Green. You see the word everywhere these days. The imagery surrounding the word is varied and sometimes evokes an emotional response that can even be polarizing. First, the debate surrounding global warming - or as it is now more widely accepted:"climate change" - took place. Many people, including parts of our own government, disputed whether any type of global climate change was or is taking place. The discussion over acceptance of the Kyoto treaty and its successors has taken place over two presidential administrations and will undoubtedly touch the administration of a third new president.
The economic development industry, or more appropriately, profession, has not ventured into the subject too deeply and, thus, has not been a leader on the framework as to how to approach the topic of what to do about the "green thing" and where all of this will lead. My search for a definition and understanding of how the greening of our globe, the debate on climate change, LEED (Leadership in Energy and Environmental Design) Green Building Rating Systems, oil prices, wind power, solar power, ethanol, sustainability and bio-fuels has been difficult and is still not complete.
What is an economic development professional to make of all this, and how can we safely, effectively and thoughtfully take advantage of a change in our world that will impact jobs and capital investment? What new changes will take place in the next 10 years that will affect our driving habits and change our thought patterns regarding everything we do, everything we consume and our quality of life and place? These are big questions that will take a long time to answer and yet may never be fully embraced.
To begin my learning process, I've spent a considerable amount of time digesting the book co-authored by Daniel Esty and Andrew Winston called Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage. Esty is the Hillhouse Professor of Environmental Law and Policy, with appointments at both the Yale Law School and the Yale School of Forestry & Environmental Studies. Winston is director of the Corporate Environmental Strategy Project at Yale's Environment School. He has advised companies on corporate strategy while at Boston Consulting Group and has held management positions in strategy and marketing at such leading media companies as Time Warner and Viacom.
I was thrilled to have an opportunity to hear Esty speak at Illinois State University earlier this year as part of a program put on by the Illinois State University Office of Environmental Sustainability. Professor Esty has a long governmental and research background, along with experience in the private sector. Professor Esty's research has focused on "next generation" regulation and the relationships between the environment and trade, competitiveness, governance and development. He is the author or editor of nine books and numerous articles on environmental policy issues. At the end of this article is a list of his other books.
So how does a company go about developing a green or sustainability strategy? Certainly this is all new. No one has delved into this until very recently. Well, the truth is there are a number of companies, some with unlikely pedigrees, that have been on the forefront of sustainability and environmental awareness for some time. Growing up in the era of the crying Native American with litter at his feet in the now-famous commercial and at least one earlier energy crisis, I feel that I have grown up with environmental awareness for many years. From urging my mother to try using phosphate-free laundry detergent while in grade school to always being part of a recycling program, environmental awareness has always been with me and everyone that follows me in age. My children (ages 16 and 20) have always known what recycling is and are now being inundated by the green and sustainability message. If they choose to work for a corporation or business, the strategies and tactics outlined in this book will likely be a ubiquitous part of business life as well.
Esty and Winston divide the book into four sections. The first section, "Preparing for a New World," is divided into three chapters that describe the issues, opportunities, influences, markets and stakeholders in the sustainability world. These chapters are written in a very clear and workmanlike manner. In fact, the book is filled with tables, protocols, matrices and other helpful sidebars that any executive or CEO would find helpful. Much of Chapter Two describes the "natural drivers" impacting the environment. These include (in order) 1) Climate Change; 2) Energy; 3) Water; 4) Biodiversity and Land Use; 5) Chemicals, Toxics and Heavy Metals; 6) Air Pollution; 7) Waste Management; 8) Ozone Layer Depletion; and 9) Oceans and Fisheries. Throughout the rest of the book these drivers are revisited.
In this section, the authors make it clear that there are many varied parties impacting these nine areas. The proverbial tree-huggers are not the only people impacting change at the corporate level when it comes to greening and sustainability. Non-governmental organizations (NGOs), regulators, politicians and media are not the only groups pursuing the green agenda. Industry, competitors, suppliers and business leaders with concerns for the environment and how their company is viewed are also putting pressure on the agenda and the change in the business practices in regard to sustainability. According to the authors, the push for the "Greening of America," and the globe for that matter, is a democratic and diverse push and one that, if ignored, could mean financial failure for businesses that don't pay attention.
The second section, "Strategies for Building Eco-Advantage," describes the risks and rewards for companies that engage in an eco-strategy. Michael Porter, a Harvard Business School Professor and recognized by the economic development community for his work in sector analysis, is the world's leading authority on competitive strategy and economic competitiveness. His work has greatly influenced the federal approach to economic development and has described two categories of competitive advantage for companies: lower its costs compared with the competition and differentiate its product on quality, features or service. Keeping his tenants in mind in the context of an eco-strategy, if a company can regulate and reduce its inputs, the energy consumed and time spent on regulatory requirements, the bottom line theoretically will be improved. From a revenue side, environmental stewardship requires the building of intangible relationships with customers, stockholders and other stakeholders. Managing the downside through "eco-efficiency;" eco-expense reduction; lowering costs upstream and downstream; building the upside through design, sales and marketing and intangibles are the green-to-gold plays the authors put forward in this section.
The final two sections, "What WaveRiders Do" and "Putting It All Together," provide the reader with examples of companies already engaged and putting it all together. The authors do an excellent job of showing examples throughout the book of eco-strategy companies that have not only implemented programs but have profited from them. The chapters explain in detail leading companies' success in implementing profit-oriented strategies and tactics. The "Eco-Advantage Mindset" which the authors have devised is a five-rule guide for developing and driving a company's eco-strategy. Using examples of 3M, IKEA, DuPont, GrupoNueva, Monsanto and others, the authors clearly and specifically lay out how each of the five rules can help a company develop its strategy.
"Putting It All Together" is an apt title to the final chapter of this book. If one is looking for a definitive guidebook for understanding how some of the leading companies globally are implementing eco-green-sustainability strategies and profiting from them, not only monetarily but also from a public perception viewpoint, this is the handbook needed. This is not the "Whole Earth Catalog" or a philosophical tome on why one should buy in on the green concept. This is a book that digs right in, spends a little time on history, influencers and shapers of the eco-friendly movement and then finally gives the reader a plethora of information, tactics, strategies, principles and concepts on how business can move through this era of change. If you think this is just a passing fad, think again. For more years than you might imagine, large companies have been incorporating eco-friendly strategies and principles for sustainability reasons, not merely for corporate sustainability, but because their employees, customers, shareholders and the countries they operate in have asked or demanded them to do so. In these companies, it is part of their risk analysis, their marketing programs and their long-term plan for shareholder and investor return. To them, this is not a fad.
If you are seeking definition and are trying to wrap your arms around this topic as I was, this book is a great primer and guidebook. There is much to read, many tables, sidebars and interesting anecdotes about companies and businesses that are leading in best practices. While it provides examples of some very large companies with great resources, my question as I read the book was can it help a small business, perhaps a business with five, 10, perhaps 100 employees? The answer is yes, but it will take more work. The guidelines and principles in this book can help any size business; it merely takes some work to distill the vast amount of information.
Green. What does it mean? Esty and Winston have clearly shown that from businesses large and small, green can mean more than being good stewards of the environment. Green can also mean profit and return on investment. This is the incentive that many are looking for to take the green movement beyond a fad and into the real thing.
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