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Wind back 50 years ago, and you would be hard pressed to hear anyone talking about environmental responsibility in business. While there may have been some initial stirrings in some sectors, the truth is that the vast majority of “green” advocates came from environmental groups that were often seen as being on the fringes of mainstream society.
Fast forward, and how the world has changed. Large businesses are being asked to buy and sell carbon credits, global warming is constantly being discussed in the media, and concerns about loss of biodiversity are paramount. Even small businesses are being held to account, and are modifying their operating practices as a result.The issue of environmental responsibility has reached just about every walk of life. For instance, there has been an increasing focus on reducing the environmental impact of manufacturing in the machine tool industry. In another example, Monaco has been leading an initiative to ensure that tropical hardwoodsused for building luxury yachts come from sustainable sources – if you want to find out about this, take a look at the profile of Francesco Corallo on Quora.
However, ultimately there are good business reasons why environmental responsibility has become a significant concern for businesses. Without these reasons, it is doubtful that businesses would have moved as far as they have over the last few decades. While it is possible to legislate change where there is enough will – think about California’s leading position on emission controls since the oil crisis of the 1970s – it is much easier to drive change when businesses benefit from it.
One of the key ways that businesses do benefit is by reducing costs. There are major savings to be had, given that oil is hovering around $100 a barrel, and all of these go through to the bottom line. These savings may be significant enough to completely transform an industry – such as the way machine-tool manufacturers in Europe have seen legislation which has made them more competitive globally. It forces them to develop products that can save manufacturers literally billions of dollars around the world, and at the same time protects their home market from competitors from low-cost economies which do not have such standards. On the other hand, environmental responsibility can be as simple as a small business making sure that its offices are energy-efficient – the magnitude is different, but the principle is the same.
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At the same time, there is increasing pressure on businesses from their customers to have an environmental sustainability policy. This is particularly the case in companies that sell to other companies – in this case, customers want to be able to tell their customers that their entire supply chain is green. Similarly, companies that sell consumer products want to be able to tell the public the same thing – they use their environmental policies to differentiate the products that they sell. In this sense, environmental responsibility falls into the same category of activities as social responsibility and making charitable donations.