Economic value in becoming sustainable

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Sustainability is becoming more compelling, as organizations find economic value in ‘going green’.

In the 2009 Newsweek magazine’s environmental ranking of the America's 500 largest corporations, technology brands dominated the top 5. However, consumers’ perception is different: most are not aware of the sustainability initiatives of technology companies, nor can they relate to the meaning of these environmental indicators to them, personally.

Many technology companies see market opportunities in implementing 'green' practices. As leading technology companies incorporate sustainability into their business strategy, educating customers and helping them become ‘greener’ is imperative.

Some corporations are increasingly taking a social responsible stand in educating their stakeholders, including customers, suppliers, employees, and the decision-makers. Consumers are not being educated well enough in what would be their personal benefits in choosing green. We are bombarded with eco/green/sustainable brands, which create confusion and skepticism.

There is still some degree of greenwashing, although, as we move out of the economic crisis, there is less of it and more recognition and focus on saving resources and on the economic value in sustainability. Three to four years ago, environmental messages centered on ‘saving the planet,’ whereas today, companies concentrate more on the economic benefits of 'going green'. Saving resources, saving energy, reducing costs, optimizing operations and facilities, streamlining business processes, greening the supply-chain, and more, are all considered the ‘other’ meanings of green business. These concepts and initiatives, which were not at the forefront a few years ago, have emerged into focus when the economy took a downturn a couple of years ago.

Becoming consumer-centric in the organization’s green strategy presents an opportunity to understand and inform the customers. Environmental leaders at technology companies like eBay, Intel, HP, Dell, and IBM indicate several challenges. Many companies don’t fully understand their customers’ expectations when it comes to sustainability. Customers’ primary motivations in engagement are not necessarily in the raw efficiency or sustainability of the product or service. Considerations such as whether the manufacturer or service-provider reduces carbon output, how efficient is the manufacturing process, can the useful life of a product be extended, or how is the product disposed - aren’t yet a top priority. However, every purchase has an impact on the environment.

At eBay, customers are looking for great deals and not for reduced carbon footprint. eBay helps users understand that buying pre-owned items actually saves resources and energy versus buying new products. Therefore, buying existing items, whether used or refurbished, is actually a green purchase. The company launched a dedicated green website called green.ebay.com that gives preference to products that were pre-owned, products that carry green labels, and products made from sustainable components - an obvious idea that consumers understand intuitively. The website also aims to educate about product usage and its entire life cycle, including end-of-life through alternate options - recycle, reuse (selling/buying used items), and disposal.

eBay uses three simple guidelines to help users choose items: 1. Preference of pre-owned products, i.e. re-use an item and save this way on raw materials required to make a new one. 2. Consideration of items that were sustainably made (i.e. use of organic fibers, renewable/recycled or salvaged materials, etc.) 3. Choosing products that save energy and resources, such as, Energy Star appliances.

Another example is Netflix, an online movie rental subscription service with approximately 10 million subscribers. Users can watch movies online or order DVDs, which are delivered via the US postal mail. The company is headquartered in Silicon Valley (Los Gatos, California) and operates in the US.
Netflix’s business model has a significant impact on climate change: the company uses minimal packaging and saves resources and materials. Netflix subscribers do not need to drive back and forth to a video rental store – therefore the carbon emission footprint of millions of customers is substantially reduced. Further more, Netflix's centralized movie warehouses, strategically located across the US to enable one day of mail delivery to most users, save on real-estate space (no need for multiple stores in many expensive central urban areas), yielding savings in leasing space, buildings' maintenance and operation, and energy usage. In addition, the online business eliminates the need for employing staff in multiple store locations – another cost saving measure.

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