Is the US awakening to the Importance of Sustainability?

Part 1- US Business and the Influence of Employees & Customers

by Paris Arey - GCX President - USA

This is a six-part series that will explore the complex question of “Is the US awakening to the Importance of Sustainability.   When viewed through an environmental lens, sustainability can be defined as the way a business creates value for its stakeholders and society by maximizing the positive and mitigating the negative effects on the environment in order to grow revenue, reduce costs, manage risk and grow goodwill.  This definition gives focus to the foundational drivers of a business while adding the new dimension of environmental impact, which we all know has ranked low on the American agenda and so any ranking change will only occur when a multitude of events intersect to create tangible and non reversible momentum.  

For US Businesses, achieving sustainability is a competitive imperative.  Now this might seem like a huge statement, but when you consider that what is at stake is leadership in the next industrial revolution, specifically the “clean energy” revolution, there leaves little doubt that every profit driven business will capitalize on the financial opportunity that this revolution will bring.  After all isn’t this the American way?    This position is netted out by Steve Chu, the Nobel-Prize winner and new leader of the Department of Energy when he recently commented about what is at stake “this is about international competition and who will lead in this new industrial revolution”.  In short, sustainability in America is as much about capitalism and global power as it is about having the social responsibility to save our planet.  While this may seem unpleasant and backwards it can be seen as a strong motive for the change we need. 

Putting aside the significant profit motive of American business, it is important to look at the changing dynamics of the two arguably most important stakeholders that affect a business’s ability to exist: Employees and Customers.

Employees

Recent studies indicate that in the face of an aging workforce and global competition for talent, organizations that take sustainability seriously will be better positioned to attract, retain and motivate the most qualified employees.  While we might believe that this is a new trend the reality is that it has been an emerging trend for some time.  In 2004 Stanford Business School conducted a survey with their MBA students, to determine the important aspects of potential employers.  The results were surprising 97% said they would forgo an average of 14% of their salary ($11,480 per year) to work for a company that cared about its employees, stakeholders and sustainability.  Four years later in 2008, Monster.com found that 92% of the undergrads that they surveyed wanted to work for a green company.  The political climate for change and the economic crisis that has reinforced it has had a growing undercurrent from employees who want and expect more from the company’s they make a commitment to. 

As a result , over the last 10 years American business leaders have been waking up to the new dynamic that employees, who can make or break a company’s success in challenging times, need to believe in what the company stands for and sustainability is quickly becoming a defining value for employees and customers.  

Customers

Today in the US there is an important trend showing that more consumers are including environmental factors into their buying decisions; however, the primary purchase focus continues to be on the traditional value points of price, quality and performance.  So while consumers want to act green, surveys have shown that 61% of consumers believe that corporations should take the lead in addressing the issue of sustainability. 

Companies are responding with eco-friendly products that are beginning to shape the food, personal care and home cleaning market segments. To keep this trend going, the tiny market share of green goods must increase and businesses must educate customers about the benefits of green products while creating green products that meet customer needs.  The logical starting point here is to understand the green minded customer.

Recent consumer reports have shown that rather than age, it appears that key values and financial status are defining characteristics in determining consumers’ level of interest in green products. These eco-conscious consumers come from all age groups, and tend to be from the mid to upper economic levels.  Key values for this group are identified as a belief in the green movement, a strong sense of community and personal pride.  While this remains a small consumer base it represents an important consumer mind shift that can be seen as a long term growth market opportunity for American businesses.

An awareness and preference change in US employees and customers on environmental sustainability has taken place and there is good reason to expect that it will not reverse.  Ironically this awareness and growing preference has been fueled by the financial crisis, rising energy costs, the skepticism in big businesses, the Middle East conflicts, the current political debate on economic recovery, job creation and the sharing of American’s super power status.  One benefit of a consumer driven economy is that US employees and customers will unequivocally play an increasing and driving role in awakening the importance of sustainability.  

In the second series we’ll discuss how economic booms, busts and the Great Recession are redefining the “American Dream” for sustainability.