By Rick Bunch
May 21, 2009
Michigan’s economic history, like that of much of the country, isn’t particularly “green.” But as the automotive and heavy manufacturing sector that has defined our business backbone faces unprecedented challenges, we are opening up enormous opportunities in clean technology, alternative energy and other “green” areas. Led by Governor Jennifer Granholm, the state has begun offering compelling tax incentives, and attracting keen investors and start-ups.
But the greening of the Michigan economy shouldn’t stop with a few eco-friendly companies in narrow sectors. We need to expand sustainability to the entire business community, even those without inherently green (or “brown”) products or services. Why? Because going green isn’t just a fad. It will fundamentally shape business strategy in this state, across the U.S. and globally in the decades to come.
Putting Green in Perspective
For many years, sustainability was considered a cost that cut into operating margins or restricted growth. That has fundamentally changed. From hybrid cars and energy-efficient light bulbs, to reusable shopping bags and recycling programs, consumers now expect environmentally friendly products, services and practices.
According to a recent survey, 54 percent of shoppers actively consider environmental sustainability characteristics when buying. And companies have responded: green product introductions remain strong in 2009, rolling out at a rate that -if it continues-will triple that of 2008, which itself was twice 2007.
This momentum, coupled with the current recession, presents a perfect storm of ecological and economic consciousness which demands that businesses respond or fail. In the post-recession economy, making decisions that are both environmentally sound and fiscally responsible will be the new business-as-usual. What was once considered an added cost is-and will continue to be-the most cost-effective way to do business.
But many are still challenged with a simple, yet daunting question: how can I kick-start or enhance my company’s sustainability efforts?
Short-Term Goals, Long-Term Gains
Regardless of your industry, size or budget, incorporating sustainable practices into everyday business and long-term strategy is essential - and doable. The key is to set attainable, short-term goals that deliver tangible business benefits while aligning with your overall growth strategy. In the long run, you’ll begin to adapt your current strategies to meet consumer demand for green goods and services, while creating competitive advantage by making sustainability part of everyday operations.
For example, an electronics component manufacturer might take on energy consumption, sourcing and distribution as areas that can deliver quick sustainability wins. Current government incentives can support the purchase of more energy-efficient fixtures, heating units or even solar panels to reduce energy use. Sourcing parts from environmentally responsible partners is another quick-win: heavy metals and other electronics inputs inevitably make their way “downstream” to the consumer (and the consumer’s landfill). Manufacturers aren’t currently held accountable for that kind of environmental impact, but with a growing level of consumer awareness, that soon will change. Better to source well now than pay later. And like any other business, a components maker can invest in bio-diesel or hybrid vehicles to reduce its footprint from deliveries and distribution.
To support sustainable practices, look at the top line as well as the bottom line. Going green is an investment in your future as a business. Consider hiring employees whose experience and education make them uniquely qualified to understand the business and the science of sustainability. As examples, organizations as varied as global retail brand Wal-Mart and the local nonprofit Huron River Watershed Council have hired graduates of the University of Michigan’s Erb Institute, an MBA+MS program in sustainable business.
Finally, forge smart partnerships. Industry-government associations such as The Southeast and West Michigan Sustainable Business Forums, Michigan Economic Development Corporation (MEDC) and the Michigan Department of Environmental Quality’s Environmental Science and Services Division provide terrific resources for understanding the implications of going green, and can put you in touch with suppliers, vendors, and even customers who want to work with sustainable businesses in this region.
Seeing the Change in Action
And if you build it, they will come. Young employees and job candidates increasingly seek companies that demonstrate a strong commitment to environmental and social initiatives. A better pool of job applicants and employees who are more committed to helping the company succeed will inevitably support sustainable strategies. In Michigan, we’re already seeing increased demand from people who want to work in sustainability, CSR or other eco-friendly roles. For example, enrollment in the Erb Institute has grown over 20 percent per year since 2003 and is poised to continue this year and into the future - resulting in a uniquely trained workforce eager to advance companies’ environmentally sustainable efforts.
Michigan has taken the stage in many of the negative economic stories surrounding the Big Three, but the state’s second act will be defined by its business community’s ability to innovate. Michigan’s business leaders need to think long-term but act now to ensure that sustainability isn’t just a buzzword, but a meaningful way to tap into new thinking, build new alliances and ultimately create a new economic foundation for this region.
Rick Bunch, Managing Director of the Erb Institute for Global Sustainable Enterprise at the University of Michigan. He is a well respected name in the green/sustainability space and has been widely quoted by top media on everything from carbon emissions and climate control, to the impact of the stimulus on the green sector, green jobs and sustainability education.