Creating an environmental policy that works for your company
Eco-advantage was a novel idea five years ago when environmental strategist Daniel C. Esty coauthored the first edition of the business book Green to Gold (Yale University Press, 2006).
“There were just a handful of companies that had begun to realize the value of bringing an environment or sustainability focus to corporate strategy,” Esty recalls. “Today, a very large number of companies understand this logic, and the challenge has turned out to be not just that you should do it, but what to do.”
That’s where Esty’s new book, coauthored by Corporate Eco Forum Chair P.J. Simmons, comes in. “Green to Gold was basically about why it makes sense to bring environment and sustainability focus into core business strategy,” he says. “The Green to Gold Business Playbook [Wiley, 2011] tells how to do this.” Here, he lets Profit readers in on the secrets to shaping a smart sustainability strategy.
Profit: What do businesses need to know about going green?
Esty: It turns out that the environment and sustainability agenda has lots of pieces. Not every green initiative will pay off, and there will be a certain process of trial and error. It makes sense to expect some success and some things not to work out. Companies should do more of the things that are paying off—and end those things that are not, so they can try something else.
It’s important for companies to pick some initial priorities to focus on, and then move on to other issues. Recognize which initiatives will pay off—and pay off biggest—and focus on those first.
Profit: What are some easy initial wins?
Esty: Almost every company is going to find opportunities to cut their energy spend, which will both reduce emissions and bring down costs. And for a good number of companies, there are going to be opportunities to become more efficient with other products—whether that’s water or the materials that go into something they’re manufacturing.
Profit: How can companies use technology to become more efficient?
Esty: One of the big areas of opportunity for companies that are in any way information technology intensive is to really pursue a green IT agenda that, again, cuts costs and improves results at the same time. A lot of companies have realized you can improve the efficiency of operations, cut the electric bill, and reduce emissions if you embrace some of these new opportunities like cloud computing and virtualization as a strategy.
Profit: What about compliance and regulation?
Esty: It certainly makes sense to keep an eye on the unfolding environmental issue set. Companies managing that with a clear focus are more likely to spot issues early and figure out how to become compliant with the law in the lowest-cost way. They may in fact get themselves advantage in the marketplace while the competition is still floundering.
Profit: You just started working as the commissioner of Connecticut’s new Department of Energy and Environmental Protection. What’s exciting about the new job?
Esty: It gives me a chance to put into the policy realm the work I’ve been doing over 20 years on a more business-oriented approach to environmental protection. I’ve tried to argue that the best path forward toward a clean energy future and a world that’s going to make environmental protection central to how we do business is to get beyond the narrow focus of command, control regulation, and figure out a broader portfolio of incentives that engage the private sector in delivering solutions to our range of environmental challenges.