Extreme weather introduces enormous uncertainty into our economy, communities, and business operations. The rise of the global middle class, particularly in China and India, is placing unprecedented demand on natural resources and driving up nearly all commodity prices. And technology is enabling a new level of transparency about every product and every company’s operations anywhere in the world (think Apple’s exposure over the treatment of supply chain workers in China).
On the “it’s profitable” front, strategies and tactics that take the mega-forces into account create tremendous short and long-term value. This isn’t about social responsibility or philanthropy, but about business value.
Becoming more efficient by cutting energy, water, and other inputs saves a lot of money. Companies like Dow, DuPont, and Walmart have cut billions out of their cost structures in everything from facilities and manufacturing to IT and fleet. Other leaders like GM and AB Inbev have turned waste into a profit center by selling waste instead of sending it to landfills (In just a few years, GM has made $2.5 billion).
The obvious benefits of eco-efficiency just scratch the surface of green value. Companies that assess their environmental and social impacts up and down their value chains also find tremendous opportunities to innovate. GE’s Ecomagination marketing and product development platform – which includes more energy efficient jet and railroad engines, wind turbines, and water efficiency systems – is now generating tens of billions of revenue and has grown twice as fast as the rest of GE’s product portfolio.
Add the risk reduction and brand benefits to the cost-cutting and revenue-driving mix, and you have a potent formula for creating substantial value. The ICT industry is very well positioned to take advantage of these strategies. As the ICT industry has pointed out in its Smart 2020 reports, intelligent use of technology can help reduce emissions and energy use throughout the economy (IBM’s “Smarter Planet” campaign is based on this idea). This reality represents an enormous opportunity for telco companies.
One telco giant in particular, British Telecom (BT), has been aggressive in seeking and creating green value. In 2007, the company pledged to cut its own carbon emissions, which tie very closely to energy use, by 80% (from 1997 levels) by 2016. The company is well on its way, finding more savings every year – 3.3% in 2012 alone. It’s a difficult feat given the continuing massive growth in network volume. But the efficiency efforts are saving the company £22 million ($33MM) per year.
For BT, sustainability is not a side issue: The company’s goal to be “a responsible and sustainable business leader” is one of just six publicly stated strategic priorities. In support of this sustainability goal, BT developed a new program dubbed “Net Good.” The aim is to help customers reduce their carbon footprint by 3 times the amount of BT’s own “end-to-end” impacts (which run from supplier footprint to customer use).
Teleconferencing is a prime example of a product that helps BT reach the Net Good goal. The equipment requires energy to make and obviously to use, but it saves much more energy by helping customers avoid business travel. “Net Good” is as much an innovation strategy as it is a tactical program: to hit the 3 to 1 target, the company will need to think about its portfolio of products and develop even more carbon-reducing solutions.
By slashing its own energy use the company is saving money and building a more flexible, resilient enterprise (less reliant on volatilely-priced fuels). And by helping customers do the same, BT is setting itself up for innovation, growth, and competitive advantage.
BT and others like it are developing strategies in new ways that reflect new global realities. But the game has really just started as the world wakes up to the challenges it faces. Is your company suited up and in the game to win?