Jim Witkin of the New York Times and Green Inc. recently interviewed Eric G. Olson a management consultant and author of the coming book “Better Green Business.”
In his book, Olson says carbon footprints will become just another measure – like profitability and growth – for businesses, and that the word green will gradually disappear from the business lexicon over the next 5 to 10 years, as environmental stewardship becomes fully integrated into everyday business practices. Several external forces will drive this transformation, Mr. Olson said – particularly as large consumer products companies and retailers like Wal-Mart require suppliers to manage their own environmental footprints. Companies without a clear strategy and committed leadership, Mr. Olson argues, will come up short.
Green Inc. recently chatted with Mr. Olson about the green business transformation. Excerpts from that conversation follow.
Q.When will green become an outdated term in the business vocabulary?
A.When we have an accepted, widely adopted and mature set of standards and practices for things like carbon footprint and other measures of resource use, like the accepted financial measures businesses use today. Carbon footprint, for example, will just become another measure along with profitability and growth. Also, branding of environmental initiatives will become commonplace and less of a differentiator in the long term. Consumers will be able to make informed choices based on environmental labeling, like today’s nutritional labels. But there’s a lot of ground to cover between now and then.
For example, Wal-Mart’s Sustainability Index could be one major driver for this kind of standardized labeling, but by some estimates, only 10 percent of its global supplier base is currently prepared to measure and manage environmental impacts with the necessary rigor.
Q.How would you recommend these other 90 percent accelerate this transformation?
A.First, committed leadership is essential, as it creates a common culture of awareness and action across an organization. And at the same time, senior executives must recognize that innovation often happens at the grassroots level within an organization. Sometimes the role of leadership is recognizing where good ideas are happening within the company and then cascading those ideas and practices throughout the organization.
Q.What advice do you give companies that feel the challenges along this path are too difficult?
A.I try to emphasize that the challenges are no different than addressing other business opportunities. This is not about learning entirely new competencies in many cases. It’s about adapting strategies, tools and techniques to a new area of your business.
Q.What will be the impact of technology on the low-carbon economy?
A.We are already seeing a big impact from information technologies that use instruments like sensors and meters to monitor and manage energy and emissions. The smart electric grid is a good example of an instrumented system, but there are numerous examples in other types of resource management, such as traffic and water.
A report last year by the Climate Group estimates that using smart technologies on a broad scale could reduce global emissions by 15 percent and save businesses $800 million by 2020. That’s a huge potential impact in a relatively short time frame.
Q.How does the green business movement compare to the quality and lean manufacturing movements of the 1980s?
A.Like the quality movements, environmental stewardship will become fully integrated into business operations. These quality movements, like Total Quality Management, had a big impact on reducing waste and costs and increasing efficiency, but I think the forces driving the green movement in business are much more compelling.
Global climate change, raw material price fluctuations, water stress, governmental regulations and consumer expectations are all external factors that will continue to drive businesses to improve. And with some emission-reduction targets set out as far as 2050, this movement will be with us for a long time and will continue to evolve.