A Greener View of Corporate ‘Eco’-nomics

August 19, 2009

Dan Hesse
CEO
Sprint Nextel Corporation

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Our country has been transformed by numerous periods of historic and evolutionary change – from the Industrial Revolution to the dot-com bubble and the age of the Internet. Today, we are in the midst of a new “green” era.

Today’s U.S. consumer is demanding a “call to action” for corporations to be good environmental stewards of our natural resources and to develop more sustainable products with reduced carbon footprints. President Obama has called on the citizens of our nation to “protect our land, wildlife, water and air.”

Recently, Congress passed a stimulus bill providing $60 billion in clean energy investments and, for the first time in 30 years, increased automotive fuel-efficiency standards.

Today’s companies recognize that corporate social responsibility practices contribute to brand recognition and brand loyalty. Organizations need to achieve tangible environmental progress toward measurable sustainability objectives.

Research supports that the best business strategies effectively target the environmentally conscious consumer.

A 2009 Deloitte-Grocery Manufacturers Association study of more than 6,000 shoppers found that 54 percent of consumers cite sustainability as a factor in their purchasing decisions. Importantly, the study notes that eco-conscious consumers “buy more and shop more often than the typical shopper,” and that as consumers’ environmental and sustainability awareness increases, their ranks will likely grow.

What is good for the planet is often good for business. Companies can reduce carbon emissions and operating costs in one fell swoop by taking simple steps. As documented in a Forrester Research case study, when Sprint performed a thorough internal audit in an effort to green its IT data operations, we saved $20 million and reduced our overall IT carbon footprint by approximately 10,450 metric tons.

Investing in innovation and using lower-carbon-producing alternative energy sources, such as wind power, solar power and hydrogen fuel cells, is an effective way to promote the commercial viability of alternative energy and to decrease pollution.

In “Green to Gold,” authors Daniel Esty & Andrew Winston, two well-regarded corporate environmental strategy experts, profile leading companies that have gained a competitive edge by ensuring that green factors are part of their corporate strategies. The authors explain how the environment “is not a fringe issue” and describe “an environmental lens” as an essential aspect of business strategy in today’s modern world.

Consider Wal-Mart. Working in partnership with major environmental groups, Arizona State University and the University of Arizona, Wal-Mart created a product sustainability index to influence and monitor how environmentally and socially sustainable products are across their life cycles. The New York Times called Wal-Mart’s innovative index “the green equivalent to nutrition labels.”

As the Wal-Mart effort shows, the simple truth is that environmental responsibility, once the niche pursuit of corporate and individual do-gooders, is now an industry best practice.

To keep pace with this new green era, organizations should embed an environmental ethos into daily business practices. Consumers today don’t want an eco-friendly smokescreen, but a genuine pursuit of responsible and environmentally sound practices and products.

Past historical eras have produced major shifts within our country. This new era is shifting our nation to appreciate and demand environmental responsibility. Today’s corporations can either embrace this new era or risk being left behind.

Dan Hesse is CEO of Sprint Nextel Corporation.

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Reader Comments

Going green has definitely become of paramount importance to Corporations because more and more consumers are making this a criterion in their purchasing decision green practices are a new and innovative lens for identifying cost saving measures government regulations around the world are becoming increasingly stringent it is more important than ever before an important item on the CSR agenda

What’s also interesting is how our understanding of what green means has evolved. E.g. In the appliance industry, at one point in time, green would have been associated with only energy and water efficiency of the appliance. However, these are only measures that apply to the ‘consumption’ cycle of the appliance. To be truly green, a company needs to conduct a cradle-to-grave life-cycle analysis of a product’s environmental impact. This would include analyzing the practices used in the design, manufacturing, distribution, consumption/usage and finally end-of-life recycling of the product.

However, what would remain a challenge is educating a consumer about this overall impact of a product as they deliberate between various options. Walmart’s sustainability index may be a step in the right direction and Enterprises will need to continually update their thinking on how to best educate the consumer.

Warwick Stirling, Global Director of Energy and Sustainability, Whirlpool Corporation | August 20th, 2009

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