Cleaning up their act: How businesses are going green

Over the past 20 years, businesses have made huge strides towards becoming more environmentally friendly, by introducing policies that have radically reduced pollution and waste. In the early days, the decision to reduce carbon emissions, introduce recycling policies made sense for the planet, but now many analysts say that it makes business sense as well.

Making the change

In December 2015, almost 200 governments will meet in Paris to discuss how best to combat climate change, with the intention of putting measures in place from 2020 to try to reverse global increase in floods, droughts, heat waves and rising oceans that the planet has seen since 1950. But many businesses believe that they cannot wait for governments to act, and are setting about introducing their own policies right away.

At the recent Reuters’ Global Climate Change Summit, some of the world’s biggest businesses agreed that customer demand for less polluting products, curbs on carbon emissions and the gradual move towards cleaner energy are actually helping to create new business opportunities.

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"We don’t have time to wait for the government to implement any kind of solution," said Josh Henretig, Director of Environmental Sustainability at Microsoft. "If we can be an example to organisations and public institutions around how a carbon price could create a more sustainable growth model for our company, then that’s ideal for us," he said.

Greener business

Environmentally-friendly attitudes are not new in business. In fact, some big businesses embraced low emissions and pollution reduction policies decades ago.

Today “leading-edge” companies including Toyota, Sainsbury's, WalMart, DuPont, Tesco, Unilever, Marks & Spencer and General Electric have “made tackling environmental wastes a key economic driver,” The Guardian says.

In 2000, DuPont, an early leader in sustainability, committed itself to a 65 per cent reduction in greenhouse gas emissions before 2010. By 2007, the company was saving itself $2.2bn a year in energy efficiency.

In the UK, Sainsbury’s has achieved a 50 per cent reduction in water usage, and Tesco announced that it intends to halve its store emissions by 2020.

The environmental message has imprint itself so profoundly upon the consciousness of big businesses that by 2010 a report by the [2]UN found that 93 per cent of the world's top chief executives believed sustainability was important not only for the environment, but also to their company's future success.

Dollars and sense

In spite of the changes, many companies are still dragging their feet when it comes to adopting greener attitudes. Some fear that becoming greener will cost money or require significant capital investments. However, “being environmentally friendly does not have to cost money. In fact going beyond compliance saves cost at the same time that it generates cash, provided that management adopts the new lean and green paradigm,” The Guardian says.

According to the British non-profit CDP, stocks of companies that take climate change seriously outperformed the wider market by almost 10 per cent over the last five years. Some of the companies recognised by the CDP for their work towards setting and meeting ambitious carbon goals include Apple, Bank of America, Merrill Lynch, BMW, CVS Health, Google, Northrop Grumman, Samsung, and Unilever.

However, a joint study by the WWF and CDP suggested that “far more needs to be done” by businesses to help avert the risks associated with climate change as global temperatures continue to rise. Still, the incentives for business have never been higher, they say, as the private sector could stand to realise cost-savings up to $190 billion in 2020 by investing in greener practices.

Business leaders

As businesses attending the Reuters summit suggested, companies do not just have to follow, but can lead on environmental policy.

Ole Hanson, who works with the UN's Global Compact Network, says that if businesses lead by example, their actions can later be codified into law. Hanson points to the example of companies that began voluntarily disclosing non-financial information such as water use and carbon emissions – an approach that was eventually tabled as EU policy. Without the initial voluntary action, Hanson says, the idea “would have met with more resistance, and it never would have been passed”.

Aron Cramer, the president and CEO of Business for Social Responsibility, told the Guardian that governments and businesses must work together to tackle climate change: “We need government to do what it does uniquely and best – set rules, and enforce them," Cramer said. "And we need business to capture the opportunity to deliver value in ways that improve people’s lives. To suggest that it’s one or the other, and reject one or the other, is like fighting a battle with one hand behind your back.”

For more advice on transforming your business, visit HP BusinessNow