The future health of the planet is at the top of the agenda for politicians, scientists, conservationists, and an increasing number of people in all walks of life, as the evidence of the effects of global warming and pollution becomes ever more apparent. And ominous.
Of course, all eyes were on the UN climate change conference in Copenhagen in December 2009, the aim of which was to deliver the successor to the Kyoto Protocol. But do these events achieve what they set out to? There are critics who believe that they won’t achieve concrete results.
Atradius sees it differently. The role of politicians is that of setting the framework for change and giving clear guidance of what has to be done. That isn’t enough. Arguably, businesses have been instrumental in creating much of the current environmental concerns through their use of traditionally wasteful and polluting processes. These very same businesses can now turn the politicians’ aspirations into reality by adapting more cost efficient, less wasteful and environmentally aware practices.
The white paper cites many examples of companies that have seized the opportunity to become ‘greener’ – and, in the process, increased their profits and enhanced their brand. Wal-Mart, for instance, has adopted an environmentally aware philosophy that runs right through its organisation, and it ensures that its suppliers do likewise. In the process it has been able to pass on savings to customers while at the same time increase profits.
The profitable application of sustainability is by no means exclusive to major corporations. If anything good has come from the economic downturn, it is that businesses have had to focus on eliminating wasteful processes to cut costs; essentially reviving the mantra that gained currency in the 70s and 80s: Total Quality Management, or TQM. But what is sustainability if not a natural development of TQM? Those businesses that have, of commercial necessity, adopted this cost saving stance to see them through the recession, have taken the first step towards making sustainability a central pillar of their business strategy.
Atradius’ white paper also highlights the commercial opportunities that were missed by businesses too focused on continuing to produce traditional products by traditional means. Take, for instance, the energy efficient light bulb: a simple yet potentially powerful weapon in the battle against waste. While the technology was developed decades ago, its blueprint languished on some researcher’s shelf while businesses – who could have marketed it profitably – failed to foresee the trend away from energy wastage.
The message that the Atradius white paper has for businesses is that sustainability isn’t a side issue – the success stories cited in the paper demonstrate that sustainability can be a profit centre, enhancing that most ethereal of assets – brand value, creating real savings that outweigh initial costs, and providing a more attractive commercial proposition: all of which add up to a healthier business. Governments should be praised for the support they are providing for the development of sustainable technologies and the encouragement they offer businesses through positive incentives such as tax breaks.
But the long term value of penalties for exceeding carbon emission targets may not be enough to ensure that the needed changes are made to create permanent reductions in emissions. If confronted by the possibility of a fine for polluting, a business can – and often will – factor that fine into its costs, thus viewing the fine to be an acceptable fee for continuing to pollute. Similarly, the carbon trading scheme that formed a key element of Kyoto, however well intentioned, can be misused as a get-out clause to continue to pollute – at a heavy price.
The carbon emissions penalty and trading scheme do not achieve what is needed to create a sustainable future. They don’t change attitudes, they don’t make countries or businesses consider the rights and wrongs of their processes, and they won’t foster global cooperation, as they simply allow some countries to buy their way out of actually reducing energy usage and carbon emissions.
For sustainability to be achieved, it has to become a boardroom issue, not just government legislation. At the very least, businesses should be able to lower costs by embracing a sustainability policy, but with more businesses choosing green companies as their preferred partners it is becoming evident that this can help brand image as well.
Download a copy of the Atradius white paper at www.atradius.com
