Turning "Sustainable" into Profitable
Can Businesses make money by putting the Environment at the forefront?
Environmentally-Friendly Business is Profitable Business
This article focuses on the more micro level of sustainability, talking about large corporations that have made sustainability one of their main goals, and how they have actually seen financial benefits from the efforts. Zokaei, the author, states that one company, Dupont, “committed itself to a 65% reduction in greenhouse gas emissions in the 10 years prior to 2010. By 2007, DuPont was saving $2.2bn a year through energy efficiency, the same as its total declared profits that year” Tesco, the grocery company, pledged to be “ a zero carbon enterprise all together by 2050”. One of Zokaei’s main points is that these companies aren’t doing this out of a love for the environment, and thats ok.
This small group of companies has realized that optimizing their business, and cutting waste tends to lead to higher profits. And what smart business would shy away at the opportunity to raise money? Well unlike some of the green companies listed, Zokaei claims that most companies that aren’t as forward thinking see being green as spending money, which it doesn’t have to be. As Zokaei puts it, “Being lean and green means doing more with less” There are even studies and reports that back these claims up, yet business across the globe still are reluctant to change. All the research and proof is there, the problem now is how to disseminate that to companies, and give them easy and quick suggestions that will save them money, and save our environment.
The 3% Report
The 3% report was published in an attempt to highlight business’s that had incorporated sustainability into their mission, and to showcase how it can be profitable. The report starts with a warning, if we are to keep global temperature rise below 2 degrees, U.S corporations will have to cut carbon emissions by 1.2 gigatons by 2020. The issue is not that the benefits aren’t there “companies just aren’t investing enough to capture them”. The report estimates that it only takes 3% decrease in emissions per year to reach the 2020 target, and to realize 190 billion dollars in financial benefits from running business’s more efficiently.
The 3% report lays out the “Carbon Productivity Portfolio” which highlights five steps that will help companies get started on the road to sustainability, and reduce carbon emissions in the long term. The 5 actions, “Set ambitious targets, Improve energy management and increase investment, Increase low carbon energy supplies, Develop low-carbon products and supply chains, engage with stakeholders and government” The actions were all based off of researching companies that have already taken strides towards sustainability. While the actions will surely produce results, there needs to be more focus on how to get companies started, and to hammer home the link between being green, and saving money. Despite some of its flaws, the 3% report is much needed, and more resources like it need to be created and shared with the world. If a large database of resources can be compiled showing first, how to be sustainable, and second, how it is profitable, companies should start paying attention more. Essentially what that would be doing is giving companies, a relatively simple way to look good in the public eye, and make money, which any smart company will seize the opportunity to do.
Acid Rain Program
The Acid Rain Program was instituted in 1995 in an attempt to cut Sulfur Dioxide emissions as well as Nitrogen Dioxide, which were the primary precursors to acid rain. The program targeted coal burning plants, forcing them to cut their SO2 emissions to. “a cap of 8.95 million tons, a level about one half of the emissions from the power sector in 1980” . The first phase of the program targeted 263 units at 110 coal burning plants located throughout the U.S. The second phase expanded that to over 2,000 units, and included non coal producing plants that produced over 25 megawatts of power.
One of the most interesting parts of the plan was that it was a market based initiative. This meant that companies were given “allowances” if they went below the requirement for emissions. These allowances could be used to cover the emissions from other plants, or to sell. A market was created for these allowances, and companies could buy and sell them to achieve their emissions standards. This marketplace essentially incentivized the companies to become as efficient as possible, because they would then get allowances that could be sold for large profits. However, the downside was that companies could continue polluting if they just kept buying allowances.
Luckily, in 2005 “ trades were registered at slightly over $1,600/to. At those rates it was less expensive to install scrubbers and reduce pollution then to purchase allowances and continue polluting”. One of the downsides is that that wasn’t always the case, and there were times where companies would purchase an allowance before they would install a scrubber to actually decrease their emissions. However, the ARP seemed to have worked, 2012 SO2 emissions were, “3.3 million tons, (68% below 2005)” and Nitrogen Oxide emissions were “1.7 million tons (53% below 2005)”.
Clearly the ARP has done a good job, but that doesn’t mean its fixed the root issue. The ARP program put mandatory caps on companies, and gave them a market that incentivized lowering emissions, but it was forced, and may have left a bad taste in the mouths of some companies. The long term goal with sustainability should be to make it something business’s organically want to do, not be forced to. I can’t argue with the results of the ARP, but the EPA and other government organizations should start focusing on the long term, and find a way to make being green desirable, so there doesn’t need to be a government mandate for sustainability.
How To Make Sustainability Profitable
In this article Ritika Puri tries to demonstrate how sustainability can work for small business’s and that it may not cost that much money to get started. She focuses on a small business owner, Willis Wood, who founded Trade Show Emporium. Wood says that, “I faced the challenge of wanting to provide environmentally friendly trade show exhibits..but at first, they were more expensive than a traditional exhibit”. Eventually Wood was able to get a green exhibit to be the same price of a traditional exhibit." The problem is that the same price isn’t cheaper. Sadly, unlike Wood, most business’s won’t want to be green out of the goodness of their hearts, especially if its a large time and financial investment.
There are a few tips however, that Kathy Nieland, a U.S sustainable business leader offered. She says that “its important “o have a relentless focus...it can be tough to cut through the noise.” While i’m sure thats sound advice, why is there even noise to cut through? If this is such a big issue, shouldn’t people, and the government be making it as easy as possible to get involved in sustainability? Puri does end up offering solutions to turn sustainability into profit. First, the mission of sustainability has to be integrated into the core of the company, it shouldn’t be a side project. The three approaches that lead to sustainability starts with taking the plunge. That means “making a large, long term investment to generate lower long term yields” Next, business’s should build on the large initiative through many smaller changes that save money. Third, a company has to extend their model of sustainability to their suppliers and costumers, in order to forge a new sustainable business chain. Puri ends her article with somewhat of a contradiction. After stating the three ways to make profits, she says that to make profits from being green, you have to experiment, and that sustainability “is far from a black and white field”. This again raises the question, if this is so important to the world, shouldn’t someone be making it a black and white issue. The government should be focused on making sustainability as easy and low cost as possible so business’s can at least get their feet wet, and see what being green is all about.
China Strengthens Environmental Laws
About a year ago China made the first change to their environmental protection laws in 25 years. The change imposed strict regulation of companies waste output, and made punishments harsher for those who disobey. China lifted limits on fines for polluting,” which are currently so low that many enterprises prefer to pay them than take long-term anti-pollution measures”. Despite these changes, the issue with China is the disparity between what they say on paper, and how the actually choose to enforce the rules. Experts say that, “China’s air pollution or water pollution control laws [are] pretty good compared to the global standard”. Yet studies show that over 60% of their water is considered “very low” in terms of quality, and around 16% of their land is polluted, some parts with hazardous chemicals such as Mercury.
China’s premier, Li Keqiang even said that China, “will declare war against pollution as we did against poverty”. Yet China remains the be the single biggest polluter in the world. The lesson learned is that even if you threaten to put CEO’s in jail, or sack public officials if they disobey the new laws, writing things down on paper doesn’t solve the problem. China demonstrates that forcing environmental change doesn’t always work. In fact, part of the reason China is even creating these new laws is because “They fear that the external world is pointing and laughing at this stage which China’s environment has reached”, the change can hardly be called self motivated. Now, to be fair, the U.S has a much less corrupt framework, one where change would most definitely be obliged more than in China, but that doesn’t mean we shouldn’t look at what went wrong there, and think that we are above it.
Also, seeing as the Chinese government can’t seem to enforce its own rules, it might be a waste of energy for the U.S to try and impose theirs, because the policy seems to get lost in translation anyways. While the article doesn’t mention any of the U.S efforts, it would probably be best if America stayed out of China’s business for a while, it could even be beneficial in the long run. If America can fix its own issues concerning pollution, maybe our government can take the methods they found to be successful, and set up a task force that would help China implement those same techniques. While it wouldn’t reduce any emissions in the short run, it could have a more effective long term impact.
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Puri, Ritika. "Why Making Your Business More Sustainable Doesn't Have To Be Expensive Or Hard." Business Insider. Business Insider, Inc, 12 Nov. 2013. Web. 26 Apr. 2015. <http://www.businessinsider.com/sc/how-to-make-sustainability-profitable-2013-11>.
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Zokaei, Keivan. "Environmentally-Friendly Business Is Profitable Business." The Guardian. The Guardian, 14 Oct. 2013. Web. 29 Apr. 2015. <http%3A%2F%2Fwww.theguardian.com%2Fsustainable-business%2Fenvironmentally-friendly-sustainable-business-profitable>.