Go sustainable to survive the crunch

Will recession force people to ditch good environmental habits? It shouldn't: going green is the best solution to a financial squeeze

Arlo Brady, The Guardian 3 Jul 08;

Over the last five years we have witnessed what I describe as a "greenrush". Businesses and consumers alike – one driven by the other – have sought to become more environmentally and socially responsible, with varying degrees of practical and perceived success.

However, today, as we sit on our forest stewardship council-certified wooden chairs, on the verge of a recession, we find ourselves asking whether this trend can survive. As the prices of many everyday items spiral out of control, are consumers now set to "dump values for value"? The answer is both yes, and no.

In the last decade, public awareness of the key sustainability issues of our generation has risen as has public perception of the power of big business. Ten years of mega-mergers, each more substantial than the next, have done little to alter this perception.

The new breed of behemoth brands and businesses has been at the forefront of the greenrush; desperate to prove to consumers and regulators that big does not necessarily equate to bad. This behaviour, coupled with the invasive transparency of the digital revolution, has resulted in an unprecedented growth in public expectation of business.

By enthusiastically showing that they can be part of the solution, businesses have inadvertently opened Pandora's box. There can be no going back.

Today's consumers want more from business, and following an unprecedented period of economic growth, they have become unaccustomed to compromise. They are looking for value, but they are also looking for authenticity, transparency and responsibility. As a recession takes hold, it's true that consumers may themselves be willing to compromise, but they are unlikely to react sympathetically if businesses and brands try the same trick.

As consumers get used to questioning what they spend their hard earned money on, they will place businesses under an unprecedented level of scrutiny. Ironically, in doing so they may inadvertently find themselves making some fundamentally more sustainable choices. This is certainly true in the automotive market where consumers are currently downshifting from large 4x4s to more economical vehicles in their droves.

Throughout the recent greenrush a fundamental misunderstanding had become established in the consumer mindset – namely that buying products and services that have a lower environmental impact is costly and therefore a luxury. This is a direct result of the premium pricing strategy that many businesses have adopted, and the lack of easily accessible and credible information on environmental impact.

This misunderstanding is fundamentally wrong on a number of levels.

Firstly, there is the obvious point that in general, consuming less equates to less environmental impact. This is the paradox of environmental consumerism. And then there is the observation that products that are more environmentally friendly tend to have used (and use) fewer resources than their conventional counterparts, and should therefore be cheaper to buy or run.

Following the principles of environmental efficiency enables us to do more with less. I can't think of a better message during a downturn. Smart businesses, governments and individuals will seek out efficiency and the competitive advantage that it brings.

In the short term, there will be a number of unsavoury consequences. For example, as the oil price soars perhaps to the $200 mark within the next year, businesses like Shell and BP will seek to exploit hard-to-extract oil resources like Canada's carbon-heavy tar sands. But in the long-term this trend will be self-defeating: it will act only to stabilise oil prices at a high level, while simultaneously increasing the economic viability of alternatives. The investment that oil majors are making in unconventional reserves is only viable if the oil price remains high. Big oil will very soon have a vested interest in maintaining a price that will ultimately lead to a decisive shift towards renewable energy.

From a corporate perspective, there is no doubt that many shortsighted businesses will stop, or even reverse, investment in sustainability and corporate social responsibility initiatives. But I don't view this as a serious cause for concern – instead, I argue that it could and should be viewed as a bonus. We have all had more than enough of greenwash.

Sustainability will simply enter a new, and more robust, phase of its development. A recession is likely to foster a more genuine sustainability, removing inefficient and vacuous programmes, and leaving the most effective and authentic in their place.

Although an economic downturn will have many negative consequences, the pain won't last forever. It's my contention that those businesses that use the time to lay reputational and practical foundations for success, by working on relevant issues that matter to real people, will be those that emerge with real competitive advantage when the downturn lifts.