Are Corporate Sustainability Practices Just a Greenhouse of Mirrors?

By Don Bray

It’s in the news a lot lately – big companies are ‘going green’. Yet many wonder if this is just the latest fad, limited to highlighting small improvements with large helpings of marketing hype. Are corporations really buying into ‘sustainability’? And if yes, how do they actually make money doing so?

I get practical questions like these all the time, and there are no absolute answers. Yet broadly speaking, it’s safe to say major changes are emerging in how businesses think about the notion of sustainability.

• So what is ‘sustainability’, anyway?
  An easy-to-understand definition is ‘being able to do what you’re doing forever, without any lasting damage’. A more classic definition accounts for three basic dimensions of sustainability - economic, social, and environmental – and require on-going benefits in all three.
  
  A new wave of environmental regulation is emerging around the world, and the cost of basic resources is sure to rise. This doesn’t mean we can’t all live well, but we are going to have to use resources in much smarter ways. In this context, the notion of ‘sustainability’ has more relevance now than ever before.
  
  
• Are businesses taking sustainability seriously?
  Generally, yes. Major corporations are under a variety of pressures to do so.
  
  A top factor is the cost and availability of energy. Given the wake-up call of oil spiking to $140+ a barrel in 2008, businesses have placed a renewed focus on energy efficiency – to earn immediate cost savings, and shield against future price increases.
  
  For industries such as utilities, oil & gas, and chemicals, carbon regulation is becoming an increasing reality. A cap and trade system is in place in Europe, and reporting is now required in the U.S. A US-wide proposal for carbon cap and trade is now under consideration in the U.S. Congress. These regulations will ultimately result in an upward impact on energy prices for all companies.
  
  Corporate stakeholders have encouraged companies of all kinds to foster brand reputation by publicly reporting their energy use and carbon emissions on a voluntary basis. Under such voluntary programs as the Carbon Disclosure Project, or EPA Climate Leaders program, companies typically set goals for reduction, and track improvements year to year.
  
  And, of course, consumers and business-to-business customers have begun to demand it. In many industries, such as electronics, brand-name manufacturers are now requiring that their suppliers comply with new reporting requirements related to sustainability. And major retailers such as Walmart have set new goals and greater expectations for environmental and social compliance, transparency and accountability for their vast network of suppliers.
  
  
• Where are the opportunities?
  At the end of the day, there are two immediate opportunities for businesses. First, there are numerous opportunities to harness new developments in energy and resource efficiency to achieve operational cost savings. Solutions in areas such as enterprise and building-level resource management, data center energy efficiency, renewable energy and green power, fleet management, telepresence and workplace solutions, to name a few, are advancing rapidly.
  
  The second opportunity is to develop new and/or improved products which enable customers to live and/or work in more sustainable ways. This is evidenced in the billions of dollars now being poured into venture investments in clean energy and energy efficiency. At the same time, many established companies are working to understand and anticipate their customer’s needs around sustainability. For example, in the banking industry, this may mean new lending products/terms for renewable energy projects; and for real estate companies, differentiating around ‘green leasing’ and LEED certification. In short, for just about any type of business, there are new green offerings being explored and developed. If ignored, these could represent competitive liabilities. Yet if exploited, they can represent significant new opportunities to protect and grow future revenues.

Don Bray, a former Vice President with Accenture, recently founded the Altaterra Research Network, www.altaterra.net, dedicated to promoting sustainable business and clean technology solutions in the corporate marketplace.