Back to Volume 11
	The Business of Green By Lisa Duszak Novak

Conservation is a hot industry. With high-profile publications like Vanity Fair, WIRED and Elle developing "green" issues, celebrities replacing their Hummers with hybrids, and financial giants like Bank of America's recycling rainwater and food scraps to fuel their headquarters' energy needs, it is clear that environmentalism is not dead. But since when did "green" become a buzz word?

While we would all like to think that this eco-revolution is taking place solely because companies want to save planet Earth, the truth is more complicated. Think back to Economics 101 and basic supply and demand.

Simply put, many businesses are going green because their customers are demanding it, and many times, are willing to pay a premium to get it. Others find hidden benefits like tax credits, government subsidies, or a shiny new "talking point" to add to their corporate messaging. Think of British Petroleum and Shell Oil's corporate ad campaigns testifying to their commitment to a cleaner environment, and Wal-Mart's "sustainability drive" involving solar-paneled stores and organic offerings. The aim? Green is good, to be sure, but you can bet these companies also hope to drive sales, enhance public image, and gain competitive advantage.

The Quantitative Conundrum

The public relations potential of going green can be enormous, but many organizations still struggle to make the switch to sustainable practices, a move that can be extremely risky and potentially unprofitable in the short run.

In 1970, economist Milton Friedman famously laid the ground work for a common, hard-line approach to socially responsible business: "business of business is business." In his eyes, and in the eyes of Wall Street, a CEO's first priority is to his or her shareholders, period. Nothing less than a strict adherence to the bottom line should be tolerated.

But, increasingly, companies are beginning to consider various levels of commitment to their "social conscience," a concept that is commonly associated with Corporate Social Responsibility, or CSR.

Admittedly a hotly debated topic, CSR is defined as a company's obligation to be sensitive to the needs of its stakeholders, including its employees, customers, suppliers, community partners, local neighborhoods, investors, and shareholders. It is closely linked with the principles of sustainable development, and making investment decisions based not only on economic factors but also on the social and environmental consequences of their activities.

More often than not, the benefits of CSR are fairly intangible, making it even more difficult for CEOs to convince board members to charge forward. Worse, research shows that companies who chose to exhibit a social conscience often find that their decision is irrelevant to financial performance.

According to "The Limits of the Market for Virtue" by Professor David Vogel at the University of California's Haas School of Business, the "market is largely incapable of identifying, let alone rewarding, relatively responsible firms and punishing less responsible ones," giving companies little financial incentive to devote resources to such projects.

Of course, some organizations have found ways to be both profitable and environmentally responsible at the same time. Companies like Wal-Mart are leading the charge in innovative ways. The behemoth expects to reduce one quarter of its solid waste in three years' time by turning its own garbage into a raw-material stream for the suppliers of its merchandise, a process known as closedlooped recycling.

According to an August 2006 Wall Street Journal article, "Wal-Mart Sees Profit in Green," David Redfield, vice president of marketing integration at the company's Sam's Club division, wasn't keen on the company's conservation goals until he started looking at, in his words, "what the waste was made of, what it cost us and what we could save, and [it] took on a life of its own."

Consider too Virgin Airlines. Maverick CEO Richard Branson has made some bold moves of late to transform his empire of mobile phones, trains, planes, wine, and even spaceships, green. In addition to cleaner biofuels, Virgin is investing in everything from wind power to trains able to run on biodiesel. And, in September 2006, Branson announced at Bill Clinton's Global Initiative that all proceeds from Virgin's transportation companies — estimated at about $3 billion over 10 years — will be donated to develop alternative fuel sources in an effort to ease global warming.

Some experts believe it is one of the largest individual financial commitments aimed at preventing deadly climate change, but as a businessman, Branson's reasons may not be entirely altruistic. He is the first to admit that going green makes business sense, especially as oil prices remain high. "Investing in biofuels will put pressure on conventional fuel prices and act as a natural hedge for our airline and train companies," he said in an online BusinessWeek story. "Plus, if oil stays at $60 a barrel," he says, "biofuels should produce 'very decent returns.'"

Two Bottom Lines

Some businesses, then, find profit as a good reason to go green. But others are primarily interested in the social and environmental return, and have been searching for ways to measure the benefits of the "double" or "triple bottom line." The essence of these alternative methods of accounting is expanding the traditional company reporting framework to take into account financial, environmental, and social performance.

Matt Hirschland, Director of Communications for Business for Social Responsibility (BSR), a group that represents companies like Patagonia, Hewlett Packard, and Nike, says a balanced scorecard is critical. In a recent article in an issue of BSR's magazine, Leading Perspectives, he explained that "CSR faces a much higher bar in justifying its existence. An opportunity exists therefore to derive substantial advantage by understanding the value of this work more thoroughly."

Some organizations have begun taking a unique approach in quantifying the value of their work product. Ruder-Finn client The Trust for Public Land, a market-based conservation organization that uses real estate tools to conserve public lands, historically evaluated real estate deals using criteria such as acres of land conserved and funds raised. For them, describing their conservation accomplishments in terms of acres, dollars, or number of projects was not sufficient in understanding the true impact of their mission delivery. So, after 34 years of measuring the social good of their real estate projects by gut analysis and the "smile factor," or positive difference open space makes in people's lives, the Trust decided to take matters in to their own hands.

As "un-developers" focused on building parks for people, they felt the intangible, public benefit of their work was just as important to measure. In order to track their "double bottom line" of mission and economic return, they have developed a yet-to-be-released "Mission Matrix" to use as a project selection tool and track the cumulative good of past projects.

According to Jay Dean, TPL's vice president of marketing, "As a mission-driven organization, we are accountable to many stakeholders: our staff, our donors, our partners, and the communities we serve across the country. And we want to do more. We want more parks in underserved neighborhoods, more protected natural areas, more hikes, and especially more grass stains on kids' pants! We plan to use the matrix to improve our impact on the ground by assessing possible projects and then tracking the degree to which we are, in fact, delivering 'more mission' year after year."

Youthful Idealism

Another form of measurement: employee satisfaction and retention. According to BusinessWeek article "The Debate Over Doing Good," a new generation of workers is seeking more from their jobs than just a steady paycheck. "The number of Gen Yers — those born between 1977 and 1994 — in the working world has grown 9.2 percent since 1999, while the number of Gen X workers remained flat, and baby boomers declined 4.3 percent," said Robert Szafran, a sociology professor at Stephen F. Austin State University in Nacogdoches, Texas.

As a result, companies like Home Depot are building 1,000 playgrounds in the next three years — and spending $25 million doing it. They find that having a socially responsible image helps to attract younger workers. "One of the things we compete most for in the marketplace is our associates," says CEO Robert Nardelli. "I'm not sure that was the case [two decades ago]."

To that end, business schools are also jumping on the trend. The environment is a high priority for members of Net Impact, a San Francisco-based network of over 11,000 nationwide MBA students and companies who aim to make corporate social responsibility a key area of focus in today's business environment.

Some schools like the George Washington University School of Business, The Leeds School of Business at the University of Colorado at Boulder, London Business School, and The Yale School of Management offer focused degrees, certificates or concentrations in sustainable business. School administrators realize that they have a responsibility to meet the growing demand, but once again, the bottom line figures prominently into the decision to become greener. B-schools follow the lead of recruiters and understand the inherent economic benefits of supporting students interested in clean energy and sustainable project development.

Conclusion: Green Business — Not an Oxymoron

With today's rising focus on sustainable development, green business is no longer an oxymoron, and hopefully, not just a trend sparked by Leonardo DiCaprio's Prius-loving ways. Conservationists, companies, and communities are uniquely powered to shape the future of America's landscapes by working together, and perhaps even make some money in the process. More and more it seems that ethics and economics do not have to be inconsistent, and in fact, companies can potentially profit from preservation and socially responsible business practices.

 

The Importance of Good CSR Communication

CSR communication can be deceptive and harmful or magically good. The following is a list of do's and don'ts for PR professionals on how to avoid having your company or client accused of "green-washing":

1. DON'T be evil, in the words of the mighty Google. Sincerity counts, and can make or break your company's reputation in the eyes of the media, investors, and the general public.
2. DO build trust among stakeholders. A onetime donation to a local environmental group is a nice gesture but doesn't illustrate a longterm commitment to the cause. Build in layers of involvement that includes investors, employees, and the community.
3. DON'T over communicate, but don't under communicate either. Find the happy medium that doesn't turn off reporters, but doesn't give the cold shoulder to other interested parties.
4. DO use a multitude of communication channels and partners to spread the good news, like in-store signage, websites, advertisements, podcasts, corporate sponsorships, and nonprofit partnerships, instead of relying on word of mouth.
5. DO adhere to the Book of B (log). If you haven't heard, bloggers are some of the most influential communicators out there — be sure not to count them out. Check out some of the more popular, like Treehugger, WorldChanging, Gristmill, and Triplepundit.
6. DO have a system of measurement in place. The media are routinely uninterested in successful CSR stories unless it demonstrates the ability to affect the bottom line or tells a story "warts-and-all." Be prepared to talk about the pros and cons of your green business venture.

Partial Source: Leading Perspectives, Business for Social Responsibility

 

Suggested Book Reading

Natural Capitalism: Creating the Next Industrial Revolution by Paul Hawken, Amory Lovins, & Hunter Lovins, 1999

Case Studies in Environmental Ethics by Patrick G. Derr, 2003

The Sacred Balance: Rediscovering our Place in Nature by David Suzuki, 1999

The Ecology of Commerce by Paul Hawken, 1993

Cradle to Cradle: Remaking the Way We Make Things by William McDonough & Michael Braungart, 2002

The Eco-Economy: Building an Economy for the Earth by Lester Brown, 2001

Earth in the Balance: Ecology & the Human Spirit by Al Gore, 1993

Walking the Talk: The Business Case for Sustainable Development by Charles O'Holliday Jr., Stephan Schmid Heiny, Philip Watts, 2002

NOTE: For a free subscription to TPL's semiannual magazine, Land&People, visit www.tpl.org/freemag