In companies adopting green strategies today, the state to aspire to might be called differentiated green
. This phrase describes companies that have moved beyond complying with regulations, reducing their energy use, or marketing ecologically safe products. Such companies make pro-environment policies the cornerstone of their
business and a defining corporate strength. Companies that have embraced this approach pursue green strategies throughout their operations and opportunistically use them to enhance performance. For example, Kaiser Permanente is
building new hospitals with rubber flooring (instead of vinyl) and PVC-free carpeting, thus promoting health-care facilities that are actually healthy. The company expects to obtain long-term paybacks from a healthier patient
population and increased market share.
The transition to differentiated green is gradual. Typically, companies begin by lowering their costs and reducing their
negative environmental impact with nascent green programs, thus gaining internal and external credibility and beginning to build the capabilities required to drive green business at the highest level. To adopt a differentiated
green approach, organizations must take seven steps.
The Seven key components of a Green Business Strategy
Corporate leaders across all industries now face growing pressures to become more sensitive to their
companies' energy consumption and environmental impact.
While environmental concerns may start with the CEO, they quickly filter down to other C-suite executives and line-of-business leaders, who are being asked to quantify
and reduce corporate energy use and environmental footprints, streamline supply chains, meet regulatory requirements and modify IT departments to drive more energy-efficient operations.
These activities are not merely
environmentally responsible: they can also drive cost savings–another universal corporate mandate. For example, according to IBM's projections, $1 in energy savings can often drive an additional $6 to $8 in operational savings. In
addition, green policies can provide competitive differentiation.
To develop policies that are both good for the planet and good for business,
corporate leaders must consider questions such as:
* Are all aspects of our business, including operations, IT and product lifecycle management, efficient and protective of the environment?
* As part of our overall strategy to increase business efficiency, are we considering that environmental stewardship and energy consumption are new business barometers?
* Does our organization maintain a public commitment to meaningful and achievable goals, with transparency in reporting
progress in meeting those goals?
* Are we taking a leadership position in driving
energy conservation and environmental stewardship through the value chain and across our industry?
* Do we have a strategy that supports reducing costs, lowering complexity, and increasing operating and energy efficiency?
* Are we looking for ways to improve IT operations to generate more computing performance without increasing power consumption?
* Are we experiencing social and regulatory pressure and responding with verifiable
energy conservation initiatives that proactively address energy and climate challenges?
* Are we pursuing the development of energy and environmental strategies and policies to improve business and brand position?
Each of these issues can seem complicated when considered
individually and perhaps overwhelming when viewed as an interrelated group. They require a framework that helps identify and prioritize environmental efforts by illustrating how problems and opportunities can be broken down into
distinct areas and then segmented into manageable projects to be addressed. These projects can be joined to form a cross-organizational program managing energy and environmental issues.
Building a framework
This framework must address the needs of various executives in developing and implementing energy and environment strategies: the CEO's need to respond to customer, government and employee expectations; the CFO's need to deal with
changing cost dynamics for energy; COO's and line-of-business' needs to design and implement new processes; and, the CIO's need to increase computing power while managing energy consumption.
Overall, this framework must
cover seven business components: strategy, people, information, product, IT, property and business operations. These components are common to virtually any enterprise or organization dealing with energy and environment issues.
The creation of an enterprise-wide energy and environment strategy as part of an overarching corporate social responsibility plan can help companies address "green" issues, resulting in improved financial
and environmental outcomes. Issues to be considered include the alignment of a company's environmental strategy into an overall business strategy and how environmental values may be translated into an improved brand image.
The impact of employee behaviors and policies on the environment is significant. Commute time and business travel form a large part of an individual's carbon footprint. The use of online collaboration tools and
policies that support reduction in commuting and traveling can also have an impact on costs. Companies also are discovering that their environmental policies and practices can impact their ability to attract and retain top talent.
With data compounding between 35 percent and 70 percent annually in some industries, it's critical for companies to better manage their data infrastructures. Optimized collection, analysis, tiering
and storage of key information helps companies comply with reporting mandates while minimizing their data footprints. These same information strategies improve business operations by improving information access and system
response. They help reduce storage needs through sharing, elimination of redundancies and compression.
As companies begin to understand the environmental impact of their products or services across the
entire product lifecycle, they can design products in a manner that has a lower environmental impact. Streamlining product development and manufacturing also means less material used, less waste created and less energy consumed.
Concurrently, an examination of the product or service lifecycle often helps businesses find and exploit market opportunities. Finally, the need to reduce energy consumption is driving an increase in the energy-management
intelligence built into certain products.
Information technology is putting increasing levels of stress on power and cooling infrastructures. According to IBM estimates, IT kilowatt-hour
usage has increased fivefold in the past five years. This IT-related energy use contributes to the establishment's greenhouse gas emissions. CIOs and IT managers view this situation as an economic and environmental crisis.
Corporations need IT energy efficiency strategies designed to help them focus their efforts. A thorough understanding of IT energy consumption, operations and constraints is the foundation for improvement. From this foundation,
companies can devise strategies to help them improve IT efficiency and resiliency, address emissions, reduce energy costs and measure their success against business goals.
Companies need to reduce the
cost and greenhouse gas emissions of their physical assets-from office buildings to truck fleets. The process starts with determining and managing the environmental impact of physical assets and properly maintaining all property
for energy-efficient operations and reduced environmental impact. Through improved maintenance and through improved tracking, deployment, location, and management of facilities and properties, reductions in environmental impact can
Corporations need to transform business processes to reduce environmental impact for operations end-to-end. Consider energy or water consumption, as a start. Understanding and
controlling these costs can be achieved only once a company measures its existing use and compares it against conservation benchmarks. Through the use of "smart" systems, dramatic efficiency improvement can take place. Any
transformation plan put into place must be communicated to key stakeholders.
Addressing any of those seven key components of a business can tangibly lower a company's energy usage and reduce its environmental impact.
Addressing them in combination, however, can dramatically amplify those effects in making a company more competitive, successful and social responsible.