Today, I spoke with Daniel Esty, who is a Yale professor and expert on the environment. One of the major news themes in the past year has been the environment and how companies should “go green.” Daniel is one of the most knowledgeable people on this topic, so we discuss how “going green” can actually help improve a companies bottom line and attract and retain employees.
Do you think companies should embrace a “green culture” to attract and retain Generation-Y?
One of the big surprises that emerged out of the research behind GREEN TO GOLD was the importance of bringing environment into business strategy as a matter of human resources policy. Many companies report that many of today’s younger employees (and potential hires) want to work for a company whose corporate culture and values they respect. Concern for the environment emerges as a core value for many, especially the most highly sought after knowledge workers.
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Can you explain corporate/social responsibility for the environment and why people and companies should start caring in a big way?
Companies have started to care for environment in a big way for reasons that go way beyond corporate social responsibility, which always seems like a narrow commitment to be a good citizen and do fewer harmful things. Today’s embrace of the environment as a core element of strategy is all about success in the marketplace. Companies that promote eco-efficiency, especially in the face of $100/barrel oil prices, will cut costs and improve their competitive position.
Likewise, businesses that manage eco-risks better than the competition will see their costs go down and their competitive position strengthen. And many corporations are finding ways to drive revenues with goods or services that have a green dimension. Others are building their brands and corporate images around being environmental solutions providers. Think, for example, of GE’s rebranding around “ecomagination.” The GREEN TO GOLD story is about growing both the top line and the bottom line by bringing an environmental lens to every aspect of corporate activity.
What impact does a green-friendly company have over bottom-line results and the overall economy?
Under today’s circumstances (notably high energy prices), companies that go green may well be positioned as low-cost providers. And they may well be able to differentiate their products in the marketplace and thus deliver more value to their customers, all of which contributes to market strength and profitability.
Why is a green-company more attractive to work at?
Many employees today have lots of choices about where to work, so companies that have attractive corporate cultures, including a commitment to the environment, emerge as the employers of choice. Environmental protection is fundamental to quality of life — and many people want to have these issues addressed in their professional as well as their personal lives.
Do you think all company’s in the future will have to be green? What will happen if a company’s chooses not to go that way?
I believe that most companies will find that it pays to go green — but how green will depend on the circumstances of the particular business. It is also the case that a mere commitment to being green will not advantage a company. In bringing an environmental focus into a business, it is important for the company’s leaders to be strategic. Environmental initiatives do not pay off unless they are pursued with the same degree of systematic care and analytic rigor as any other sort of corporate effort.
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Daniel C. Esty is the Hillhouse Professor of Environmental Law and Policy, with appointments at both the Yale Law School and the Yale School of Forestry & Environmental Studies. He is also the Director of the Yale Center for Environmental Law and Policy as well as the Center for Business and the Environment at Yale.
Professor Esty’s research has focused on “next generation” regulation and the relationships between the environment and trade, competitiveness, governance, and development. He is the author or editor of nine books and numerous articles on environmental policy issues.
