As the nation faces the daunting challenge of economic recession, the development of a Green Economy is widely promoted as the answer to turning our fortunes around while simultaneously addressing the urgent issue of global climate change. The major hallmarks of a Green Economy are energy and resource efficiency, which to a large extent require us to rethink how we build our communities, move people and goods around, provide energy and use scarce resources. We have to face up to the fact that business as usual is no longer an option. The industries that comprise our economy have to make significant changes if we are to rise to the challenge presented by our changing environment. Nevertheless if you ask the public what changes must be made or what constitutes a “Green Business” you are likely to get a wide variety of responses.
For some “green” means running on alternative energies. For others, going “green” means a business limits its carbon footprint by procuring inputs, goods and services locally, or occupying a LEED certified resource-efficient building. Some define “green businesses” as manufacturing goods from organically grown, ethically produced products. Others expect a “green business” to minimize its overall impact on the environment through waste reduction and use of recycled goods.
In fact, each of these characteristics is a component of the “green industries” and “green businesses” that it will take to build a Green Economy. However, a company that adopts only one of the strategies on the list may not truly function as a “green business” if its practices in other areas outweigh the benefits of its “green” practices. Failure to look at the total impact of “green” decisions can actually exacerbate our problems as proved the case with ethanol. Converting corn to ethanol seemed like a good strategy to reduce carbon emissions until further study revealed that more hydrocarbon fuel is burned to grow, transport and process the corn into ethanol than is saved by its use. To make matters worse, ethanol production drove up the price of basic foodstuffs worldwide, an unintended dire consequence. Unfortunately, there are also instances in which companies engage in “greenwashing” by adopting a high-profile, but essentially meaningless “green stance” strictly for the marketing potential.
How do we as conscientious business owners know what strategies are truly effective in addressing our environmental concerns? How do we know when we have achieved “green?” In addition, how do we assure consumers that we are earnest in our efforts to be environmentally conscientious?
For manufacturers and processors, the best way is to do the math. Life Cycle Analysis (LCA) and Environmental Life Cycle Costing (ELCC) are two methods used widely by international corporations that do business in the European Union, where stricter environmental laws have forced the issue. In both methods, the final product is scrutinized from cradle-to-discard or ideally from cradle-to-cradle in terms of real money flows. In ELCC, externalized costs (such as pollutant emissions and greenhouse gases) are also identified so that associated costs can be internalized or the production process amended to alleviate these impacts. Many companies that have undertaken LCA or ELCC have also adopted The Natural Step (TNS) management framework established in the 1980s by Karl-Henrik Robért, a Swedish medical doctor and cancer researcher. Robért’s experience as a researcher convinced him that the way to simultaneously address social and corporate sustainability, environmental issues and natural resource constraints was to begin by identifying the desired sustainable outcome and work back from there in a process called backcasting. Under this method, a plan for reaching the preferred future is broken down into incremental actions or stages, with each stage designed to position the company for adoption of subsequent actions that will ultimately result in the goal of sustainability. TNS works well for all types and sizes of companies. Firms that have adopted TNS include Rohm and Haas, Interface/FLOR, IKEA, Nike, ICI Paints, Scandic Hotels, and Whistler Blackcomb ski resort. TNS has also been adapted for communities.
Smaller companies can and do undertake LCA, ELCC and/or TNS. Service companies in particular may find adopting TNS advantageous. But short of this, they can require accountability from their suppliers and choose to do business only with firms that provide quantified documentation (such as an LCA or ELCC) of their products. Standardization issues related to LCA or ELCC still exist, but as more industries engage in these assessments definitions of functional units, unit processes, and system boundaries are being refined. Furthermore, the databases integral to the assessments are being expanded, which may help lower the costs of these analyses.
Despite the focus in the media on new green ventures, the Green Economy isn’t just about new companies offering new products. It affords an opportunity for nearly all businesses, regardless of size or industry, to remake their companies into “green” enterprises. Existing strategies, processes and systems must be challenged and tested in light of the new realities of future resource shortages, higher energy and transportation costs, and emerging technologies. Evaluating options to your supply chain, product design, process flow, and other major areas of the business can yield cost-savings and position your business for sustainable growth in the future.
We are at a critical juncture with respect to the long-term environmental outlook. Despite the feel-good mantra that if we all contribute a little bit our combined efforts will somehow result in success, it is more likely the case that-as Oxford University professor David MacKay states in Sustainable Energy Without the Hot Air-“if each of us does only a little, we will achieve only a little.” To achieve a sustainable economy, individually and collectively we have to make big changes in the way we do things. That is not say these changes must or can be instituted in one fell swoop but, since time is of the essence for any company that intends to survive and prosper in the 21st Century, it is important to make sure that the actions we take are effectively moving us toward our goal of sustainability.
A. Michael Weaver founded Weaver Research & Consulting Group (http://www.weavergroup.org) in 1998 with a mission to conduct thorough research and develop sustainable solutions to client’s problems. Using his thirty years of business experience and MBA training, Michael has assisted numerous owners and top executives of small and mid-sized firms from a wide-range of industries find ways to change your organization potential into improved bottom line performance. He is an Accredited Associate of the Institute for Independent Business and a Strategic Partner with Profiles International. Susan H. Weaver, economist and urban planner, also contributed to this article.