July 04

Going Green Translates to Good Business

Learning from the article that companies in the US are in an investing spree on this so called “green revolution,” I ended up thinking of reasons how these actions add up to the main goal of any corporation, that is to increase owners’ wealth. And this investing spree is not in the US alone. In our country, there’s Downy’s Isang Banlaw, energy efficiency ads from makers of compact fluorescent lamps, SM’s recycling depot and green bags and the advent of green cars (Prius by Toyota and Accord ’08 of Honda). The La Mesa Watershed was reforested with the help of several companies like Shell. And a lot of companies are sponsoring environmental awareness campaigns and projects. It sure is expensive to put up a wind turbine and generate your own electricity, to finance a reforestation, to design and run recycling programs or to renovate stores to refurbish their efficiency in terms of energy usage, yet a lot of companies are willing to invest money in these nonprofit endeavors. Maybe there’s (really) a lot more to sustainability than just selling products or even selling green products. But what is this “more?”

Corporate citizenship has been a popular concept in the business world. It argues that companies can pursue their long-term interests along with contributing to the development of the society and environmental sustainability. The pressure generally comes from expectant stakeholders. Customers expect companies to fulfill their social responsibilities as a survey shows that 9 out of 10 customers expect companies to be supporting and acting on social issues. Another study tells that 86% of the consumers are willing to shift to a brand associated with a cause. They are increasingly making decisions according to the social reputation of the brand or company, to quote Bradley K. Googins of Boston College Center for Corporate Citizenship. To establish a more concrete basis, let’s take the example of BT, a British telecommunication giant. Its caused-related activities comprise 25% of its customer satisfaction rating. Moreover, the research also shows that stopping the said activities would reduce customer satisfaction by 10% which translates to a 20%-30% reduction in revenues. Another good example is Whirlpool. Whirlpool has been donating refrigerators to every Habitat home built in US; then sales shot up by 47% and web site hits rose dramatically. Personally, I’d rather buy a product from a company which is involved in charitable acts even if it’s more expensive than the other brands available in the market. It’s like hitting two birds with one stone – I’m getting the product that I want and I get to help the company in its altruistic goals. I’m sure you think the same way as well. As mere humans, especially with the kind of value system we have as Filipinos and the current social and environmental crises we are experiencing, as much as possible, we don’t want to allow someone/or the environment to suffer at our expense and we’d be delighted to contribute anything we can to the betterment of the society and environment, so in turn we see socially and environmentally responsible companies as channels. As for the companies, the challenge is how to incorporate this growing consumer behavior to their operations to their advantage.

From these we can say that corporate citizenship has the power to influence consumer and employee behavior. There’s indeed a lot more to sustainability than just selling products. It’s good to earn a lot of money by selling your products well and by making your products sellable, but it’s also important not to forget that the intangibles (reputation, per se) are keys to long term sustainability in an era that holds rising expectations on business’ role in the society. Corporate citizenship, when exercised tactically, translates to good business.