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Adopting Green for Profit: Lessons to Save Antarctica
The Antarctic is the one of the remote and pristine places left on Earth with large reserves of natural resources. The Inspire Antarctic Expedition (IEA) brings together corporate leaders, entrepreneurs and environmentalists to gather insights about the continent. This article by Bandanjot Singh, expedition member of IEA 2013, takes a look at the ways in which corporates can learn to devise ways to combine environmental concerns with their business strategies so that places like the Antarctic can remain untouched.
The southernmost continent on planet Earth –Antarctica has been a place of interest for multiple nations. Antarctica is known to have rich reserves of copper, chromium, gold and other valuable resources. Hence, it has been a much desired location for resource exploration since 1950s. In 1970s there was considerable discussion regarding handing out mining rights in the region but the proposal was finally struck down in 1988 over fear of exploitation and territorial claims in Antarctica. As the last unexploited place on planet Earth, any sort of environment exploitation is protected through the Antarctica Treaty which can undergo revision or possible amendment only in 2041.
Given the ever depleting natural splendor, it becomes very important to implement sustainable solutions in the real world so that financially resource exploration /exploitation are not an attractive proposition. For this it becomes important that global economy moves towards exploring natural resources in the most efficient and productive way by refining the way manufacturing processes are handled and by changing the way business is done.
The economics of many countries have primarily been influenced by key revolutions that have moved money across national borders. It started with Agrarianism and was followed by Industrial Revolution up until now. Agrarianism included multiple individuals, organizations and governments involved in the production of a crop, processing of raw crop, storage and finally distribution. Then this movement was followed by the Industrial Revolution which included industrial processes that aimed at simplifying human efforts. Recently, a new revolution has been making rounds called ‘Natural Capitalism’ which aims at earning profit through complying with the environment , mostly through efforts that refine industrial processes ,hence create competition by capturing more energy efficient products and processes.
One way of capturing the wave of Natural Capitalism and profiting out of it is by complying with environmental regulations and also investing in waste reducing and efficiency shaping industrial processes. In early 2000s, companies were reluctant to undertake comprehensive steps in line with many of the regulations; most saw it only with a social responsibility lens rather than a known competitive move in the market. A few progressive ones recognized the potential for enhancing the image in the consumer’s mind but still saw it as a ‘good to have’ rather than a ‘must’ activity. But slowly managers and top decision makers in companies have realized that these resource oriented efficiency measures are not only about gaining immense customer faith but also about moving your competition out of the market and hence increasing your hold on the market. So the focus has shifted from plain environmental spending to please the governments, to adopting green practices for increasing shareholder value.
Green practices have evolved over time and given the increasing resource crunch, financial case is emerging stronger. Some of the known strategies for building /upholding shareholder value while following green practices are provided below:
1) Redefining The Market
Innovation can be in form of more power efficient solutions or products which produce the least waste over the whole product use cycle. One sure shot way of shaping a differentiator in the market is by delivering innovative products as also ensuring that the consumers are aware about your efforts in delivering the same. This can be typically achieved by:
a) Highlighting ways in which the new innovative product or solution complies with the Environmental regulations and other standard certifications.
b) Owning copyrights or filing for Intellectual Property Rights to retain competitive intelligence and edge over the market.
2) Managing Your Competition
Recently due to ongoing concerns over climate change and changing weather patterns, consumers have become more aware about companies which comply with environmental regulations. Hence, it is a good idea to manage your competition by forming alliances that collectively define thresholds and norms that can eventually catalyze or feed into government policies. This automatically creates a barrier for competitors operating outside the alliance.
A good case in point is that infamous Union Carbide Gas Tragedy in India which happened in 1984. As a consequence of that disaster, the image of the whole industry was tarnished. Only as a subsequent response, few leading companies in similar business developed a set of private regulations that were adopted by a significant number of industry players and hence became a benchmark and also ensure that Industry is able to align to the needs of the community it is operating in.
3) Saving Costs through Sustainable Solution Model
More and more companies are moving from the product model to a solutions model. This has led to cost savings for the consumer who is only interested in using the products for a particular time period as also for the producer as the used product can act as an input for another new solution.
One of the best examples is Monsanto’s innovation in its carpet business. Historically carpet was sold as a product and being made of nylon and polyester was very hard to recycle hence leading to 5 billion pounds of carpet being sent to the landfill in 2003 alone - clearly a lot of non-recyclable material lying un-attended!
Monsanto (now Mohawk) launched a home solutions business where they loan out and then take back the same carpet, recycle it and make new carpets using renewably sourced polymers. This not only creates savings for the consumers but also makes it more likely for homes to afford carpets, hence helping Monsanto expand its customer footprint.
When these strategies are executed with the consumer as also shareholder in mind, the concept of sustainability becomes an integral part of any business. Hence if a business sees value in going green, there would be no need for organizations to clamor for exploration in unchartered territories like Antarctica which can only lead to further imbalance in nature causing loss of ice sheet, rise in sea levels and affect the local life at the Southern Pole.
Intelligent steps in the right direction with the coming together of corporations and governments can really implant the idea in the mind of decision makers that if renewable energy sources and sustainable practices are adopted more diligently, there would be no need to harm the unexploited part of nature.
Bandanjot Singh is an alumnus of BITS Pilani. During his work as a consultant at National Instruments, he started working on renewable energy research lab setups in various parts of India. He is currently part of the 2013 Sustainability leadership program in Antarctica.
US Embassy New Zealand
John "Pathfinder" Lester