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Cover Story

Green Strategy as a Competitive Advantage
In The Aftermath of The Global Financial Meltdown, Corporations are facing unique Challenges. The Future is in Incorporating and Capitalising on a Green Strategy writes Andrew Winston, Co-Author of Green to Gold and author of Green Recovery.
Issue Date - 21/07/2011
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 But a lot of business leaders hold on to an outdated view with respect to green, the misconception that environmental practices always cost a lot of money.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).

Although your 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 usage and wastage – two pillars of going green, can save a great deal of money.

But as they say, nothing comes for free. Yes, some projects will save money immediately at virtually no expense, but greater rewards often require some commitment. So if corporations 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 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 – 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 contemporary 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, thinking green 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 strategies make this issue 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. Mega forces 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. Back here in America, 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 are making up for a green wave which is altering business dynamics permanently. 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 businesses, the solutions to both economic and environmental problems overlap heavily. The same strategies and tactics that address long-term environmental challenges will help companies survive today’s economic conditions.

Companies that want to stay healthy today, and also get ready for the inevitable upturn to come need a strong green plan. In tight times, figuring out what to prioritise is even more important. I suggest focusing on four areas:
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.
The four major areas of focus will benefit your company today and tomorrow. Betting on efficiency and getting lean will 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 optimising 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 efforts possible. In short, green isn’t an additional, tangential pursuit that clashes with business functions; it is a core part of operations 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.

Coordinated By : Amir Moin


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