Monday, May 26, 2008

Green Drivers

Despite what ideologically motivated Green purists would have us believe, free markets are crucial to the growth of Green. Significant Green market opportunities are drawing investors and forging entirely new industries. Eco-capitalists are responding to market demand by providing consumers and industry with a range of Green products and services.

Traditional environmentalists understand the interdependence of the natural world's ecosystems, but far too often fail to understand the interdependence of the worlds national economies. Trade is intimately connected with social welfare. In Asia and around the world, billions have escaped poverty due largely to international trade. In the wake of the failure of socialism, there is no viable alternative to capitalism. It is time to normalize sustainable business practices by reclaiming Green from those on the margins of society.

We need to get on with the business of Green and this implies carefully examining the larger picture to understand the implications of our actions. Sustainable living involves a wholistic approach, and includes economic considerations. As we are seeing in the agricultural commodities markets, ignoring broader considerations can contribute to other serious crises.

The growth of Green as a mainstream movement is being driven by consumer demand. The burgeoning cost of fossil fuels enhances the value of conservation efforts and drives innovation. And reduced costs are a major incentive to increase energy efficiency. Market forces are driving corporations to adopt Green business practices.

The rapid increase in corporate social responsibility is a function of customer pressure and this is being translated all the way down the supply chain. According to a PwC survey cited in Backbone Magazine, "currently 18 per cent of technology executives claim their companies practice environmentally preferred purchasing, with 53 per cent stating they will implement this practice in the next two years...the drastic increase in energy costs and the impending threat of government legislation and taxes which will ultimately make unsustainable practices increasingly expensive.

Industries that develop their own standards for sustainability reporting will be in a good position, to face government legislation. This is already beginning to influence business practices in Europe and parts of the US." Clearly customer pressures are impacting corporate culture and demand for Green is already driving investment and innovation.

The popular conception of the importance of Green is being driven by scientific evidence. People also have tangible evidence of eco-degradation. This includes loss of flora and fauna, climate change, water shortages, air pollution, and extreme weather. Growing eco-awareness is driving buying behaviors. The general public has much greater access to information. In today's fragmented television market, viewers have highly specialized information access. Increased nature awareness is also fueling conservation efforts. These realizations are changing our values.

We now understand the world to be profoundly interconnected. The so called 'small world phenomenon' or notions of 'one world' are expressions of these new values. For many eco awareness is seamlessly connected to compassion, cultural sensitivity and the lofty values of altruism and social responsibility. Environmental concerns are part of popular culture. Green is growing because sustainable products and services are increasingly mainstream and cost effective.

There are some interesting studies which demonstrate the importance of psycho-social factors in the growth of Green. In California posting consumption increased conservation. Another study demonstrated the bandwagon effect. In this study "61% [said they] feel it’s important to take steps to reduce environmental impact." Fear can also motivate people to buy Green. Love for the earth and its inhabitants is yet another powerful psycho-social driver, as is Green guilt.

Federal environmental policies and concomitant legislation are crucial if we are to have enforceable industry standards. Legislation and taxation are powerful industry drivers. In 2008 going Green is a matter of enlightened self-interest. An article in Backbone magazine reported that: "Politicians and big companies have been pushed, if not shoved, into listening to the environmental concerns of their citizens and consumers over the last few years. Now many of those same people are looking at whether their employers’ policies are green enough, and if they are demanding enough of their companies are being proactive by investing in sustainable R&D and reevaluating their manufacturing and packaging processes in order to stay ahead of the curve and ensure a reduction in environmental impact."

These competitive pressures are being addressed voluntarily. Other corporate leaderships which are less receptive are being pressured by shareholders, institutional investors and current and potential employees. There are good reasons why Green is now coming of age. Not the least of which has to do with the buying behaviors of Genration Y. This is the first generation that has grown up steeped in an awareness of Green.

The same article continues: "Companies now realize that many investors and Gen Y employees are looking for organizations that demonstrate ethical and sustainable business practices and offer feel-good employment and investment opportunities...For organizations looking at the big picture, these two influencing forces seem to be enough to drive legitimate change."

The "lifestyles of health and sustainability" sector of the U.S. economy has ballooned into a $240 billion gold mine. And total sales are growing sharply. With unprecedented interest in healthy, organic, fair trade foods, socially conscious consumers are acting on their concerns and fueling the Green foods industry.

Concerns about world hunger demand that we find efficient and sustainable means of feeding the world. The growing demand for food necessitates efforts to find healthy and sustainable methods of production. Aqua-culture is an example of the learning curve involved in the production of sustainable and healthy foods. Although fraught with difficulties, the blue revolution has grown into a large industry. However, the farming of seafood is improving. Better methods are being introduced along with greater emphasis on species better adapted to sustainable farming (i.e.; shellfish, carp, tilapia and catfish).

Greater government regulation is required, but consumers will ultimately determine which species and what methods will survive. Educating consumers will enable them to make choices which are truly sustainable.

Close collaboration and an atmosphere of inclusiveness will drive the next waves of environmental innovation. According to Anthony Giddens,“Environmental technologies are likely to be for the next 20 years what information technology has been for the last 20 - a driving force of wider economic and social change.” While there are numerous forces behind Green, market forces are driving Green infinitely faster than decades of marginalized environmental activism.

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