Market News

 June 27, 2009
Business is the Muscle Against Climate Change

 The world’s ability to meet the challenge of reducing global greenhouse gas (GHG) emissions by 80% below 1990 levels by 2050 depends upon leadership from the business sector. This is the opinion of Gil Friend, author of an insightful book The Truth about Green Business.

Friend argues that the rise of green initiatives by businesses illustrates the fact that the private sector has acknowledged its "... profound impact on the ability of nature to sustainably provide services [of which] our economy fundamentally depends on."

Friend’s thesis is that the need for more sustainable business practices is being driven by a host of compelling factors:  climate change, population increase, rapidly developing economies, resource depletion, environmental degradation, loss of biodiversity, dependency on fossil fuels, and many others.

As well, the rise in information transparency has given consumers, investors, and regulators, elevated expectations about what to expect from businesses. 

While many green measures undertaken by businesses are targeted to satisfy these increased expectations, they also are effective ways to cut costs and to add more value to products and services. 

Companies seeking to gain a competitive advantage in their respected industries have been quick to leverage green initiatives to direct their businesses towards more sustainable and successful practices.

The overall message in Friend’s analysis is that while the good intentions and spending programs of governments to deal with environmental issues are welcomed, the true drivers of the economy will be the creative muscle of the business sector.  Through continued innovation and adaptation, businesses will be able to lower their environmental impacts and to find ways of dealing with climate change impacts.

Businesses can work towards sustainability through a number of tactics. Documentation of unit of benefit per unit of input resource used, net carbon emissions, toxicity levels of wastes, and current and long term profits, for example, can provide useful tools for companies to measure their successes.

Steps to lower energy use, reduce greenhouse gas emissions, or eliminate wastage, are practices leading businesses are adopting as part of their commitment to improving our environment and their businesses concurrently.  Additionally, the green initiatives of one company affect the processes of others, creating a domino effect of sustainability.

A recent example of this would be Wal-Mart’s requirement that their suppliers use sustainable packaging for their products to maintain shelf space.  The residual effects of Wal-Mart’s strategy have worked to galvanize their suppliers towards a collective effort of sustainability.

Friend expands considerably on the need for companies to develop solid relationships with their suppliers, and to include environmental criteria in those relationships. He recommends companies devise systems by which their expectations can be clearly communicated to their suppliers.

This trend towards more sustainable business practices, the creation and deployment of environmentally friendly technologies, and ability to adapt to changing conditions, illustrates the fact that a versatile and robust business sector can work to combat climate change with far better results than governmental oversight or stringent regulation.

A sample chapter from Friend’s book is available here.