny while reducing risk and enhancing image — but the upshot is the same: Until the climate problem is under control, it will be Job One, environmentally speaking, inside most companies. And as concern, regulation, and market-based mechanisms to address climate change ramp up, this will be a key business focus for a long, long time.
- The political will is finally emerging. Again, climate is the reason. In the U.S. and elsewhere, political leaders are realizing that this isn't a topic that will go away; indeed, it is gaining steam and could even be a focus of the 2008 U.S. election. That could increase public scrutiny of how company lobbyists are pressing for favorable treatment, and some of this pressure could come from companies otherwise seen as "leaders" in corporate climate action, leading to activist charges of greenwashing or worse. If there's evidence of a parade of public concern over climate change, politicians will certainly want to get in front of it, and companies may end up finding that there's simply no longer enough lobbying money to buy their way out of the problem — or, better still, not enough politicians willing to be bought off.
- Consumers are waking up. This remains to be seen, of course, but there are encouraging signs that the American public is finally ready to vote with their pocketbooks, choosing greener products, or products from companies perceived to be green leaders. One thing is certain: the pipeline of greener products from household brands is filling up. We'll see a new wave of green product introductions starting later this year, including some from companies that haven't previously been in the green marketplace. If their products catch on, that pipeline could become a gusher.
- The supply chain is gaining power. Wal-Mart, which is pushing its 60,000 suppliers to perform all sorts of sustainability somersaults, is one big reason, but they're hardly alone. Corporate and institutional buyers of everything from carpets to car parts are looking upstream for solutions, asking suppliers to, variously, reduce packaging, eliminate hazardous materials, use more organic or biobased ingredients, and take other measures to "green up" their products and operations. That's moving some markets toward cleaner production methods far faster than any mass consumer movement could.
- The environment has become a fiduciary issue. The past twelve months has seen an almost weekly stream of stories and reports from large financial institutions — banks, insurance companies, and investment houses — talking about the risks of climate change, toxics, and other environmental issues to shareholders. And shareholders, especially pension funds and large faith-based institutional investors, are starting to hammer hard on companies to acknowledge, reduce, and report on their risk profiles in these areas.
- The bar keeps moving. One theme of my presentations lately is the question, "How good is good enough?" Simply put, it bemoans the lack of standards or general agreement on what constitutes a "green business." That lack of standards frustrates many companies' efforts to be seen as "good guys"; instead, they never seem to be good enough. But there may be an upside to the lack of definitions: With no standards, the bar is free to drift continually higher. And that seems to be what is happening. For example, as more companies claim some form of carbon neutrality, the value of carbon neutral as a marketing claim becomes increasingly devalued. And as the bar rises, laggard companies, even if fully compliant on the regulatory front, are finding themselves further and further behind, from a reputational perspective.
- Companies are moving beyond "sustainability." Given the rising bar, it would follow that companies are continually innovating, and that the cutting edge moves increasingly farther out. Within the next two years, it would not surprise me if being a "sustainable" company was no longer seen as a leadership goal. The real leaders will have focused their sights on being restorative — for example, not being merely carbon neutral, but being carbon negative, taking more carbon out of the atmosphere than they put in.
- More companies are telling their stories. It's no longer good enough for companies to be quiet and humble on things green. That doesn't necessarily mean they should be needlessly boastful, especially if it's not in their nature to do so. But doing the right thing and keeping it quiet is less of an option these days. Customers — both consumers and business customers — want green heroes, companies they believe are setting the pace. Companies that believe that walking more than talking will insulate them from criticism are finding that the risks of being overly exposed may be outweighed by the risks of being seen as a laggard. Expect green advertising and marketing campaigns to grow in the coming months.
- Clean technology is changing the game. The clean-tech boom (which, indeed, may be a bubble unto itself) is making it easier and cheaper for companies to transform their products, processes, and performance to use more renewable energy, biobased or lightweight materials, and fewer toxic ingredients. Given that some of the most promising, game-changing technologies are only just now reaching their intended markets, we are on the cusp of a new generation of clean-tech products and services. As they roll out, whether from startups or mega-conglomerates, they'll enable a wide range of new green products, services, and business opportunities.
- There's money to be made. That's the real bottom line: The environment is now being seen increasingly as a potential value-add, not merely a cost to be minimized. Hence, green leaders are emerging throughout companies, not just in the environmental departments, as forward-thinking entrepreneurs (and intrapreneurs) identify and exploit new ways to leverage green thinking into new products and markets. As the number of success stories moves beyond hybrid automobiles and organic foods to include other categories products and services, green will be seen as a more "normal" part of the marketplace.
There's more. (What did I miss? Please weigh in.) I managed to get through all this without once mentioning China or India. They, of course, are also game-changers, as they move forward — too slowly at times, leapfrogging the industrialized world at others — in building their fast-growing economies.
And then there's the specter of surprises: another Katrina, a terrorist attack, refinery explosion, nuclear meltdown, deadly heat wave, infectious epidemic, discombobulating iceberg, other other catastrophe. Each of these could help move the role and responsibility of the private sector to be green leaders back into the limelight.
And once again, the media will likely "discover" the greening of business.