BSL Conference - Green To Gold
14 December 2006 at 9:43 am
At the recent Business for Social Responsibility (BSR) Conference in New York, Daniel Esty and Andrew Winston, authors of a new book called Green to Gold, got under the surface of the green business movement, drawing on a four-year study of the world’s most innovative companies.
Their conclusions are that there is a Green Wave sweeping business and companies are trying to turn green — developing environmental programs to boost both company image and profits.
General Electric is pitching itself as the solution to the world’s environmental ills and running ads with dancing elephants or supermodels in a coal mine. Wal-Mart is "asking" its suppliers to produce more green and organic products.
The authors told the conference that the business playing field is shifting fast and the rules of the game are changing. With high energy prices and mounting concerns about global warming, businesses are facing tough questions about how they treat the environment.
But they say leading companies are discovering that thinking green is not just a defensive move–it can generate great value for the brand and do wonders for the bottom line as well.
In their book GREEN TO GOLD: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage (Yale University Press, October 9, 2006) authors Esty and Winston look at the pressures affecting corporations of all sizes and in all industries offering real-life examples of how to navigate the new terrain and use environmental strategy to spur innovation and increase revenues.
The authors say the “Green Wave” is propelled by two fundamental forces: environmental stresses and a world of people who are insisting that the business community take action in response.
WaveRiders, as Esty and Winston have dubbed those businesses that are embracing the Green Wave, view this moment not as an obstacle to growth, but instead as an opportunity.
They say these companies are harnessing the wave and using it to gain a competitive edge. An edge they claim has its own golden rewards for having a workable, practical environmental strategy which includes:
– Innovative, breakthrough products that drive customer loyalty and higher revenues
– New-found eco-efficiency that slashes operational costs
– Anticipation and management of serious business risks
– Higher “intangible” value—soft benefits from a more innovative culture to increased brand credibility and trust.
GREEN TO GOLD uses real-life examples of companies that have deployed green strategies to their advantage including BP, IKEA, Toyota, Ford, McDonald’s and GE.
The authors say that some companies have been more successful than others in changing the long-held corporate mindset and redirecting their organizations.
One of the most compelling examples in the book is the story of Chiquita Bananas. For many years Chiquita held perhaps the worst reputation in the business world for its callous resource management and poor corporate responsibility record. At its nadir in the 50’s, the company funded a CIA-led coup of the democratically elected government of Guatemala because it had a few differences of opinion over the new leader’s agricultural policies.
The term “banana republic” was born and Chiquita’s corporate image went into a swift, downward free-fall for the next few decades.
Remarkably, a transformation began in the early 90s. Food distributors around the world began to more closely examine their suppliers and break ties with those who specifically had poor corporate responsibility and bad environmental records.
The threat to profit at Chiquita and other companies like it gained traction and momentum, and the spectre of significant economic loss forced Chiquita to reconsider its policies. Economics drove the initial push, so no one could have predicted how committed the company would become to the mission of reinventing its operations and image.
Chiquita took the first steps toward transformation by forming a “deep, lasting, and unlikely” partnership with the Rainforest Alliance, a powerful non-government organization (NGO), and a vocal critic of Chiquita’s practices. Although it seemed doomed at the outset, both sides sat down together, turned their swords into ploughshares, and eventually began to work in harmony. The results have been remarkable, to say the least.
Chiquita dove in, making a full-fledged corporate commitment. The company spent $US20 million over the first decade to roll out changes across Central America (The Better Banana Program), but found that it saved $100 million in operating costs at the same time. The re-engineered farms are more efficient and more profitable, with productivity up 27 percent and the cost per box of bananas down 12 percent.
Green to Gold is published by Yale University Press.