For the past few years, the business world has been swept up in a green wave—a rising tide of interest and concern about environmental issues. Pressures from both natural forces and key stakeholders have made going green somewhat unavoidable. But many business people hold on to an outdated view of green, and the misconception that environmental practices always cost a lot of money. But green doesn’t raise costs; it lowers them—quite often in the short run, and definitely in the long run.
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Although a person’s instinct may be to retreat from green initiatives in hard times, that would be shortsighted and a huge mistake. In tight times, most companies need to focus on their bottom lines, cut costs, and conserve cash. And they need to do it fast. Reducing energy use and waste, two pillars of green, can save a great deal of money.
But as they say, nothing in life is free. Yes, some projects will save money immediately at virtually no expense, but greater rewards often require some commitment. So if you want to reduce energy costs, asking people to turn off lights won’t cost anything. But changing lightbulbs and installing motion detectors to get larger savings will clearly take some capital. The return on investment (ROI) will be high and the payoff fast, but it still requires some up-front expense.
So the critical distinction here is between costs and investments. Let me be blunt: If your business is unable to allocate any human or financial capital for investment—in R&D, customer relationships, people, process changes, or anything whatsoever—then no strategy, including a green one, will matter right now. Survival will be the only priority, and that means conserving cash above all. But most companies, even in these hard times, are still making decisions about where to put their attention, people, and money every day.
For those companies that are navigating these tricky waters but also want to position themselves for dominance in the future, green thinking can make all the difference. The logic for going green is no different from the logic for pursuing other business strategies. Companies look to drive profitability, innovation, customer loyalty, employee engagement, and so on. But unlike with most other strategies, the external forces driving green thinking make this topic unique and unavoidable.
Most of the forces driving companies to go green have not gone away. Environmental crises, such as climate change and water shortages, continue to evolve. Megaforces such as technology-driven transparency and the rise of the middle class in India and China, which will force the price of oil and other resources up over time, continue to advance. Closer to home, key stakeholders still demand more of companies than ever, especially corporate customers greening their supply chains. Even your employees and consumers, both of whom are under extreme financial pressure, still want some measure of environmental performance and social responsibility in the companies they work for and buy from.
All of these pressures make up an overpowering green wave that is permanently changing business. Like it or not, companies and countries must deal with current and longer-term environmental issues while simultaneously working on current economic challenges. Luckily for business, the solutions to both economic and environmental problems heavily overlap. The same strategies and tactics that address long-term environmental challenges will help businesses survive today’s economic conditions.
My new book, Green Recovery, offers a plan for companies that want to stay healthy today and also get ready for the inevitable upturn to come. In tight times, figuring out what to prioritize is even more important. I suggest focusing on four areas in order to:
- Get lean by revving up your energy and resource efficiency to survive the downturn.
- Get smart by using environmental data about products and value chains to save money, innovate, and generate competitive advantage.
- Get creative and rejuvenate your innovation efforts by asking heretical questions such as, “Can we run our business with no fossil fuels?”
- Get (your people) engaged and excited by asking employees to solve their own, the company’s, and even the world’s environmental challenges.
Get Focused
The four big areas of focus will benefit your company today and tomorrow. Betting on efficiency and getting lean will not only save you money quickly, but also make you more competitive in a future with higher resource prices and more questions from customers about your environmental footprint. Gathering data on the company’s environmental footprint up and down the value chain will help you identify high priority areas for cost-cutting today and make you smarter about where to focus longer-term innovation efforts. Getting creative means optimizing today’s processes and operations and developing tomorrow’s new products and services. And of course, engagement and alignment of all your people makes all of these benefits possible. In short, green isn’t an additional, tangential pursuit that distracts from the real work of the business; it is a core part of operating today.
In tight times, more than ever, a solid plan for a green recovery will make your company more competitive, no matter what its size.
