E-Magazine
Andy Phippen
Man made global warming is a fact. Or maybe not. Depending on who is available to comment, it is either definitely happening or a conspiracy by the “green mafia” to point the finger at business when in reality it’s just natural climate fluctuation.
I certainly don’t have the answer, but the fact that this debate is top of many people’s agendas these days is very interesting in itself. I am old enough to remember a time when environmentalism was reserved for people who wore camouflaged clothing and spent their time living in tunnels dug to prevent the Government building more motorways and recycling was a quaint dinner party discussion topic. These days the “green agenda” is so high profile that to admit not recycling is probably as serious a faux pas as one might make at such a party!
At the start of the year, world leaders met in Copenhagen to come to agreement on what “we” would do about climate change. It was agreed that the World would ensure that the rise in global temperatures would increase by no more the 2 degrees Celsius. This would be achieved through controlling emissions and supporting developing countries through offsetting projects, the use of market forces to encourage the development of renewable energy project and the trading of carbon in emissions trading schemes.
When we are looking at environmental policy at this level, it can seem a massive distance between what is being discussed, and what it means to someone running a small business. Are such global decisions going to have an impact upon business practice in the next few years? Or is business adapting its practices regardless?
Certainly, there are some regulatory developments that will affect many small businesses across the country. Carbon accounting is becoming mandatory for businesses, the level of which depends upon energy consumption by the organisation. Annual consumption of more than 6 million kWh requires an organisation to produce detailed reporting of their energy consumption, have assigned “carbon management” employees and have to purchase annual carbon allowances which can result in penalties and further charges if they are exceeded. Less consumption has reduced statutory responsibilities but there are still requirements on those companies to report on energy usage. If the Government is placing emissions targets on specific sectors, then businesses within those sectors will have to respond to overall caps. The fact that there have finally been successful prosecutions under Waste Electronic and Electrical disposal also focuses the mind of businesses in terms of how the dispose of their old PCs and similar.
Post-recession, it is also interesting to see where big business in general is headed. It seems that every large organisation is really keen to tell it’s customer what a nice company it is. Marks and Spencer have “Plan A” (“because there is no plan B”), Walmart has made bold statements about being carbon neutral and using 100% renewable energy and one can not watch TV without seeing adverts like those recently from Kenco where they were proudly telling us how much they reduced their packaging for their instant coffee. I was somewhat amused when I recently popped to the gents at a MacDonalds “restaurant” near where I live in Cornwall and was met with a large sign telling me how much water they were saving by having waterless urinals!
So it is clear in this new era of responsible enterprise that big business wants us to know how ethical they are and how they deserve our custom as a result. If large organisations are making such bold, public, statements about their sustainability practices, they will be placing pressure on their suppliers to “help” them achieve their targets. Nike famously suffered serious negative impact on their brand image as a result of poor practices in the supply chain. More recently, tech companies such as Apple have also received criticism for sourcing that is not in line with their public ethical messaging.
Does this sort of thing have an impact on the customer? It would seem it does. Recent research by the University of Ontario showed three very interesting top line statistics. Firstly, customers are willing to pay, on average, 10% premium for “ethical” products. There is also no “typical” ethical consumer, they span across social strata. Finally, and perhaps most interestingly, the research presented evidence that customers do respond to ethical advertising. One particular study suggested that being able to demonstrate green or ethical practice has up to six times more impact than uncorroborated marketing messages.
This issue of efficacy is an interesting one – the capability of an organisation to walk it as well as talk it. It would seem customers can smell a rat about a company pretending to be green. Do you have to “believe” in green to be green? Does a business have to believe they are saving the planet to adopt effective green practices? I certainly work with environmental researchers who believe that unless you whole heartedly buy into the issues of man made climate change you can’t possibly engage with sustainability. Indeed, I sat in a meeting where one particular individual saying he wanted no part in working with a local authority until they agreed to charge £5 per hour for parking to “force people onto buses”!
However, I am also involved with a special interest collective from a local Chamber of Commerce who have set themselves up as an “ecoBusiness Group”. This group comprises small businesses that have green credentials. One is a printing company whose MD seems to spend most of his time talking to clients about using less paper and reducing their ink consumption. There is another organisation that provides technology recycling services, collecting old PCs, printers, etc. from other companies to save them the time and expense of disposing of such themselves. The company generates further revenue through either the resale of hardware or recycled materials. There are others who provide service of energy reduction, legal advice, and similar. Some other companies might not provide green services, but show their green credentials through their own practices, whether they are using renewable energy, have innovative recycling policies, and so forth.
Yet not one member of the group is what you might consider to be an “eco-activist”. In our meetings we have rarely have a discussion about climate change, and whether or not it is man made. But to a great or less degree, there is not one organisation within this collective that is not making a positive contribution to the aims of global agenda such as that discussed at the Copenhagen summit. They are reducing their carbon emissions, paper and water consumption, ensuring dangerous chemicals do not leak into the environment, and so forth. And they are using these practices to promote their business, engage with customers and entice new ones, all while saving money from reduced power, paper and water bills and similar.
Is this a bad thing? Perhaps the gentleman wishing to force the public onto buses feels that it is but surely doing a good thing for the environment, whatever the motivation, is still a good thing. The days of environmentalism being the domain of the elite are gone, and rightly so. To quote a colleague of mine, “in business, the green train has left the station”. In the same way that recycling is now an expectation in the home, there is an expectation that businesses should be adopting green practices, from their clients, their customers, and society in general. Yet the benefits for the business can be fantastic too, whether or not the MD believes they might be contributing to the warming of the planet!
Dr Andy Phippen, Director of Responsible Enterprise, School of Management, University of Plymouth