Environment as a Business – The Risks

I am unashamedly green – I believe in the green agenda and I want my two children to grow up in a word where the sky is blue, the grass is green and there is snow and ice and polar bears. I want that for your children too. However, to make the green agenda work, there has to be a coming together of business, government and the population. All must work together for what ever reason. I’ll say that again – for whatever reason.

That’s important.

I’m results driven. My drivers are also ethical and environmental – or what that means by my understanding and interpretation anyway.

But it works for me.

It gives me a framework.

Business is driven by economic imperatives. It must make money to cover basic operating costs. It cannot survive on thin air. To do this, businesses are often run by hardnosed business types.

Sometimes, they get the green bug and lose all sense of commercial perspective thus causing their business a lot of damage. This doesn’t do them any good and it does promote the green agenda as it reinforces the notion that green is bad for business.

The solution is to show businesses how to make the best environmental decisions possible whilst making increased profit. To turn the environment into a competitive advantage.

However, as with anything new, there are risks. For those going down the green route in an existing business, the following risks should be looked at:

  • Unrealistic view of the market. Most green markets are niche with a small number of consumers paying more for a green product. Similarly, they may accept a small drop in quality at a similar price point. However, most – if not all – will accept higher price and lower quality. That’s the trick – making a product green, cost effective and have a good level of quality;
  • Expecting customers to take the pain. Customers will take a little pain on brand loyalty but be careful that your competition don’t use price point as a way of taking your existing customers away;
  • Cultural differences. What works in the UK may not work in China for a whole host of cultural reasons. What works in one sector may well not work in another;
  • Not sticking to core products and services. Sudden changes into new markets can result in poor financial performance. Green markets are the same as any market and requires careful analysis and a lot of thought before entering. If you have an established market and brand, then you are better to innovate within your own space and then vertically or horizontally integrate;
  • Weak supply chains. These present several problems: low volumes = high prices, lack of competition = poor quality and low demand = indifferent supplier attitude. Supply chain is often seen as the greatest challenge to businesses wishing to adopt a green stance. However, I also see it as the greatest area of opportunity;
  • Immature technologies. There are some innovators out there with the ‘mad inventor’ hat on who will happily take your money after convincing you of the good the investment will make to the world. Be careful of such claims. In energy, cold fusion springs to mind. Its also a question of scale. If you can get a technology to work at a small-scale level, it doesn’t necessarily mean it works on a bigger scale;
  • Public relations disasters. The greatest sin in the environment world is ‘greenwash’ – the painting of things as green simply to increase the bottom line with no commitment to the environment. These issues are often highlighted by the hordes of activists who reject capitalism, use incidents to generate publicity for their own message, journalists who are looking for a news scoop and regulators who look to verify claims;
  • Overstating your case. This has two areas to be cautious over – the first is reputational damage which happens when you massage the numbers to show a good result of a bad performance. The second – and more immediate – is the Advertising Standards Agency who are taking increasingly strong action on those who falsely report environmental results as a way of looking better than the competition;
  • Getting cold feet. If you are going to do it, then do it. There is nothing worse than drums and fireworks followed by a reversal of direction. BP’s ‘Beyond Petroleum’ is a prime example of this whereby investments were made in renewables but the core business remains to be oil and gas. This led to a phenomenal backlash by the environment lobby and damage to their credibility;
  • Accidents. Any incident which impacts the environment will be used to hit you – ‘green company at centre of chemical spill contaminating a stream’ will get more media attention than a water company polluting a river with raw sewerage;
  • Blame for the sins of others. Traceability is increasingly hard in a globalised and commoditised business world. Activists will often go for the end user of goods rather than the perpetrator. For example, when a logging company illegally felled hard woods which hen ended up being used in he Houses of Parliament, it was the government who were embarrassed rather than the loggers;

So, there are markets and there are opportunities – but of you are going to do it, do it properly and in a well thought out and considered manner.

By | 2018-04-19T13:09:50+00:00 April 19th, 2018|Uncategorised|0 Comments

About the Author:

Leave A Comment