Getting the Green Light
When CEOs of major corporations are talking about how it pays to be green, you know that the term is no longer being relegated to the tree-hugging fringe. Yet, despite the fact that “going green” is becoming a key business strategy for some organizations, few experts so far are talking about how this trend applies to the workforce, affecting everything from recruitment and engagement to innovation and leadership development.
The green trend shows up in the rhetoric of some major business leaders. “Green is green,” says GE CEO Jeffrey Immelt, alluding to the potential financial benefits of producing environmentally responsible products. George David (2005), CEO of United Technologies, says, “We make money out of sustainability – we make money out of lower resource consumption.”
The greening of business also shows up in some recent market data. In the U.S., the market for organic foods is projected to grow by an annual rate of 20% in coming years, and the market for green buildings is expected to jump from $7.4 billion in 2005 to $38 billion by the end of the decade (Beck, 2006). Trend lines are also rising for certain kinds of green investments. In 2005, venture capital funds poured $917 million into clean-energy technologies, up by 22% from the previous year, according to the National Venture Capital Association (Henderson, 2006).
Green issues are likely to become much more significant over time. A recent global survey conducted by HRI and commissioned by the American Management Association asked over 1,000 managers and executives to rate the importance of external factors in terms of their impact on business ethics. The survey found that, although respondents ranked “environmental issues” as only ninth out of 10 issues in 2005, they predicted it would be the second most important issue by the year 2015, behind changing laws and regulations. That is, environmental issues are expected to rise in importance faster than any other issue in the survey.
In early 2006, Fast Company reported, “The past few months have seen blue-chip companies tripping over themselves to go green” (Giller & Roberts, 2006). Among the organizations recently taking up green initiatives are General Electric, Wal-Mart, BP, Whole Foods, and Starbucks.
The inevitable question, of course, is whether such initiatives give companies a true bottom-line advantage. One bit of evidence comes from a report presented at the World Economic Forum on the subject of sustainability. The sustainability concept typically means that organizations take into consideration the social and environmental as well as the financial outcomes of doing business. The 2006 Global 100 Most Sustainable Corporations in the World listing was released by Corporate Knights and Innovest Strategic Value Advisers, an environmental investment research advisory firm. Their research indicates that the 100 most sustainable firms outperformed the Morgan Stanley Capital International Index by 7.1% over a five-year period (The Global 100, 2006).
“In each sector, there increasingly are social and environmental dynamics that are becoming material to company performance,” said Innovest analyst Charles Morand. “These companies in the medium and long term will outperform their peers because those factors will become increasingly germane to performance” (Holloway, 2006)
Assuming it’s true that being green and otherwise sustainable results in a competitive advantage, what does this mean for HR professionals and other experts on workforce management? The most obvious implication is in the area of becoming an employer of choice. It’s likely that having a reputation as a successful green company will make it easier for companies to attract and retain talent. After all, various surveys indicate that a prospective employer’s ethical track record affects respondents’ desire to work for the company (“Surveys,” 2003; “Tarnished,” 2004), and a green ethic is often viewed as one sign of social responsibility.
But legitimately “going green” or – more broadly – emphasizing sustainability means more than just burnishing the corporate brand for the new millennium. It means shaping corporate culture and values systems. Andrew Savitz, author of The Triple Bottom Line, notes that a single corporate department can’t be charged with focusing on sustainability. It’s a cross-functional concept. To create a sustainable organization, people company-wide must come together. “You need a purchasing person, an HR person, someone from R&D, an environmentalist and someone from investor relations,” Savitz states (Mohan, 2006).
Becoming a greener company also means recruiting, training and rewarding people who can innovate and engineer in new ways. George David (2005), chief executive of United Technologies, emphasizes how his corporation – which includes Pratt & Whitney jet engines, Otis elevators and Carrier air-conditioning divisions – has created products that are much more energy-efficient than they were some years ago. “Careful, thoughtful work that optimizes processes and preserves resources can make a huge gain in environmental impact...,” he states.
It’s clear that leadership also plays a major role in the successful greening of an organization. After all, going green doesn’t always result in greener finances. “Indeed, our four-year study of corporate environmental strategies reveals that many such efforts fall flat,” write Daniel Esty and Andrew Winston, authors of Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build a Competitive Advantage. They suggest that there are many ways to boost profits through green strategies, but these strategies must be well conceived and well executed. Leaders should have training and experience to ensure that green truly results in more green.
For a Fast Company article on green businesses, click here.
For more information on the world’s most sustainable companies, click here.
For an interview with Andrew Savitz, click here.
For more on The Triple Bottom Line, click here.
For more on Green to Gold, click here.
For a BusinessWeek article called “Do You Need to Be Green?” click here.
Documents used in the preparation of this TrendWatcher include the following:
Beck, Ernest. “ Do You Need to Be Green?” BusinessWeek Online, Summer 2006.
David, George. “Why CEOs Shouldn’t Fear a Green Agenda.” Chief Executive. ProQuest. December 2005.
Esty, Daniel and Andrew Winston. “It’s Easy Being Green.” Forbes. EBSCO, October 2, 2006.
Giller, Chip and David Roberts “Resources: Green Gets Going.” Fast Company, March 2006, p. 72.
The Global 100. “World’s 100 Most Sustainable Companies Announced at Davos: Benchmarking Study Showcases Sustainability Premium.” Press release. January 27, 2006.
Henderson, Tom. “Green Tech Begins to Draw Venture Capital.” Crain’s Detroit Business. ProQuest. May 15, 2006, p. 14.
Holloway, Andy. “Sustain to Gain.” Canadian Business. EBSCO. January 30, 2006.
Mohan, Sheena. “Andrew Savitz on the Sustainable Business.” CIO Insight, July 10, 2006.
“Surveys: ‘Gaping’ Divide over Ethics in Business.” Silicon Valley/San Jose Business Journal, November 17, 2003.
“Tarnished Employment Brands Affect Recruiting.” HR Magazine, November 2004, pp. 16-17.
“The Trust House.” PRweek, April 3, 2006.
The green trend shows up in the rhetoric of some major business leaders. “Green is green,” says GE CEO Jeffrey Immelt, alluding to the potential financial benefits of producing environmentally responsible products. George David (2005), CEO of United Technologies, says, “We make money out of sustainability – we make money out of lower resource consumption.”
The greening of business also shows up in some recent market data. In the U.S., the market for organic foods is projected to grow by an annual rate of 20% in coming years, and the market for green buildings is expected to jump from $7.4 billion in 2005 to $38 billion by the end of the decade (Beck, 2006). Trend lines are also rising for certain kinds of green investments. In 2005, venture capital funds poured $917 million into clean-energy technologies, up by 22% from the previous year, according to the National Venture Capital Association (Henderson, 2006).
Green issues are likely to become much more significant over time. A recent global survey conducted by HRI and commissioned by the American Management Association asked over 1,000 managers and executives to rate the importance of external factors in terms of their impact on business ethics. The survey found that, although respondents ranked “environmental issues” as only ninth out of 10 issues in 2005, they predicted it would be the second most important issue by the year 2015, behind changing laws and regulations. That is, environmental issues are expected to rise in importance faster than any other issue in the survey.
In early 2006, Fast Company reported, “The past few months have seen blue-chip companies tripping over themselves to go green” (Giller & Roberts, 2006). Among the organizations recently taking up green initiatives are General Electric, Wal-Mart, BP, Whole Foods, and Starbucks.
The inevitable question, of course, is whether such initiatives give companies a true bottom-line advantage. One bit of evidence comes from a report presented at the World Economic Forum on the subject of sustainability. The sustainability concept typically means that organizations take into consideration the social and environmental as well as the financial outcomes of doing business. The 2006 Global 100 Most Sustainable Corporations in the World listing was released by Corporate Knights and Innovest Strategic Value Advisers, an environmental investment research advisory firm. Their research indicates that the 100 most sustainable firms outperformed the Morgan Stanley Capital International Index by 7.1% over a five-year period (The Global 100, 2006).
“In each sector, there increasingly are social and environmental dynamics that are becoming material to company performance,” said Innovest analyst Charles Morand. “These companies in the medium and long term will outperform their peers because those factors will become increasingly germane to performance” (Holloway, 2006)
Assuming it’s true that being green and otherwise sustainable results in a competitive advantage, what does this mean for HR professionals and other experts on workforce management? The most obvious implication is in the area of becoming an employer of choice. It’s likely that having a reputation as a successful green company will make it easier for companies to attract and retain talent. After all, various surveys indicate that a prospective employer’s ethical track record affects respondents’ desire to work for the company (“Surveys,” 2003; “Tarnished,” 2004), and a green ethic is often viewed as one sign of social responsibility.
But legitimately “going green” or – more broadly – emphasizing sustainability means more than just burnishing the corporate brand for the new millennium. It means shaping corporate culture and values systems. Andrew Savitz, author of The Triple Bottom Line, notes that a single corporate department can’t be charged with focusing on sustainability. It’s a cross-functional concept. To create a sustainable organization, people company-wide must come together. “You need a purchasing person, an HR person, someone from R&D, an environmentalist and someone from investor relations,” Savitz states (Mohan, 2006).
Becoming a greener company also means recruiting, training and rewarding people who can innovate and engineer in new ways. George David (2005), chief executive of United Technologies, emphasizes how his corporation – which includes Pratt & Whitney jet engines, Otis elevators and Carrier air-conditioning divisions – has created products that are much more energy-efficient than they were some years ago. “Careful, thoughtful work that optimizes processes and preserves resources can make a huge gain in environmental impact...,” he states.
It’s clear that leadership also plays a major role in the successful greening of an organization. After all, going green doesn’t always result in greener finances. “Indeed, our four-year study of corporate environmental strategies reveals that many such efforts fall flat,” write Daniel Esty and Andrew Winston, authors of Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build a Competitive Advantage. They suggest that there are many ways to boost profits through green strategies, but these strategies must be well conceived and well executed. Leaders should have training and experience to ensure that green truly results in more green.
For a Fast Company article on green businesses, click here.
For more information on the world’s most sustainable companies, click here.
For an interview with Andrew Savitz, click here.
For more on The Triple Bottom Line, click here.
For more on Green to Gold, click here.
For a BusinessWeek article called “Do You Need to Be Green?” click here.
Documents used in the preparation of this TrendWatcher include the following:
Beck, Ernest. “ Do You Need to Be Green?” BusinessWeek Online, Summer 2006.
David, George. “Why CEOs Shouldn’t Fear a Green Agenda.” Chief Executive. ProQuest. December 2005.
Esty, Daniel and Andrew Winston. “It’s Easy Being Green.” Forbes. EBSCO, October 2, 2006.
Giller, Chip and David Roberts “Resources: Green Gets Going.” Fast Company, March 2006, p. 72.
The Global 100. “World’s 100 Most Sustainable Companies Announced at Davos: Benchmarking Study Showcases Sustainability Premium.” Press release. January 27, 2006.
Henderson, Tom. “Green Tech Begins to Draw Venture Capital.” Crain’s Detroit Business. ProQuest. May 15, 2006, p. 14.
Holloway, Andy. “Sustain to Gain.” Canadian Business. EBSCO. January 30, 2006.
Mohan, Sheena. “Andrew Savitz on the Sustainable Business.” CIO Insight, July 10, 2006.
“Surveys: ‘Gaping’ Divide over Ethics in Business.” Silicon Valley/San Jose Business Journal, November 17, 2003.
“Tarnished Employment Brands Affect Recruiting.” HR Magazine, November 2004, pp. 16-17.
“The Trust House.” PRweek, April 3, 2006.