Leaders in the Clean-Tech Economy

While B2B customers and consumers alike universally applaud nearly every single “sustainable” thing a company does, they’re reticent to pay more for the privilege of helping serve the planet. About 10 percent of American consumers will accept a price penalty in order to purchase a product positioned as green or sustainable—but 75 percent won’t agree to trade off environmental advantages for a decrease in performance, and the remaining 15 percent still don’t care much about sustainability, even now, according to Procter & Gamble research.

Meanwhile, it’s up to CEOs to decide how far they want to go in committing their companies to the next environmentally pristine supplier, the next huge energy-efficiency initiative or the next green-tinged project to ensure that raw materials or manufacturing done on their behalf in an emerging market meets the standards of the sustainability police.

“Right now, the emphasis is on investment, but it will take a while to sort out what’s socially correct versus what’s correct for business,” says John Grace, president of corporate-branding consultant BrandTaxi in New York. “That’s what’s being determined in this period of time: what’s socially correct about sustainability versus what’s correct for business.”

Ever since the first Earth Day 43 years ago, a rising drumbeat of environmental concern has been fed by the American and global news and entertainment media and the educational system—even while industry worldwide has dramatically cleaned up its act. However, over the last five years, the sustainability phenomenon has become a juggernaut of concern for corporate governance for three reasons.

First, the children of Earth Day have become the consumers, business executives, managers, employees and bureaucrats of today, and their minds think in green hues about everything. Second, their predilections about sustainability are being translated every day into new-product designs, marketing campaigns, Hollywood movies and government mandates that spread and reinforce the sustainability ethos.

And third, the last decade’s dubious hype over “global warming”—fed by many of the same systems and sensibilities as the Earth Day phenomenon—has created a backdrop of strong expectations that companies now can never do enough to reduce their environmental footprints because vast climatic destruction is all but inevitable unless they do.

“All of these things exert an absolutely powerful force,” asserts Kathy Nieland, leader of PwC’s Sustainable Business Solutions practice unit. “But if you’re doing sustainability right, you’re delivering business benefits—ROI and all those things that businesses are looking for—as well as benefits to the environment and to the society in which you operate. It’s increasingly important to tell the story of what you’re doing, particularly for the younger generation of consumers.”

For example, Procter & Gamble has been boosting its own environmental responsibility for two decades, but lately it has been intensifying, broadening—and marketing—it in new ways. A recent emphasis has brought 50 plants worldwide to “zero-waste-to-landfill” status, saving $1 billion a year for the company by harnessing electricity from incinerating trimmings from Pampers production, for instance, and converting paper refuse into ceiling tiles in Mexico.

“Only in a landfill does that waste have no value,” points out Len Sauers, vice president for global sustainability. “Our goal was to find some value in all that waste, which has been a good investment for the company. Plus, not paying to have the stuff landfilled.”