Green is a Strategy

August 11, 2011

Companies like Unilever, General Electric Company (GE), Dell and Nike view going green as an essential strategy in a global commercial landscape increasingly contoured by environmental policies, regulations and attitudes. GE CEO Jeffrey Immelt reported that going green has been 10 times better than he ever imagined, generating US$17 billion in annual revenue through his initiative called Ecomagination.

Recession resistant
According to strategy+business authors Rich Kauffeld, Abhishek Malhotra and Susan Higgins, companies mentioned above recognize that consumers’ concern for the environment has morphed into buying behaviors that are recession-resistant. A survey found that 87% of 6,000 global consumers believed it was their “duty” to contribute to a better environment and that even in a recession, 55% would pay more for a brand if it supported a cause in which they believed. In turn, retailers and manufacturers are demanding greener products and supply chains.

Public sector support
Government actions are also driving the shift to green initiatives. The Obama administration and the U.S. Congress earmarked US$70 billion for the development of renewable and efficient energy technologies and manufacturing. The European Union has set targets for reducing emissions to 20% of 1990 levels in 2020 while Chinese President Hu Jintao said his country would generate 15% of its energy from renewable resources within a decade.

Beyond compliance
The state to aspire to might be called ‘differentiated green’ to companies adopting green strategies today. This phrase describes companies that have moved beyond complying with regulations, reducing their energy use or marketing ecologically safe products. To adopt a differentiated approach, companies must take the following 5 steps:.

  1. Elevate sustainability to a core business strategy
  2. Embed green principles in innovation efforts
  3. View the entire product life cycle through a green lens
  4. Consider green principles in making major decisions
  5. Integrate sustainability into corporate and brand marketing and messaging

When differentiated green companies promote their sustainability efforts, they must be prepared to have all their practices and products scrutinized by the public and by environmental advocates. If they fail to live up to expectations, companies can be accused of “greenwashing,” which can damage corporate and brand reputation. To avoid such problems, companies should not proclaim a green identity unless they can withstand the scrutiny that will ensue.

Read the full article on strategy+business

Herre Visser

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