SUSTAINABILITY : Going green – The bottom line

Green is definitely the new black. Social trends researcher Jill Caldwell of Windshift says that last year was the tipping point – the point at which most people “got” climate change and loving the environment became cool.
Two factors helped tip the balance – former United States vice-president Al Gore’s film An Inconvenient Truth about the horrors of climate change, and the warning by former World Bank chief economist Sir Nicholas Stern that the economic impacts of climate change could be worse than the Great Depression.
But New Zealand has been late in coming to the party. International communications specialist Cindy Baxter, New Zealander working on climate change projects in the United States, says that smart British and American companies saw the writing on the wall some time ago and moved early to position themselves.
“It makes economic sense as business to start counting – and reducing – your carbon emissions,” she says. “A global and increasing price on carbon is utterly inevitable. The smart businesses are getting in fast.”
But just how far do you need to go? Commitment in New Zealand ranges from companies who adopt sustainability statement and pay few hundred dollars year to join an organisation like the Sustainable Business Network, to companies that are reorganising their entire operations along sustainable lines.
Latest research by Waikato University and the Sustainable Business Network shows that businesses have increased their sustainable practices by an average 10 percent over the past three years. The most popular action (taken by 70 percent of respondents) was introducing recycling scheme, followed by consideration of environmental impacts of products, processes and services (63 percent), and membership of an environmental group or network (36 percent).
Research leader Eva Collins said that while most companies in Japan (80 percent) and the United Kingdom (71 percent) issued annual sustainability reports, just 11 percent of New Zealand companies did the same.
What did surprise the researchers was that most managers said that while they expect to come under increasing pressure from customers over environmental performance in the next five years, they are not feeling this pressure yet. Just over half (52 percent) said their environmental practices were driven by their own values.
But social trends researcher Jill Caldwell says that while the environment is not yet factor in the purchasing decisions of the mass market, it already is among trendy urban liberals.
“There is significant un-met demand in the premium high-end market, and it’s growing fast,” she said.
This is confirmed by others working in the green area.
“A strong reputation in sustainable business practices can help company build trust with its stakeholders,” says Nikki Wright, managing director of Wright Communication, adding that positive reputation equity can result if companies focus on doing the right thing.
“For clever companies, embracing sustainability makes good business sense. By adopting sustainable business practices companies can improve their access to capital, enhance their brand image, create competitive advantage and increase sales, attract, retain, motivate and develop employees, sharpen decision-making, improve risk management and reduce costs.
“Several academic studies have shown direct correlation between socially responsible business practices and positive financial performance. An 11-year Harvard University study found that ‘stakeholder-balanced’ companies showed four times the growth rate and eight times the employment growth when compared to companies that were only shareholder focused,” Wright says.
“Businesses must manage the economic, social and environmental impacts of their operations to maximise their competitive advantage and minimise risks.”
In the United States, green business is so far ahead of politics that some of the world’s biggest companies have joined forces to push the federal government to bring in legally binding regime to cut greenhouse gas emissions and to introduce cap-and-trade emissions trading scheme.
These are serious companies calling for serious action – together, the companies and organisations that make up the United States Climate Action Partnership (USCAP) have revenues of US$1.7 trillion, workforce of more than two million people and combined market capitalisation in excess of US$1.9 trillion. Among the latest to join USCAP are ConocoPhillips, Deere and Co, Dow Chemical Group, General Motors, Johnson and Johnson, PepsiCo, Shell and Siemens.
In Britain, similar organisation, The Climate Group, is working on US$100 million HSBC-funding project for action on climate change. Members include BP, BSkyB, BT, JPMorgan Chase, Starbucks, Virgin and News Corporation. Even Rupert Murdoch is going green.
Public concern about climate change has reached such point in Britain that it now directly threatens New Zealand’s exports. Supermarket chain Tesco says it will restrict air-freighted produce to just one percent of its goods, will require carbon footprint labelling (showing how much carbon was emitted in production and distribution) of all products, and is already putting stickers with pictures of planes on air-freighted goods to enable customers to avoid buying anything transported by carbon-spewing aeroplanes. This is worrying for New Zealand exporters, despite the fact that sea freight is actually used to transport the vast majority of our food and beverage to the United Kingdom.
Marks & Spencer has told many New Zealand companies that they will have to be carbon-neutral if they want to continue supplying the retail chain, and recently The Times published green consumer guide in which it urged readers to drink wine from France instead of New Zealand in order to avoid the carbon cost of transportation halfway across the world.
It’s not surprising that The Times’ action upset New Zealand exporters. The wine industry, which has had sustainability programme in place since 1997, countered that it was wrong to focus only on food miles when other practices like waste management, sustainable production and wasteful subsidies should also be taken into account. But, however, these arguments are likely to be too subtle for the average British shopper.
One New Zealand wine producer is making money out of the growing international desire to be environmentally friendly. The New Zealand Wine Company’s Grove Mill was the first company in New Zealand – and possibly the first wine producer in the world – to go carbon neutral.
Grove Mill was the pilot project for Landcare’s CarboNZero scheme, certification programme to minimise carbon emissions. Grove Mill’s systems analyst, Roger Kerrison, stresses that the company has long and proud history of environmental action and is motivated by genuine concern for the environment. It has, however, also been incredibly good for business.
The company got “extremely positive” press in publications like The Guardian, The Times, The Mail on Sunday, Decanter and Wine Spectator when it completed its first CarboNZero rating year ago, and sales have reflected the attention.
“CarboNZero has probably helped us sell an extra 40,000 cases this year – that’s up 25 percent on last year,” he said.
Grove Mill’s road to carbon neutrality started in 1994, when it relocated to the Waihopai Valley. The company restored the adjacent wetland, planting more than 4000 native plants and providing home for numerous native species.
The project involved many long working bees by staff – factor that Kerrison says is critical in any corporate move towards sustainability.
“That’s extremely important – you have to have your staff environmentally focused as well.”
The next project was to improve energy efficiency. Wine making and storage involves many critical temperature points, and Grove Mill set out to find the most energy-efficient ways of achieving them. It started with an insulated new warehouse.