From the forthcoming 2008 edition of Brands & Branding: Green Companies are not Rookies
The “environment” that green companies are looking to add value to – or at the very least avoid destroying value – is simply the air, water and soil that we and all life on the planet depend on for our survival. Destroying your means for survival is certainly childish, while the restraint, efficiency and a long view required to maintain your environment are marks of maturity.
The best run companies are also the most environmentally responsible. In nature, organisms survive when they are able to adapt to their environment. It is dubious whether a company could afford to reinvent itself continuously in order to adapt to new realities if it was barely struggling to survive. Today’s companies help ensure their own survival through ensuring that of the planet which their business depends on.
An emerging reality for humankind in the 21st century is an epoch of scarcity. One of our major economic inputs, oil, is running into shortages – oil fields are closing faster than they are discovered, deposits are more expensive to retrieve and processing capacity is strained and lagging demand growth. The same is true for freshwater, forests, fish and even many minerals. The shortage in the earth’s ability to absorb all the carbon dioxide we produce is resulting in dangerous systemic change in the form of global warming.
Companies cannot afford to disregard these shortages. As inputs to business, their continued scarcity means rising input costs at best and at worst the disappearance (extinction?) of the resource altogether. This is why oil companies invest in renewable energy and cold-drink companies in securing freshwater.
Digging deeper into issues of the environment shows a fundamental issue of equity at stake: most of the damage done to the environment is by the rich for the rich (for example cars or airconditioning), but affects the poor the worst (for example people living under smokestacks or subsistence livelihoods exposed to climate change).
In South Africa, social issues have featured strongly in the first 13 years of the new democracy, but a “green line” runs through the country’s identity: the central “Y” of the national flag is green, as is the center bar of the ANC flag. In both cases the colour refers to land or natural capital. In economics “land” is the word used for the economic input known today as “natural capital”.
SA is a leader in greenhouse gas emissions. It emits more than the rest of the continent combined. It has the world’s seventh most carbon-intensive economy.
It is also a leader in international climate negotiations and innovation for a post-carbon economy, for example in solar power, batteries and electric vehicles.
South African companies rate among the most responsibly competitive amongst developing nations, according to a 2007 AccountAbility survey. Both companies and developing nations will have to play a leading role in addressing global environmental sustainability concerns.
For companies to play a constructive role in transforming a resource-intensive economy into a “resource-extensive” one requires that they move environmental issues out of the Social Responsibility agenda and onto the business strategy, investment and product development agenda. “Green” must be part of the company’s DNA, not a charity or a theme in a report.
WWF research for South Africa shows that South African companies have resource-saving initiatives in place because they see an economic benefit from it. They subscribe to principles of environmental sustainability in their vision and values, but not in their strategy and performance measurement. Recent reports show this to be the case in companies globally.
The green market opportunity is substantial: the global Environmental Goods and Services (EGS) sector was worth $600bn in a 2004 estimate and is showing extremely high growth. Wind power, for example, is growing at more than 30% a year. Estimates for solar power in South Africa see the industry growing ten-fold in three to five years. However, South Africa’s EGS sector is young and almost entirely composed of waste management services.
Green buildings may cost the same or at most 10% more, but end up saving money throughout their lifetime and have additional value as a result. Yet green building design is only slowly taking off in South Africa.
Solar waterheaters are one of the cheapest ways to use renewable energy to replace fossil-fueled electricity. It pays for itself within a decade and is seeing massive subsidies being put in place by Eskom to support its uptake. Eskom aims to install 150 000 units of this technology per year, yet at the moment the industry sells only 10 000 units a year.
Unlocking the economic potential of green goods and services will involve not only small start-up companies, but the cooperation and investment of government, consumers and other companies. Both the public and private sector have a material stake in seeing the success of these products.
Consumers (according to the UNISA Center for Corporate Citizenship) and procurers (according to the WWF report) all say they would prefer buying a green product and half are willing to pay a premium for it. But according to industry surveys, consumers are still relatively uneducated on environmental goods and issues.
The challenge for the modern company is nothing short of “saving the world”. It can do so through its footprint – efficient operations and production through, for example green buildings; through the footprint of its product – selling green goods; and through its “brain-print” – the values it markets.
The message that green companies need to send to their markets is that a way of living in a One Planet Economy where we use no more of our only planet than it can provide without deteriorating, is possible, practical, preferred and profitable. They then need to sell into these markets the products and services needed to make such an economy possible.
Green companies in South Africa face an especially exciting time and their success will be important to the country as well as to the world: if it works in South Africa, it can work anywhere.