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How To “Go Green, Get Green”


Sustainability is one of the hottest trends in business. Across the country companies are launching sustainability initiatives in order to adapt to an increasingly sustainability-focused world. On November 14, leaders from Procter and Gamble, General Electric, and the Kellogg School of Management gathered on Northwestern’s campus for an event by Ayers CCI to discuss the growth of the sustainable business strategy.

But why do companies make the decision to go green? According to Kellogg professor Klaus Weber, the reasons are varied. Chiefly, companies are interested in profit, cutting cost by promoting more efficient practices. Some companies have investors and employees with an interest in sustainability, or consumers might demand it from their products. The most important thing to note, though, is that there are many reasons to make the decision to “go green” and that making the decision can, in fact, be profitable.

What is clear after examining recent trends is that interest in sustainability is only growing. Event coordinator Jason Smullen said that “a symposium focusing on the use of green and sustainable business practices is paramount to our understanding of corporate social responsibility and our effects on the environment,” and noted that increasing awareness not only about sustainability but, more specifically, sustainable and profitable business practices, can help contribute to a cleaner and brighter future.

This attitude has been reflected in the programs launched at Procter and Gamble and General Electric. Jill Boughton enlightened attendees about Procter and Gamble’s “Waste to Worth,” program, which helps the Cincinnati, Ohio-based company accomplish their goal towards increased sustainability by creating a strategy to dispose of solid waste, particularly in developing regions.

Waste to Worth creates an infrastructure based on developed regions and their own research. In developed regions, the cornerstone of a waste company’s model was volume; as volume went up, so did profitability. For their own research, Boughton’s team went into the Philippines to analyze their waste procedure to more fully develop a lasting and profitable business model. A cornerstone of this is separating waste into recyclable, biodegradables, and solids, and then finding market value in what can be converted and then used in other ways.

On the other hand, General Electric has launched their “Ecomagination” program to promote sustainable efforts within their own company as well as be a leader for companies elsewhere. General Electric’s Ecomagination team, of which Director of Open Innovation Mike Clark is a member, focuses on the cornerstone of economics: the distribution of scarce resources such as water, land rental, and fuels, with the knowledge that, Clark said, by 2020 the annual worldwide capital expenditure will approach $1.5 trillion in these areas. By focusing on distributed energy, new gas resources, mining, and fuel at seven centers worldwide, Ecomagination teams with start-ups around the globe to meet customer needs while promoting sustainability.

According to Professor Weber, sustainability is the intersection of environmental, social, and economic goals working together to create more efficient practices. Though a convenient intersection of these three goals may initially seem impossible, in fact there are many areas at which environmental, social, and economic goals coincide.

The Ecomagination project does exactly that: meeting consumer needs while promoting sustainability, all while maintaining a profit. Clark said that the best way to do that, broadly speaking, is to use feedback from consumers to design products that bring value to General Electric; in so doing, the company creates a sustainable business model. General Electric gains a market; the start-up company gains a customer as well as further exposure; and consumers gain a need that has been met. Everyone wins.

Any sustainable market, though, needs to create value in each of the three main areas, capturing economic value while also being wary of consumer demand (for instance, that “green” stigma in certain car markets could affect demand). The market needs to be cost-efficient, either through having greater value than cost, or have government help, and be defensible against competitors. With these ingredients, sustainable markets can flourish.

It is not a secret that the environment is an increasingly important issue, and public awareness is only growing. Time will tell to what extent these measures are successful and adapted across the business world, but some companies are already making the leap.

 

Photo credit: Jenn Murphy

About Jack Hopper

Jack Hopper covers finance and politics for NBR. Originally from Pennsylvania, he's a die-hard Steelers fan... Even if this year it's not going so well for them.

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1 Response

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