I had the chance to read an excellent essay in the 9/22/08 issue of Newsweek, by Zachary Karabell of RiverTwice Research, which I strongly recommend. The main message of the article is that in an era of high energy costs, a company that has sustainable business practices will likely be able to save money and reap positive financial returns as a result.
Karabell writes that “sharply higher prices for oil and raw materials” have made “reductions in energy use economically viable and strategically important in a way that no amount of green activism ever could.” He continues by discussing Wal-Mart’s efforts to “green” its supply chain: “To maintain its razor-thin margins at a time of record oil prices, which are raising the cost of importing goods from China, Wal-Mart has radically altered how its products are made and how they’re transported. One example: making detergent more concentrated, which leads Wal-Mart suppliers to use smaller plastic containers, which in turn use less petroleum to manufacture those containers, which can then be shipped with more containers in each carton, which leads to less cardboard, which makes it possible to transport more units on each ship or truck, which then reduces the amount of gas used to get those units from the factory to Wal-Mart outlets. The result: Wal-Mart maintains margins and reduces its resource consumption as well as that of its suppliers.”
Karabell also goes on to mention other profit-driven reasons for companies’ sustainability efforts: international regulatory rules as well as studies showing that companies that receive high environmental marks have shown above-average return on investment and stock price performance.
I have frequently written about the importance of green business practices, not only because they are the right thing to do but also because they help the bottom line. Whatever the reason, the fact that companies like Wal-Mart, Du Pont and Google, to name a few, are all investing heavily in making their businesses less resource intensive, and therefore more profitable, is a great step. Our national government has not done enough to create incentives for companies and individuals to invest now to save resources and money in the long run, so it is incumbent on the business community to take the initiative.
Relative to my business, Grossman Marketing Group, we strongly urge our clients to not only operate their core businesses responsibly, but also to make the effort to bring that message of sustainability to their constituents through their marketing and communications campaigns. Whether it’s a piece of direct mail or a giveaway at a tradeshow, by leveraging environmentally-friendly materials, and clearly communicating what they have done to make their pieces less resource-intensive and the savings derived by doing so, they will send a values-laden message to their core customers and donors that will help reinforce their brand and build relationships for the long term.