One hears about businesses benefiting from revenue growth that has come from products, services and business model innovations that are in line with green stewardship. Others benefit from purchasing and using those products and services, from both increased efficiency and lower costs. The global environment also benefits from lower greenhouse gas emissions and less resource consumption.
Over the last 10 years, green stewardship has gripped popular imagination. Environmental issues have challenged our self-awareness and started many global initiatives to respond to critical issues such as global climate change and resource depletion. As a result, attitudes toward the environment are changing to encourage innovation in conservation. The benefits that arise will outlive our current generation. Regulations to implement the National Action Plan on Climate Change and other guidelines like Extended Producer Responsibility (EPR) are being framed and have started to get rolled out to incentivise such programmes. All businesses, whether on their own or under pressure, will have to join the green bandwagon some day and the sooner that happens, the better for them as well as for the civilization.
Leaders are already taking action. The concept of the ‘green economy’ has emerged as a potential remedial measure in an era marked by the severe challenges of climate change, energy and food security, compounded by economic uncertainty. A number of recent trends show that the green economy is growing and that with increasing consumer awareness, the demand for green products is on the rise. The success of ‘green economy’ depends on developing a number of green initiatives, green policies and programmes by different economic institutions including corporates.
For large multinationals, greening of business represents creation of new market opportunities thereby driving up revenues, reducing internal costs through internal-facing improvements (resource optimisation) and improving a company’s reputation. This way, corporate leaders seek to secure a unique competitive advantage in the global market.
Below are some examples of successful green endeavors by corporations around the world
Green initiatives improve investors’ confidence. Investors are increasingly demanding the disclosure of information on companies’ environmental and social policies, practices and performance to support their financial investment and lending decision making including company valuations.
Since a company’s financial reports do not currently sufficiently account for the full range of risks and opportunities and performance of a company there is a call for company’s to produce integrated reports. This is that a report which displays an organisation’s stewardship not only of financial capital, but also of the other “capitals” (manufactured, human, intellectual, natural and social), their interdependence and how they contribute to the company’s success.
| INITIATIVES | IMPACT |
| US retailer Wal-Mart addressed the issues of excess packaging of products and greenhouse gas emissions by introducing a ‘packaging scorecard’ concept, through which it expects to reduce packing across its global supply chain by 5 per cent from 2006 level till 2013 | The initiative is expected to generate revenue of $12 billion in global supply chain savings |
| Alcatel Lucent seeks, with the GreenTouch Consortium initiated by Bell Labs, to make communication networks more energy efficient thereby drastically reducing any negative impact of the industry on the environment. These initiatives include reduction in carbon emission across supply chain, product transport and personal travel, adoption of energy efficient lighting, HVAC, VSD on air conditioning units and many more endeavors | At the end of 2010, Alcatel-Lucent reduced the carbon footprint from its facilities by 15 per cent of the 2007 baseline, and reduced the entire corporate carbon footprint from all operations (scope 1 and 2) by 8 per cent of 2008 baseline. Implementation of energy savings technology saved one million Euros in energy cost in 2010 |
| In 2003, Sharp Corp. established a system to develop environmentally sustainable ‘green factories’ to improve its environmental performance | By 2008, 16 plants out of 38 worldwide were certified as ‘green factories’ and 21 plants were certified as ‘super green factories’. It reduced GHG emission by 6 per cent in the year 2008, improved in minimising waste discharge by 10 per cent |
| In 2005, GE launched its ecomagination division to develop green technologies using the catch phrase ‘Green is Green’. Using energy, technology, manufacturing and infrastructure capabilities to develop solutions in various fields of renewable, Clean coal technologies such as gasification combined cycle system, CCS technology, membrane technology | Revenue of more than $85 billion is generated from ecomagination products and services through 2010, with $130 million in energy efficiency savings |
| With a comprehensive energy efficiency and alternate energy programme, Bharti Airtel’s GreenTowers P7 initiative covers seven high impact initiatives, which are aimed at reducing diesel usage and therefore the carbon footprint. Some of the initiatives are: * Deployment of alternate energy sources like solar * Implementing energy efficiency measures like Integrated Power Management System (IPMS) and variable speed DC generators (DCDG) * Demand side management like Free Cooling Units (FCU) instead of air conditioners etc substantially reducing the electrical load requirement | The alternate energy programme has already saved 6.9 million litres of diesel and around Rs280 million. The IPMS and DCDG initiative has reduced consumption of diesel by 1.2 million litres, thereby saving Rs 47 million in diesel costs. The DSM measures implemented across more than 3400 sites, has savings potential of 4.1 million litres of diesel |
| Philips offers green solutions to its customers in various products, ranging from energy saving lighting to TVs, home theaters, kettles and many others. It has launched “Green Flagship” products and developed a proprietary EcoDesign process to drive product development as part of their EcoVision5 programme | Philips is recognised as the 9th greenest company in the world in Newsweek’s 2011 Green Rankings. It is rated as one of the top companies in the personal and household goods sector in the 2010 Dow Jones Sustainability Index |
IFAC (International Federation of Accountants), the Global Reporting Initiative (GRI), and The Prince’s Accounting for Sustainability Project have collaborated to promote integrated reporting. In turn they have established the International Integrated Reporting Council (IIRC) to oversee the development of global integrated reporting standards and guidelines which is slated to get rolled out globally around 2015.
Companies around the world are making environmental stewardship a top priority and using it to transform every aspect of their businesses. The shift from the green being ‘just a fad’ to a strong business case starts when companies look beyond the low hanging fruits to integrate the green initiative as part of their strategy for green growth. Governments are also working to facilitate the transformation to a more sustainable planet by providing incentives to adopt green practices and technology, providing funding to develop more efficient technology, and legislating new policies that enterprises must follow. Trends are now firmly in place, with drivers of those trends strongly aligned so that long-term prominence of the green movement can continue until environmental stewardship is a natural part of everyday business activity.
The author is advisory partner & climate change & sustainability leader (India), Ernst & Young.
