Environment as a “New Kind of Capitalism”.

NRM North column for Tasmanian Business Reporter. Feb 2010.

In a recent edition of the Harvard Business Review, a number of authors have begun promoting the need for business to not simply support environmental and social causes in a philanthropic manner, but to build, or rebuild their core business around products which enhance social and environmental outcomes. To use an environmental analogy, it is the difference between offsetting pollution and not polluting in the first place.

This is a substantive shift in thinking for many business owners who, mostly with really good intentions, have been good corporate citizens by supporting an organisation or cause. And this is still a very valid thing to do. Many not for profit organisations or causes are able to meet specific and immediate environmental outcomes or societal needs far more effectively than those businesses could themselves. And I suspect philanthropy and support of causes/organisations will remain an important way for business to engage in those needs.

But the authors in the Harvard Business Review were making the point that business must see environmental and social needs, not just as something to “offset” through sponsorship or philanthropy but as a business opportunity in itself. A “New Kind of Capitalism” they called it. Businesses and individuals grasping the opportunities to develop products and services which meet some of those needs and turns a good profit.

So what might it look like? There are many examples around of businesses which already do this in the environmental space. Developers who build sustainable housing and create developments which include environmental spaces for biodiversity as well as social interaction. Companies who produce and sell renewable energy. Primary producers who focus on sustainability. Small business owners who sell locally grown and made products. Architects who design for minimum energy use.

As we move into a more open and self conscious society, we have a great opportunity to do business which is directed at improving environmental and social outcomes and which turns a decent profit. And the first steps for businesses may well be letting their staff get their hands dirty in this space. (Other than customers, they are often the best innovators). And that is where NGO’s like NRM North can help. We are happy to find ways for individuals and organisations to participate in environmental and sustainability issues and activities. Who knows what profitable business innovation may come from it.

Business going Green

NRM North column for Tasmanian Business Reporter. Jan 2010.

Why should I go green with my business? Does it really pay for business to go green? Is the market willing to pay the costs for green products? Well, yes and no. Plenty of businesses have and are profited from riding the initial wave of consumer demand for “greened up” products. Take any number of products from cars and cosmetics, to paper, pens and everything in between. Tweak the manufacturing process, grab a certification (unless you can get away without it) and market to the segment willing to pay you a premium. And that is sometimes fair enough. Until the demand for environmentally sustainable products and services gets high enough, the “green” element will only ever be a market segment.

But the question is really the wrong question. It should be; why aren’t I building my whole business around environmental sustainability? For any business to survive, it has to be financially sustainable. Most businesses don’t last very long without social sustainability, looking after staff, good governance and good customer/client relationships. In fact these are simply basic business management expectations. So why not environmental sustainability?

After all, virtually every business relies to some degree on our common natural resources. We all use water, fuel and air. Most businesses ultimately rely on primary production of one sort or another from minerals and water to food and fibre, to produce their products and services. And these are not infinite resources. It is in the interests of business to use resources in a way which ensures long term supply and quality. It starts with thinking about environmental sustainability, not simply as a marketable add on, but as the third foundation for good long term business practice. And it can start simply.

As an example, NRM North, the Launceston Chamber of Commerce, the Launceston City Council and other partners identified an opportunity to engage small and medium size businesses (SME’s) in understanding and reducing their environmental footprint. The partners see environmental sustainability of business as a key opportunity for the city from an economic, environmental and social point of view.

The result was a program (EcoSmartBiz) which focused on reducing the impact of business on the environment through reduced emissions, water use and waste. The project phase was well oversubscribed, demonstrating that even small businesses are looking to take action to reduce their environmental footprint. And in the process of making this a part of their business practice, they started saving money. So yes, it really can pay for business to go “green”, to build environmental sustainability as a core part of their business practices. It can pay now and will certainly pay in the future.