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June 25, 2009

Book Review: The Truth about Green Business
    by Robert Kropp

Author Gil Friend surveys the current state of sustainable corporations, and provides steps that companies can take to green their business. -- With climate change now an undeniable reality, and regulatory enforcement of such climate change initiatives as carbon markets all but inevitable, the time is now for business to confront its effects on climate change, and retool operations so as to minimize risk and exploit opportunities.

According to Gil Friend, author of The Truth about Green Business, society's ability to meet the challenge of reducing global greenhouse gas (GHG) emissions by 80% below 1990 levels by 2050 depends upon leadership from the business sector. The argument over human activity being the cause of climate change is over, Friend argues, and companies that take such measures as steps to improve energy efficiency are most likely to benefit from the transition to a low-carbon economy.

Friend espouses a renewed attention to natural processes as providing a framework for the operations of sustainable companies. He argues that adherence to the laws of nature will encourage companies and societies to work together to eliminate the following: the buildup in the biosphere of substances extracted from the earth, the buildup in the biosphere of chemicals and compounds produced by society, the degradation and destruction of nature and natural processes, and conditions that undermine people's capacity to meet their basic human needs.

A realistic appraisal of the return on investment (ROI) of steps taken by companies to improve their eco-efficiency should convince such stakeholders as management and investors of the long-term benefits of such steps, Friend argues. He refers to guidelines established by the World Business Council for Sustainable Development (WBCSD) for opportunities provided by process improvements.

The WBCSD calls for business to reduce the material and energy intensity of its goods and services, reduce the dispersion of toxic materials, improve recyclability and maximize the use of renewable resources, improve the durability of products, and increase the service intensity of its goods and services.

Having established the case for transitioning business activities according to principles of sustainability, Friend devotes much of his book to providing suggestions as to how this can be done. Throughout, he refers to the activities of forward-looking companies as examples for his business readers to incorporate into their own sustainability practices.

Without effective measurement, companies are operating in the dark, and Friend supplies a number of steps that companies can take to accurately measure their effect on the environment. Ecological audits of the facilities in which business operations occur can lead to improved energy efficiency and reduced costs of operations. Using the Toyota Production System as an example, Friend argues that the creation of a corporate culture in which new opportunities to improve efficiency and reduce environmental impacts are constantly addressed can lead to increased profitability.

Friend's concise writing style captures the necessity of accurate measurement of a company's carbon footprint, both in describing the scope of activities to be measured as well as advising what companies should do with information on their carbon footprints once they have been measured.

The measurement of a company's carbon footprint must include both direct and indirect emissions, and should be expanded to include the emissions from supply chains and such corporate activities as air travel as well. Friend recommends that corporate carbon positions be reported to management, shareowners, and investors, as well as to such voluntary initiatives as the Carbon Disclosure Project (CDP).

Friend devotes several chapters to corporate relationships with suppliers, and advises companies to include environmental criteria in those relationships. Friend recommends that companies devise systems by which their expectations can be clearly communicated to their suppliers.

Once a company takes steps to improve energy efficiency and reduce its carbon footprint, opportunities to introduce green products and services to the marketplace should increase. Friend describes green products as those that minimize their environmental impact throughout their life cycles. One way to improve the environmental impact of products is by offering recycling programs to consumers, and Friend uses Hewlett-Packard's printer cartridge recycling program as an innovative example.

Finding opportunities to replace or augment product offerings with service is another strategy that Friend notes in many sustainable companies. Using IBM's multimillion dollar information solutions service as an example, Friend describes the transition from product to service as one in which ongoing relationships with customers can be established, and environmental impact minimized.

"Building your green strategy into the daily life of your business means changes in behavior, not just technology," Friend writes in the section of his book entitled "Green Management." Engaging employees and key stakeholders is crucial for such a change in corporate culture to take place, and Friend recommends that environmental performance be considered a management imperative. Rather than viewing environmental activists and sustainability investors as adversaries, Friend argues that the more effective course is one in which input on corporate decisions is sought from such key stakeholders before those decisions are made.

Managers who want to green their business can take a number of steps to ensure that they do so effectively. Friend recommends that cross-functional teams be established to identify key performance indicators, that data collection systems are devised to measure information accurately, that the results of measurements be communicated to stakeholders, and that corporate performance be compared to that of peers and competitors.

Friend closes The Truth about Green Business by advising companies not to wait for regulatory enforcement to green their business. Companies that "define the way forward by making a strategic asset out of integrating the laws of nature into their operating systems…are creating new profit centers out of unprecedented resource efficiency," he writes. Tools such as scenario planning and contingency plans should be regularly employed to ensure that companies engaged in greening their business remain on a profitable and environmentally beneficial course.

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