How Important Is It For A Business To Be Eco-Friendly?

Wednesday, November 12, 2014

It's very easy these days to feel confused about the whole environmental debate. In Australia, as elsewhere, the topic seems to attract extremes on both the pro- and anti- sides, which often has the effect of deadening much public awareness of the issues. So what does the term “eco-friendly” really mean?

Firstly, what does an eco-friendly business really stand for? Well, none of us outside of say, Grizzly Adams (and even he chopped down trees), can truly say we are living eco-friendly. That goes for businesses for sure, but also for us as individuals because pretty much everyone uses, buys, accesses, throws out, benefits from or otherwise consumes goods or services, which have an environmental cost. Even cavemen took their toll on the environment – it's just the impact was negligible and there wasn't that many of them anyway.

So, let's get past the myth that we can really be 100% eco-friendly in the true sense of the term. But, we can minimise our ecological impact and this is what an eco-friendly business should really stand for.

The means of doing this tend to fall into one of what I call the three C's: Cut, reCycle, and Consider.

That is to say, cut down on everything you use as its production chain is likely to have some kind of environmental cost somewhere; recycle where possible (from paper to computer hardware) and; consider the source, use and end-result of everything you do and use so as to find ways to minimise environmental impact.

Most, if not all, lists of 'ten tips to make your business eco-friendly' will fall into these broad categories. Take a look at this book on steps to make your business eco-friendly for instance, or Kate Harrison's tips; they all share a similar theme..

Much of this is common sense these days and that's credit to the environmental movement to a large extent for translating street rally banners into mainstream action. But don't let the fact that eco is the flavour of the month and therefore seemingly gained without much effort fool you. Sometimes, what appears to be straight-up eco can be a little fuzzy at the edges.

Take recycled paper for instance. Virtually every piece of paper out there – and this includes that marked as 'recycled' – has some new paper fibre in it. That's because paper fibre can only be recycled so many times. Or take so-called eco-light bulbs. The most common form, called Compact Fluorescent Lamps or CFLs contain elements of mercury, making their disposal problematic.

Small and medium businesses can take pro-environment steps - you don't have to be buying carbon credits or investing in CDMs to consider yourself eco-friendly. But you do have to be fair dinkum.

The Australian Competition and Consumer Commission is on the lookout for companies over-marketing themselves as so green they're golden. Its policy statement on the subject makes it clear that “Firms which make environmental or 'green' claims should ensure that their claims are scientifically sound or appropriately substantiated.” The watchdog has put companies on notice that “Misleading or deceptive conduct” or “false or misleading representations” in relation to marketing themselves as 'eco' can expect to cop the full force of the law.

Have common sense and tread warily, well within the laws, and your future as an eco-friend seems secure. But if we put our business hardhat on, is it really worth it?

The general consensus is that being eco saves money, helps develop a company's social licence to operate, and encourages creative and expansive thinking among staff.

The first point is probably pretty easy to prove or disprove. At one level, a major analysis into the cost of climate change known as the Stern Review (2007) famously concluded, after a period of extensive study involving a multitude of experts that the cost of acting now – on climate change – would be far less than the cost of allowing the status quo to remain unchecked.

It's not unfair to extend this argument to environmental damage as a whole, inclusive of climate change. That is, expenditure on any environmental impact of your business is likely to be less than the cost of not spending anything in the long run.

But this is a very broad notion, aimed at government leaders and world policy makers. For small businesses for instance, the view is a little more ground level. Economically too, it makes good sense that if you're buying less supplies, you are spending less. Being more efficient is always a business plus. In 2007, for instance, the giant company DuPont saved $US 2.2 billion due to energy efficiency. That saving actually put them in the black after a tough year.

Indeed, so evident is this point that it is often a criticism of some 'eco' companies that they are simply just cutting costs and calling it green.

The other points above are perhaps less amenable to ready proof. But, there is evidence that taking an environmental approach to business can be good business in a more indirect sense.

Consumers are becoming more aware of environmental issues and reputational factors (and of bogus claims of business greenery).

For the skinny on eco-friendly business impacts and consumers, consider this fairly comprehensive list of global consumer trends. Of the top 10, four can easily refer to eco-friendly business (numbers 1, 3, 4 and 7). So, on this count, simply being eco-friendly has a 40% chance of tapping into one of the major buying trends worldwide, without even thinking about the product or service on offer.

The rise of the conscious consumer or the LOHAS buyer (those following choices favouring Lifestyles of Health and Sustainability) is a by now a well-established fact of retail marketing.

Moreover, investors are proving more adept at selecting their targets on more eco grounds, as the Australian National University and others have proven of late.

Increasingly, reputation counts.

And what impact can an eco-friendly approach have on staff and company culture?

Well, increased respect out there in the big wide world can be a massive free kick in marketing and brand recognition terms. Imagine yourself in a leading business publication for instance as a champion of the environment. It’s difficult to see a downside here for staff and company culture as confidence and pride in one's workplace surely has to translate to more commitment and energy.

It's likely your company will also attract better staff prospects as your reputation as an eco-friendly operator grows.

While there are risks, the benefits of being an eco-friendly business seem to outweigh them, commercially as well as morally.