These initiatives have gained approval from consumers and praise from environmental groups, but what will happen if the economy slows? Will companies continue to put efforts into improving their environmental credentials? Or will these green buds wither in the chill wind blowing through the markets?
Neil Kirkpatrick, leader of the sustainable solutions team at Arup, the engineering company, warns: “The principles of being environmentally friendly are commendable, but should the economic climate worsen they could be perceived as too expensive for most businesses.”
His experience is that even companies that feel a pressure – from consumers, rivals, shareholders or government – to be more environmentally sound are often nervous of doing so because of the possible price tag attached. He notes: “Discuss environmental issues with most major public and private sector organisations and you’ll find their primary concern is cost.”
A worrying sign for companies that have staked money on the green consumer comes today in the form of an opinion poll by Ipsos Mori. Carried out among more than 1,000 UK adults, it found that concerns over the environment peaked in January 2007, when 19 per cent of people rated the environment as a top concern, up from 2 per cent in 2003 and 10 per cent in 1997. When questioned earlier this year, only 8 per cent rated it as a concern.
But Tom Delay, chief executive of the UK’s government-funded Carbon Trust, which advises businesses on how to cut greenhouse gas emissions, says it would be short-sighted for companies to abandon green principles in tougher economic times.
“There is a real risk that businesses will take their eye off the environment [in a slowdown], as what businesses are good at is focusing on the priority of the day, and [in a slowdown] it will not be obvious that climate change is a priority,” he admits.
But companies should consider the benefits of taking environmental actions, he urges, rather than making “an emotional response” to forget green issues.
“The flipside is that almost everything businesses can do to tackle climate change is good for short term profits. Though the temptation is to say you must worry about core business concerns, the great beauty of the environment is that it plays to that. [In a downturn] you want to hunker down and sweat your assets – that means getting the most out of every last kilowatt of power,” he says.
Joe Ippolito of Deloitte says that these factors, and competitive pressure, will keep companies focused on climate change.
“We believe that sustainability as a concept is here to stay. In the medium term, sustainable practices will become a licence to operate rather than a competitive advantage. This will lead into a longer term decline in public interest ,as sustainable risk management becomes the new hot topic.”
He adds that employees also exert an influence: he cites a 2007 survey of MBA students which found that 77 per cent of them would willingly forgo income to work for a firm with a credible sustainability strategy.
A recent survey carried out by GCI found that companies were persuaded of the logic of going green, even in a recession.
Asked whether they would continue to invest in green initiatives during a recession, 143 out of 150 businesses in the US and the UK replied positively.
James Mahoney, director of global public policy at Bank of America, says the company’s $20bn environmental initiative is safe in a downturn. “In a period of economic slowdown, businesses face greater pressure to reduce operating costs,” he explains.
“With the increased price of energy, businesses are now finding they reach payback more quickly on investments in efficiency.”
Other businesses have also found “greening” their operations is economically beneficial. Pfizer, the pharmaceuticals company, saved $30m a year between 2002 and 2005 with its programme to cut energy wastage and use more power from renewable sources.
Wal-Mart, meanwhile, is set to save $3.4bn a year by reducing its packaging by 5 per cent. Less packaging also cuts fuel bills – by using less packaging on fewer than 300 ranges of toys, the retailer saved $3.5m in transport costs in one year.
Another factor that may keep businesses cloaked in green is the sheer loss of face involved in backsliding on public environmental commitments made very publicly during times of economic plenty.
Would Marks and Spencer, the UK retailer that announced to great fanfare it would become carbonneutral as part of its “Plan A” for the planet – so-called because “there is no Plan B” – be able to admit it was opting instead for Plan C for cuts or D for downturn?
A stronger force will be regulation. Governments around the worldhave plans to toughen environmental standards to cut greenhouse gases to the extent that scientists say is necessary to avoid catastrophic climate change.
Some have come under pressure to soften their commitments – heavy industries in Europe have been lobbying the European Commission to ease some of its strictures affecting them under the European Union’s emissions trading scheme, by continuing to give them free permits to emit carbon.
Though this special pleading may win concessions, it is unlikely to sway the Commission’s proposal to cut emissions by 20 per cent by 2020. The broad direction of policy is likely to remain in favour of tighter regulation, even in the US, where Congress is considering a cap-and-trade scheme for carbon.
Mr Mahoney says: “The path of regulation is clear. It gives a double incentive [to invest sustainably].”
Even if businesses heed these calls, however, becoming greener in a downturn will not be easy.
Jan Babiak, managing partner, regulatory & public policy at Ernst & Young, says: “Tackling environmental concerns at a corporate and consumer level, requires an unprecedented engagement from government, business and the consumer. We all need to move forward in a choreographed way, globally.
“The closest the international community has come to a collective response to an issue of this magnitude was Y2K, which had a fixed deadline and a defined and easily measurable solution.
“But Y2K only provided a glimpse of what it will take to address climate change – and get it right.”