In Recession, Business Keeps Going Green

by Joel Makower

Given all that's been going on—the global economic meltdown and the tectonic political shifts—going green should be the last thing on the mind of any CEO. In such challenging times, "saving the Earth" should rightfully take a back seat to "saving the business."

Or, maybe it need not? Consider these announcements—all since Nov. 4, Election Day:

Bank of America (BAC) plans to phase out loans to companies that use mountaintop extraction as their primary means of coal production. It also will give $1 million to Harvard to study the implications of capturing the greenhouse gas emissions generated by burning coal.

Clorox (CLX) has expanded its year-old Green Works line of eco-friendly cleaners, which has met with such success that the company raised its sales projections six times in 12 months.

Coca-Cola Enterprises (CCE), the largest bottler of Coke beverages, will more than double the size of its fleet of hybrid vehicles. It will soon have 327 green trucks on the road in the U.S. and Canada.

Heinz (HNZ), Sodexo (EXHO.PA), Sysco (SYY), and Unilever (UN) are among 30 large growers, food buyers, and environmental groups that formed the Stewardship Index for Specialty Crops, a coalition to incorporate sustainability from the field to the table for specialty crops.

Wal-Mart (WMT) plans to partner with the World Environment Center to help more than two dozen suppliers in El Salvador and Guatemala improve energy and water savings and reduce waste, raw material use, and emissions.

I could go on.

Only Nudging the Needle

In good times and bad, the greening of mainstream business marches on. Although the people—and their political representatives—have only recently taken notice, companies have been integrating environmental thinking into their operations increasingly for years.

It's all good, but it's not good enough. It's true that more companies are doing more things to correct years of environmental neglect. But all these efforts collectively move the needle of environmental progress only slightly, if at all.

To be sure, there's much to celebrate. We're using an ever-shrinking amount of energy, water, and toxic materials to produce a unit of gross domestic product. Green building is on the rise, spurring technologies that save energy and money while creating more healthful workplaces. There is a green race taking place in the automobile industry, with every major manufacturer planning to introduce electric vehicles. The leading consumer product companies and retailers are starting to rigorously assess the environmental impact of their products using sophisticated metrics, sending signals along the supply chain that tomorrow's products will need to hew to higher levels of environmental responsibility.

An Issue of Scale

But on balance, despite a growing chorus of corporate commitments and actions, I'm less optimistic that these activities, in aggregate, are addressing planetary problems at sufficient scale and speed. President Obama's stimulus plan will help create demand for some green technologies, but they won't necessarily move companies to transform their operations in ways that dramatically improve efficiencies and reduce pollution and waste.

Consider: Absolute greenhouse gas emissions grew 1.4% in 2007 from 2006 but shrank 0.6% as a unit of GDP—the smallest annual decrease since 2002. The U.S. has steadily reduced the amount of greenhouse gases produced per unit of GDP since 1990, when the greenhouse gases per GDP were roughly 28% higher than in 2007, largely because of strides in energy efficiency. But these are far from the level to which President Obama—and most scientists—say are needed to stem the worst impacts of global climate change.

Or consider electronic waste: Despite widespread discussions in boardrooms and legislatures about the dangers of e-waste, we recycled only a tiny fraction more e-waste in 2007 than the year before, even as the amount of toxic electronic equipment entering the waste stream grew substantially. In 2007 the most recent year for which data are available, we collected only 18% of the 1.32 billion tons of computers available for recycling, according to federal data.

We're merely treading water. What slight progress we may be making has been offset by economic growth, at least until recently. It's unclear whether the economic downturn will spur an increase in efficiency measures or lead companies to set aside such investment for now.

Leadership at All Levels Needed

At the end of the day, the questions remain: Are we moving far enough, fast enough? Does the ever-growing green activity in the business world represent a true transformation, one capable of adequately addressing pressing issues such as climate change, air quality, the loss of species, and the looming water crisis? Or is it merely nibbling at the edges of the problems? Reasonable minds can justifiably argue both sides.

But the data don't lie: What's taking place in business is encouraging, but it seems too little, too late. Without a major push by companies—in partnership with federal and local political leaders, activists, and consumers—what's going on isn't much more than random acts of greenness. We'll need leadership at all levels to make Mr. Obama's "green economy"—creating jobs, improving communities, engendering security, and ensuring clean air and water for all—more than just a well-intended slogan.

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