Environmental Sustainability as a Business Opportunity and Risk
Consumers and businesses are starting to pay attention to the environmental impact of what they buy and sell. This is a trend responding to the reality of climate change, the loss of biodiversity, and a cultural awareness of the importance of the planet to human well-being. Of course, the definition of human well-being is changing in many parts of the world. In the developing world and places under assault like Ukraine, schools in Texas or supermarkets in Buffalo, the issue is survival. Staying alive and obtaining food, clothing, shelter, and protection from evil men with weapons is the priority in those places. But in most places in the developed world, human well-being assumes freedom from want and fear as a given and focuses on wellness and self-actualization. This leads to a concern for the environmental impact of human activity. While this concern is in some sense a luxury, for the planet, it’s a necessity.
It is not easy for consumers to know the environmental impact of a good or service. It’s also not easy to know how many consumers care or if this concern will continue to grow. Writing on this issue, Wall Street Journal reporter Ed Ballard observed that:
“Climate-change modeling largely draws from physical science. How much hotter will the world get as greenhouse gases enter the atmosphere, and what does that mean for heat waves, floods and harvests? But these hazards are only half the picture for companies facing pressure to assess their exposure to climate risks. The other half concerns people. Will consumers switch to eco-friendly products? Will governments raise carbon taxes? And how quickly could such changes occur?”
An even more important factor, not mentioned in this piece, is the impact of technology on the environmental impact of a product or service. The technology of renewable energy, energy transmission and batteries are all advancing, and so our measurement and understanding of environmental impact must be subject to rapid modification. The Sports Utility Vehicle (SUV) is a standard example of a consumer product with a massive impact on the planet. But what if it’s an electric vehicle (EV) powered by your home solar array and made with recycled aluminum and other planet-friendly materials?
And beyond manufacturing, what about people living in cities that are becoming more environmentally sustainable who might ride in that EV but not own it and instead ride in an Uber or rent a Zip Car to drive? About 80% of America’s GDP is in the service sector, and more and more consumption is light on material consumption and heavier on the consumption of entertainment, ideas, or physical activity. Software needs hardware to run, but the …….