Why Should Companies Go Green?

Updated: May 22, 2019

Over the years there have been increasing debate about the reality of global warming and it’s pervasive effects. Regardless of this, there are a couple facts that have been established: some natural resources that are used are non renewable, unsustainable, and polluting to the planet. Many companies are opposed to going green because they do not see the market to do so, they also argue that it is not cost effective, or profiting, to change their operations. Walmart and General Electric are two examples of companies that have invested in green technology and have seen the benefits, there are also new marketing strategies that can be implemented to increase the sales of green products (Boerner, 2008; Stafford, 2003).

One main reason why companies choose not to go green is because they do are not convinced of the benefits. Two companies that have been successful in being more eco friendly are Walmart and General Electric. Investors often look to invest in new technologies, and companies that are developing innovative products, such as the sustainable packaging and shipping methods Walmart created. The benefits of this new technology is not solely limited to Walmart, also extends to the companies in their supply chain as well as other retail companies (Boerner, 2008). Comparatively, General Electric (GE) has invested over $1.5 billion to researching and developing green technologies. While GE has used these technologies within their own company, they have made billions of dollars from selling them to other companies who are also trying to be more eco friendly (Boerner, 2008). From their advancements they have made more than $25 billion in new revenue, as well as saved billions of dollars by cutting down their greenhouse gas energy usage (Boerner, 2008). There are a few factors that companies should think about when debating going green such as unsustainable resources, reliability of resources, and long-term value.

The leader of the global sustainability practice at AT Kearney, Daniel Mahler has pointed out factors that companies need to consider when thinking about going green or continuing their operations as they are (Boerner, 2008). Companies may face escalating prices as resources used in processing and shipping such as fossil fuels become more scarce. Walmart’s green shipping innovations combat this problem by needed less fuel to transport that same amount of product, for example. The products that affect the operating costs of companies should also be reliable, however some resources are concentrated in the hands of unreliable providers (Boerner, 2008). Global tensions greatly affect this reliability because there are many resources used by companies that are controlled by unstable nations, which could affect their operation and profitability if those resources were no longer accessible. By taking the initiative to become more green, companies like Walmart and General Electric will have more long-term value because they can better avoid problems in the future, like keeping up with elevated prices for resources, and other conditions that will affect companies that are less efficient (Boerner, 2008).

One argument companies can make against going green is the lack of a market for eco friendly products among consumers. It is argued that over the years the U.S. has focused more on terrorism, war, and the economy rather than being more efficient (Stafford, 2003). However, efforts against terrorism have been used to inspire consumers to go green by promoting less dependency on oil from countries tied to terrorism. It has also been found that consumers are increasingly choosing products that are more convenient to them rather than safe for the environment. In order for companies to be more successful in their sale of green products, they have to make sure the quality of their product is comparable to the quality of a more convenient product. They should avoid the trade-off between cost and quality if they want consumers to pay extra for a more efficient product (Stafford, 2003). Since consumers are more concerned with products meeting their basic needs, companies should focus on capitalizing on the convenience and health factors of their product such as being “non-toxic” or “safe” rather than “biodegradable” and “ozone friendly” (Stafford, 2003). Some customers may not be know what the former words mean, therefore they will be less likely to buy them.

Companies choosing to not go green lose out on revenue and also be unable to produce their products due to using nonrenewable resources. There are success stories of companies rethinking their operations and capitalizing on new green technologies. These companies save money on their operating costs, and they also make more profit by selling these technologies to other companies. The market for green products can be revitalized by focusing on the priorities of the consumers when promoting the eco friendly attributes of a product. The war on terrorism and the focus on homeland security has previously deterred consumers and the government from the dependance on oil and other resources that are controlled by unstable nations. This also builds the market for green products, as consumers find it a way to contribute to the solution of this problem.

Work Cited

  1. Boerner, H. (2008). The greening of public corporations. Corporate Finance Review, 13.2, 32-35.

  2. Stafford, E. R. (2003). Energy efficiency and the new green marketing. Environment, 45.3, 12.

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