September 12, 2009

Sustainable Business Truths: The Least Your Employees Need to Know

[This appeared first on my Harvard Business blog here]

In hard times, focusing your company on environmental challenges and opportunities — or "greening" your business — can be a terrific source of employee motivation. But I make the case in my new book Green Recovery that increasing engagement and knowledge around green issues isn't just about pumping up morale — it also gives your people a solid foundation to innovate and create value in new ways.

The world is changing, and fast. Profound shifts are under way as the world mutates demographically (more, younger, less white), politically (new bases of power to the East), and perhaps most importantly, physically (climate change, water stress, resource constraints). How can your company prepare for markets that will be driven, unavoidably, by a quest for sustainability? As I argue in the book, you need to get all your employees on the same page on three essential realities:

1. Resources are not infinite. This goes against everything we've experienced as a species for millennia. We are reaching limits in resource availability, from fossil fuels to water. You know it's serious when Forbes Magazine casually mentions that Exxon is going to natural gas because it's "running out of oil."

2. The value is in the value chain. In most industries, the largest part of a company's environmental footprint lies outside of its direct control, falling either upstream in the supply chain or downstream with customers using the product. The environmental risks (such as discovering lead in your toys like Mattel did in 2007) and opportunities (like creating energy-efficient products that consumers lap up) reside outside your four walls. Everyone will need to think more holistically.

3. Climate change is a political and business reality regardless of what anyone thinks about the scientific reality. I won't belabor this idea, but getting lost in debates about whether Al Gore is plotting to take away your SUV is missing the point. Virtually every country in the world is joining international negotiations about climate or directly regulating carbon. Most of the world's largest businesses are actively tackling their own carbon emissions and demanding the same of their suppliers. The cost of doing business is changing permanently and being carbon-fat is getting much more expensive. These are critical business issues to understand and prepare for.

[Please see the rest of the post here]

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