Going Green: How Environmentally Conscious Practices and Products Present a Profitable Future Today

By Infor

Forward-thinking companies have embraced Green practices to satisfy customers, comply with regulations and promote positive community relations. Yet many firms are finding – often to their surprise – that Green initiatives aren’t just good citizenship, they’re good business, too. These companies are developing cost-effective internal processes that encourage environmental stewardship, and they are increasingly tapping revenue-generating market opportunities for products and services where customers are hungry for Green.

For many years a vastly different outlook dominated in the United States and around the globe. Skeptics predicted that Green practices and mandates would dramatically increase costs and stymie growth. But warnings and reports about contamination in emerging markets, global warming, toxic-product dangers and rising energy costs have pushed environmentalism to the forefront of consumers’ minds, and, subsequently, forced business leaders to focus on finding cost-effective and profitable solutions to these and other environmental problems.

Leading companies anticipate increasing environmental regulation around the globe, and are savvy enough to understand that by demonstrating responsibility they earn a place at the table as rules and policies change – and they’re earning market share in the new markets those regulatory changes create. Living in an era when Green leaders win Nobel Peace Prizes has made it dramatically clear that in getting organizations “… to become greener, we are pushing them to become more productive, more innovative, more efficient and more competitive. You can’t make a product Greener without making it smarter and more in demand – whether it is a refrigerator or a microchip. Just ask GE or Wal-Mart or Sun Microsystems.”[1]

What does all this mean? That the most important driver of business challenges and opportunities in our lifetimes (and our children’s) will likely be the Green revolution. The challenge is that the earth’s resources are limited, but its population is expected to grow by 50% over the next four decades. This will create opportunities for every company to develop products and services to address escalating growth and gradually minimize the impact of those inhabiting the planet. As leading companies embark down the Green road, they’ll transition from a position of being aware of their environmental responsibility to one of inculcating Green as a core value and relying on Green internal processes and product/service offerings as a core competency – but only through research, planning, action and investment can this happen.

Becoming Green

Corporations interested in becoming Green are advised to first look within. Assessing and improving the corporate environmental footprint helps build consumer credibility when a company launches Green products (or products and services that help others develop Green products). Fortunately, working internally brings its own benefits. Developing the internal processes and practices that support Green reduce waste, improve efficiency and lower costs. It’s good business.

Companies that have made Green a part of the way they operate have a number of environmental levers to pull: 

• Recycling of waste byproducts: The simple act of offering recycling containers for plastics, paper and glass is a big first step and one that gets workforce attention to going Green.
• Eliminating pollutants and reducing greenhouse gas emissions: Among industrial firms this can be a challenging but rewarding effort, and in the process can remove regulatory scrutiny of operations and open up new markets.
• Conserving resources through the efficient operation of assets: Every organization should be looking to rationalize its network of locations and facilities, squeezing as much from operations as possible, ramping up or down as demand dictates. Operations improvement approaches such as lean manufacturing help this to happen and also nicely incorporate Green goals into productive outcomes.
• Satisfying customers: Not only meeting customer mandates for new green products but also providing current products in a Green manner (i.e., reducing packaging content) is an opportunity for every company.

Companies typically sort through and prioritize their Green options by developing an overall strategy and timeline for how they can be better environmental stewards.

Pulling together a strategy
Green strategic planning requires company-wide (and ideally supply chain-wide) input and collaboration. Depending upon a company’s mission, culture, business sector and other factors, going Green will involve a variety of functions and departments such as procurement, materials management, production, shipping and receiving, sales and marketing, etc. Major suppliers and customers also should be involved in the planning processes, as their ideas and early buy-in make for easier and faster adoption of new practices and products later.

This cross-functional Green leadership group can then rate the company’s environmental stewardship using a scorecard, assessment mechanism or existing performance management solution to identify realistic goals in a variety of categories (e.g., recycling initiatives, asset management, production practices, product offerings, supplier involvement). By evaluating the gap between current conditions and goals, the group can develop a list of actions/projects required to move the company toward each goal and can assign them to group members, managers and employee teams.

Having mechanisms to gauge Green improvement also will help reinforce a company’s Green advances and position in the market, particularly as more and more companies claim Green business practices –“… without measured policies, control mechanisms, and reporting functions, the Green organization has little to show for its investment beyond a few public relations buzzwords.”[2]

Plotting Green progress
A Green development timeline keeps companies moving toward where they want to go and defines how to get there in a timely manner (see the sample Green Timeline). For example, first milestones are typically positioned for quick wins – projects that can be started easily and will show fast returns, such as a recycle-and-reuse program and other means of resource conservation. This type of activity involves employees immediately, promotes acceptance and enthusiasm, and creates much needed visibility for momentum building. Another common quick win is to replace disposable shipment containers with reusable ones, an initiative that also begins to involve suppliers and customers.

Technology supports Green initiatives

Leading Green companies are using technologies to make strategic decisions related to environmental responsibility, including energy consumption. AMR Research projects that by 2010, up to 70% of corporate IT spending will be driven by environmental responsibility efforts (a rise from about 30% of IT budgets currently based on these efforts).

Performance Management
Understanding the current, real-time Green position and being able to efficiently transform and monitor the organization are critical to success. Performance management (PM) applications support this effort, especially in multinational companies with locations across the planet. PM helps companies link their overall Green strategy to specific operations plans and increase productivity, control costs, and improve overall business performance – not just get Greener.

Enterprise Asset Management
A company with a sophisticated enterprise asset management (EAM) program likely has energy-consumption information for machinery and other assets. A company without EAM or comparable programs will need to invest in them, taking time to gather data before setting goals and identifying required actions.

Supply Chain Management
A significant Green challenge is working with suppliers and customers, such as devising inbound and outbound transportation and distribution networks that use the least amount of fuel and facilities (warehousing, distribution, etc.) while achieving optimal on-time delivery and fulfilment. This becomes particularly important as businesses make cost/benefit decisions for suppliers in a variety of locations.

Product Lifecycle Management
Flexibility and speed in the product development process will become increasingly important as the number of environmental mandates increases and new technologies make possible more environmentally friendly products and processes. Building a data-management and modeling program now that encompasses product lifecycles will provide enormous advantages to Green manufacturers tomorrow.

Enterprise Resource Planning
The foundation for Green-enhancing technologies is an enterprise resource planning (ERP) system that can help govern the end-to-end control and flexibility needed to deliver Green products amid challenging market conditions as well as reduce unnecessary business expenses and negative environmental impact throughout all stages of a Green rollout.

Green brings benefits

The buying public wants to go Green. A study of more than 7,500 consumers in 17 countries in North America, Europe and Asia found that 64% of respondents said they would be willing to pay a higher price – a premium of 11% on average – for products and services that produce lower greenhouse gas emissions. In addition, 41% said they regularly buy products containing recycled material.[3]

Business is and will be driven by revenues and profits. If Green didn’t hit the bottom line, it would not be easily embraced by business today or tomorrow. And companies big and small are, indeed, seeing the returns in Green.

The consumer goods giant Unilever ranks high on a list compiled by The Independent of the Greenest companies in the UK. Unilever incorporates environmental sustainability into its overall business strategy, pioneered a zero industrial waste policy, is working at developing zero-effluent factories and is implementing a sustainable water initiative.[4] And it’s doing this while the business profits and grows. At the end of the 2007 third quarter, Unilever reported nine-month net profit from continuing operations of €3.27 billion, up 17% from €2.79 billion in the prior year, while total sales reached €30.297 billion, 1% higher than €29.92 billion in the previous year period.[5]

Another large multinational, General Electric, has seen the Green light. In 2007 General Electric reconfigured manufacturing assets in its consumer and industrial lighting division to produce more environmentally friendly light bulbs. Specifically, the company transferred capacity from incandescent-bulb plants in Brazil and the U.S. to other facilities in the U.S. and Mexico equipped to produce energy-efficient lighting products, such as compact fluorescent light bulbs (CFLs). Over the previous four years, GE had invested $200 million to ramp up production of energy-efficient lighting in response to dramatic declines in incandescent bulb sales. GE is also adopting a more vertical approach for its Greener light products after determining that this approach is more cost-effective than the horizontal model used for traditional bulb-making.[6]

Ongoing effort

Becoming a Green company requires an adoption of conservation principles into the culture of the company. A firm’s Green strategy and timeline must be reviewed and updated as often as any other aspect of business performance. This ensures that the organization:

Savvy businesses recognize the many opportunities they have to do good and make profits – now and in the future – regardless of when or where they begin the Green journey.

So begin – today – to develop a Green strategy and timeline, asking:

• How Green is the company right now?
• Where can we quickly make a positive environmental impact (what are employees and customers demanding)?
• Where will the company need to roll up its sleeves and make tough decisions about pollutants and greenhouse gas emissions?
• What products currently lend themselves to “going Green,” and what Green markets are further out on the horizon?
• And, lastly: What choice is there but to go Green?

Disclaimer
This document reflects the direction Infor may take with regard to the specific product(s) described in this document, all of which is subject to change by Infor in its sole discretion, with or without notice to you. This document is not a commitment to you in any way and you should not rely on this document or any of its content in making any decision. Infor is not committing to develop or deliver any specified enhancement, upgrade, product or functionality, even if such is described in this document.

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Notes:
[1] Thomas L. Friedman, “Who Will Succeed Al Gore,” New York Times, Oct. 14, 2007.
[2] Michael Rasmussen, Chris McClean, Jonathan Penn and Alissa Dill, “GRC Should Take The Lead In Green Business,” Forrester, May 11, 2007.
[3] “Two-Thirds Of People Will Pay Premium For Green Products,” Environmental Leader citing an Accenture study, Oct. 18, 2007.
[4] Karen Atwood, “Green Leaders: A Guide to the World’s Greenest Companies,” The Independent, June 1, 2007.
[5] “Unilever Announces Q3 2007 Results,” www.unilever.com, Nov. 1, 2007.
[6] “Consumer & Industrial Announces Intention to Restructure its Lighting Business,” General Electric, Oct. 4, 2007.