While concerned groups have been making the case for global warming and environmental responsibility for years, it only recently crossed over into the mainstream. Popular acceptance is in part thanks to Al Gore's An Inconvenient Truth, which spread the word that global warming is a reality. Whether you agree fully with the documentary or not, its message resonated with the public and fueled consumer demand for environmentally friendly products and services.
At the same time, the science behind global warming and man's role in accelerating it is no longer refuted. The academic and business communities came together with a single voice, including holdouts like Exxon that until recently had cast doubt on the science. These events sounded a wake-up call around the world.
Chief executives, as individuals and as business leaders, heard this wake-up call and the current sustainability movement was born. Today's sustainability builds corporate social responsibility and environmental awareness on the foundations of increasing brand value and the bottom line. Unlike the Carter-era ecology movement, today's sustainability does not ask consumers to change their habits or make do with less, but to expect more from less.
This message appeals to existing environmentally sensitive consumers and makes it easy for others to go green. Meanwhile, corporations win with positive contributions to the bottom line, a sense of doing the right thing, and an almost unprecedented opportunity to increase brand value and loyalty.
Sounds great, but what are companies actually doing to achieve this? The good news for CEOs looking to go green is that sustainability initiatives across industries follow a common blueprint.
Efficiency improvements are often the low-hanging fruit of sustainability and a good place for businesses to start. Efficiencies enhance existing products or processes, such as modifying engine design to burn 20 percent less fuel or redesigning product packaging to reduce waste.
Product innovation goes beyond efficiency improvements to create fundamental change in products and processes. Innovation requires ideas that challenge the status quo and significant R&D and marketing investments. While product- and customer-acceptance risks are high for innovation, so too are the potential rewards. Examples include development of thin-module photovoltaic solar cells and algae-based biodiesel, both with the potential to significantly change the economics of renewable energy.
Consumer awareness communicates the value of your program and is key to building brand equity. Transparency offers accountability to the program and avoids greenwashing. Many awareness programs are also promoted as educational, providing a series of sustainability best practices to improve industry at large.
Carbon mitigation offsets greenhouse gas emissions through projects that remove carbon from the atmosphere. The Kyoto Protocol's cap-and-trade mechanism created the framework for carbon trading as a way to meet mandatory emissions targets. It also paved the way for a voluntary carbon market where individuals or companies without mandatory requirements can purchase offsets to be carbon neutral.
The rapid rise of sustainability programs is a sign that we have started to change our thought processes in business and consumer decisions. As companies gain experience and success, sustainable practices will extend deeper and earlier into new product cycles, creating higher returns and environmental benefits. Those companies successful in capturing the brand loyalty of an increasingly eco-conscious world stand to be big winners in the coming years.
Today's sustainability efforts form wedges, which collectively help reduce the rate of global warming and are an essential step in creating real change. Along the way, we are planting seeds for the macro-innovation and changes in human behavior required for long-term sustainability. Long-term sustainability requires far more than efficiencies and innovation in a carbon economy. It requires major breakthroughs to take us to a non-carbon economy—an economy that will look to carbon not as an energy source but as a building block of life.
It won't be easy. The carbon economy has incredible inertia. The political and financial power structures of the world were forged on and are fed by hydrocarbons. The change to a non-carbon economy threatens to unbalance this status quo, possibly in very dramatic ways. Once again, there will be big winners and losers, but this time on an exponential scale. Despite this inertia, advances and breakthroughs will occur, prompting the human drama that will play out as we move to a non-carbon economy. In the meantime, we have our work cut out for us building wedges.
Further Reading:
Sustainability Initiatives across Key Sectors: A Blueprint for Today's Sustainability, by John Lash
