Since its emergence over the past decade as a
key concern of CEOs, corporate responsibility
has had its doubters and naysayers. So you might
expect the severe global economic downturn to
present a serious challenge to those arguing that
corporations need to continue to focus on social
and environmental commitments.
Surely, when companies are contemplating their very survival, squishy notions of how to be better global citizens should be the last thing on a CEO’s mind.
As counterintuitive as it might appear, however, when it comes to the environment, the reverse seems to be happening.
Global companies that have taken initiatives to reduce their environmental impact are continuing to invest in them and are communicating them with more urgency than before. Realizing that good environmental practices such as energy conservation and reduced packaging save costs, they are expanding efforts, not in spite of the grim economy but because of it. And with a new administration in Washington set to provide fresh incentives for green behavior, companies stand to be rewarded for doing right by the planet.
When companies first considered environmental responsibility, it was largely a reaction to consumer demands that business behave differently. In essence a negative imperative drove it. “If you ignore this issue,” went the argument, “you run the risk of a consumer and media backlash which will harm your reputation and erode your profitability over time.”
The first green corporate initiatives in the mid-1990s were characterized as much by their superficiality as by their enthusiasm. “How many light bulbs can we replace with compact fluorescent lamps?” was the refrain of newly-minted corporate responsibility and sustainability officers. While barely scratching the surface of a company’s total environmental impact, these measures have netted sizeable savings. Wal-Mart recently trimmed $3m from its annual electricity bill by switching to low energy LED refrigerator lighting.
But strategies for environmental efficiencies have since become more sophisticated, addressing every aspect of a company’s carbon footprint. Good ideas in one facility have been adopted as best practice throughout all operations, harvesting bigger savings. PepsiCo, for example, has experienced this multiplier effect. By applying water reduction and replacement technologies pioneered at one Gatorade plant to other factories and divisions, the company has wiped $30m off its utility costs since 2004.
These figures finally provide evidence of the value of corporate responsibility, not expressed as some fuzzy, difficult-to-measure reputational benefit, but in hard numbers which can be scaled up within the business.