Green Business and Sustainability Management Have Finally Arrived

The $800 billion federal stimulus package is only slowly starting to kick in, and we see the President pushing to

The $800 billion federal stimulus package is only slowly starting to kick in, and we see the President pushing to accelerate job creation over the summer. The good news is that a recent study of green jobs by the Pew Charitable Trusts indicates that the Administration’s focus on sustainability is sound economics- and the government may very well be throwing its money in the right direction after all. According to the Pew study:

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“The number of jobs in America’s emerging clean energy economy grew nearly two and a half times faster than overall jobs between 1998 and 2007… Pew found that jobs in the clean energy economy grew at a national rate of 9.1 percent, while traditional jobs grew by only 3.7 percent between 1998 and 2007.  There was a similar pattern at the state level, where job growth in the clean energy economy outperformed overall job growth in 38 states and the District of Columbia during the same period….This promising sector is poised to expand significantly, driven by increasing consumer demand, venture capital infusions, and federal and state policy reforms.”

The Pew study carefully defines green jobs to include employment in: “(1) Clean Energy, (2) Energy Efficiency, (3) Environmentally Friendly Production, (4) Conservation and Pollution Mitigation, and (5) Training and Support.”  This is an important and methodologically sound study and Pew is to be congratulated for a thorough and creative piece of policy analysis.  (O.K., the professor in me is enough of a wonk to get a little thrilled by the quality of this work… what can I say?).

I am seeing increasing signs of the mainstreaming of green business and its move out of public relations and green washing into the world of hard-headed, realistic business practice. As performance measurement systems have become ubiquitous within organizations, management has focused on reporting cycles that include quarterly, monthly, weekly and even daily reports. This focus on the present creates an organizational culture and environment that makes it very difficult for the issue of long term sustainability to be taken seriously. However, we are starting to see the notion of sustainability added to the definition of effective management. Organizations seek to maintain themselves. An organization that fails to take into account the long term sustainability of the planet may survive while everything around them dies, but the odds are against them. My view is that healthy organizations depend, more than they think, on a healthy planet.  Organizations have trouble absorbing those long term considerations, but many of the best managed companies are starting to learn how to act sustainably.

It comes down to the issue of waste and the relationship of efficiency to good management.  Why wouldn’t an organization strive to maximize the productive benefit of all of the resources that they have access to?  One way that successful organizations thrive is by keeping the costs of production and service delivery as low as possible without sacrificing quality. If there is a technology that can allow you to use less energy, water or other materials in production, all things being equal, why wouldn’t you use it? The issue is often one of competing capital investments. The funds for reducing waste are the same funds needed to actually produce the product or service you are selling. Shouldn’t the rate of return for sustainability investments be analyzed the same way you would analyze other investments?  The mania for short term financial gain is both the enemy of sustainability and also, as we learned in the recent economic crash, the enemy of a sound economy as well.  This was clearly articulated by Mindy S. Lubber, the President of Ceres, a U.S. coalition of investors and environmental leaders in mid September, 2008:

“The fiscal crisis on Wall Street is a painful lesson in how entire industries can delude themselves into ignoring the most fundamental issues — in this case, the hidden risks from easy sub-prime mortgages. It also reveals the vast pitfalls of an economic system obsessed with short-term gains and growth at all costs while ignoring essentials such as building long-term shareholder value and protecting the future of the planet. As we confront global climate change — perhaps the biggest challenge mankind has ever faced — business and government leaders have an opportunity to learn from the ongoing Wall Street debacle and get it right.”

I often hear arguments about the relative role of government and the private sector in building a green economy. This is more of the same old tired debate about socialism vs. capitalism. At the risk of stating the obvious, let me reiterate: The war between the commies and the capitalists is over…. And the winner is…. both. We need government to encourage “green” practices with regulation and incentives, and; we need the private sector to actually do the work of building the green economy.  The Pew study indicates that over the past decade the green economy has grown faster than the rest of the economy. The Obama recovery strategy is built on the idea of using government funds to accelerate that growth. It makes sense to me.

Green Business and Sustainability Management Have Finally Arrived