Use Green to Grow (Not Just Cut Costs)

In the face of the current recession, there has been much talk about using sustainability to "get lean" by being more efficient. But in every crisis is also a hidden opportunity to grow, and today's economic turmoil is no exception.

For society and business, this crisis presents the rare chance for deep, fundamental, and significant change. Leading businesses, then, will look beyond cost-cutting. They will use sustainability as a lens to find ways, even in today's economy, to grow their top line — and to be poised for breakthrough success when macroeconomic conditions improve. Smart businesses will emerge from this downturn stronger than their competition by focusing on their customers' changing energy and environmental needs, preparing for a new policy landscape, and investing in tomorrow's clean technologies. Here are three ways to start:

1. Create more products that meet customers' energy and environmental needs
Seldom does a global trend provide the opportunity for businesses to fundamentally redefine their value propositions and relationships with their customers. The rise of the internet was one such trend; so is the run-up in mainstream awareness of energy and environment issues. Companies that are creative and disciplined will seize the opportunity of environmental sustainability to create innovative new offerings built around energy and environmental issues for consumers and business customers of all stripes.

Although the economic crisis may have caused resource scarcity and climate change to fade temporarily from the top of the public's agenda, the serious challenges we face remain. Companies that provide products and services to help their customers meet environmental challenges will out-green and out-compete those that don't. For an example, look at Johnson Controls, which is focusing on retrofitting existing buildings with systems that use energy more efficiently. (The building sector is responsible for about 40% of energy use in the U.S.). Similarly, a prominent real estate investment firm is leveraging the extra time its deal originators now have on their hands to scan the portfolio for efficiency retrofit opportunities that will increase asset values when the market rebounds.

You might think that green sales have slumped, but emerging research suggests that green products and services are in fact less recession-prone. While "eco-luxury" has fallen out of fashion, a range of recent studies suggest that the market for environmentally smart products remains strong. (This makes sense when you consider that the biggest obstacle to a green purchase is not cost, but customer knowledge that the product or service exists - that there's something better than the market's status quo offerings.)

2. Set your sails for new policy winds
A dramatically different policy environment has arrived. For new laws on climate, it's no longer a question of "if," but "when." Legislation to slow or reduce greenhouse-gas emissions is coming and it will affect every business, in every sector. And it's just the beginning. From new building requirements to fuel-economy rules to billions instimulus funding for green jobs, there is a lot at stake.

Firms that anticipate and understand the range of likely policy scenarios, and build defensive and offensive strategies to address them, will succeed where their competitors won't. IBM, with its Smarter Planet initiative, is just one company that is actively engaging its customers to help them address the challenges and opportunities of the changing policy landscape.

3. Invest for tomorrow, starting today
We can't be certain whether we have started to hit the bottom of this recession, but we will eventually — and mortgaging the future, particularly where environmental issues are concerned, is a poor strategic choice. Economic recovery is likely to raise energy and commodity prices, bring more of the world's people out of poverty, and further the demand for breakthrough green products and services, from the 80-mpg car to environmentally aligned financial products and professional services. Investment in tomorrow's offerings must begin today. In the spirit of this investment, GM is sticking with its commitment to produce the potentially game changing electric Chevrolet Volt, even in the face of potential bankruptcy. Will your company show the same courage?

Environmental innovation is a crucial component of the corporate strategies needed to succeed in the current downturn — and thrive when it ends. A relevant, credible, and differentiated sustainability strategy remains a path to business success. Embarking on that path is the opportunity of our time.

Nicholas Moore Eisenberger is Managing Principal of GreenOrder, an LRN Company. GreenOrder is a strategy and management consulting firm that, since 2000, has helped leading companies turn sustainability into business value. Ted Grozier is an Associate at the firm.