Greenbiz.com reports that in a recent MIT survey “Americans now rank climate change as the country’s most pressing environmental problem – a dramatic shift from three years ago, when they ranked climate change sixth out of 10 environmental concerns.” The survey shows that people are beginning to grasp that climate change is a real issue. They want government action and are even willing to spend their own money to help.

Apparently concerned citizens also want business to be held accountable for its role in the climate change problem. BusinessWeek, October 30, 2006, reports that global warming is the next wave of litigation after tobacco, guns, and junk food. At least 16 cases are pending in federal and state courts. The targets are oil, electric power, auto, and other companies whose emissions are linked to global warming.

It may prove difficult for the plaintiffs to win these cases, but the mere threat of litigation can certainly motivate businesses to act, especially if the general population sees the problem and wants resolution. The heat is on.

The recent passing of renowned economist Milton Friedman recalls the argument about social responsibility and business. Friedman famously debunked the idea of corporate social responsibility when he rhetorically asked, “What does it mean to say that ‘business’ has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense.”

Ever the advocate of free markets, he went on to say "there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Source: The New York Times Magazine, September 13, 1970. Click here for the full text of the article.

Milton Friedman believed that the primary responsibility of the corporate executive is to serve the interests of the corporate shareholders. A broader view is that the interests of shareholders and other stakeholders are connected, therefore, by serving the interests of all stakeholders the corporation is serving the best interests of its shareholders as well.

The debate continues but companies increasingly see the imperative to serve all stakeholders. While Friedman’s view on corporate responsibility may be falling out of favor today, his legacy of free market philosophy lives on.

An international report entitled Ecosystem Challenges and Business Implications, issued in November 2006, says that business and ecosystem services are inextricably linked. Companies not only affect ecosystems but also rely on them. The report identifies risks and opportunities for business based on the findings of the Millenium Ecosystem Assessment, a 4-year scientific study that concluded that the past 50 years of human activity has altered ecosystems faster and more extensively than ever before. The inter-relationship between business and ecosystems poses significant risks to companies including:

• Operational — increased scarcity and cost of raw materials, such as freshwater, disruptions to business operations caused by natural hazards, and higher insurance costs for disasters such as flooding.
• Regulatory — emergence of new government policies such as taxes and moratoria on extractive activities.
• Reputational — damage to corporate reputation from media and non-governmental organization campaigns, shareholder resolutions and changing customer preferences.
• Access to capital — restrictions as the financial community adopts more rigorous investment and lending policies.

At the same time, new business opportunities can arise through development of new technologies, products and services that restore and preserve ecosystems. However, most companies fail to recognize the link between healthy ecosystems and their business interests.

The report is a collaborative effort by four international organizations — Earthwatch Institute, IUCN - The World Conservation Union, The World Business Council for Sustainable Development, and World Resources Institute. Their aim is to make businesses aware of the degradation of ecosystems and to promote ways that business can help reverse the trend. 

Click here for more information and to download a copy of the report.

There’s definitely a buzz about the greening of business these days. Climate change is a “hot” topic and that probably has something to do with the buzz. After all, business is viewed both as the main culprit and the potential savior. To me what’s most interesting is how being “green” is being placed in a broader context. Businesses are increasingly viewing green practices as not only good for society, but also good for the bottom line. Have tree huggers invaded the corporate suite? Not likely, but it seems that a new green line of thinking is catching on with top management.

A 60 Minutes feature on NASA climate scientist, Jim Hansen, started me thinking seriously about green business. Hansen has been studying climate change and sending warning signals for years. He’s very well respected and credible. While I’ve always been concerned about the environment, the fact that I recycle, turn out lights and pick up litter hardly makes me an activist. And I do have a fondness for SUV’s … so I’m light green at best. My commitment changed when I heard Hansen on 60 Minutes tell how government lawyers had edited a recent report to soften his warnings about climate change. That did not sit well with me, to say the least. I decided it was time for me to get involved, to do something. But what?

Since business is my vocation, it seemed logical to see what I could do in the context of the business world. I began my quest by searching the internet to learn about green businesses. I was quickly overwhelmed with information and it wasn’t limited to environmental matters. My search led me progressively to the inter-related issues of sustainable development, corporate social responsibility, corporate citizenship and ethics. I found myself looking at the dynamics of business differently than I have for over 30 years as a CPA, management consultant and business owner. And surprisingly it reinforced my long held belief that business is far too short-sighted and too narrowly focused on the financial bottom line.

It’s not that I was naïve about the ability of business to contribute to society. In the 90’s, I co-founded a company that produced and distributed television and video programming on the subject of crime prevention. We provided life-saving information and I was proud of our work, especially when we heard from people who had relied on our programming to stay safe. But now I am looking at business’ role in society from a broader and more strategic perspective, and I have a deeper appreciation for the imperative to create value for all stakeholders. I now think of a green business as a healthy enterprise that strives for sustainable performance.

My exploration of the greening of business is on-going and I look forward to sharing what I learn with you. In conjunction with my firm, Duma Tau, I have started this blog and an e-newsletter under the umbrella topic of sustainable performance. Our publications will be an easy way to stay abreast of current developments and new thinking on 3 key aspects of business performance … financial, social and environmental. The blog and the e-newsletter are free.

Our subject matter will be targeted primarily to executives and managers that are in a position to influence their company’s strategic direction as well as those that serve as the custodians of financial and operational information. As more companies make environmental and social performance part of their core strategies, non-financial reporting will need to be on par with financial reporting. Accordingly, our content will emphasize strategy, financial impacts, measurement and reporting.

So do I think every business should go green? You bet. But practically speaking, it must be done progressively … in shades of green. After all, no business has unlimited resources to bring about instant change. And what is appropriate for an energy company is different than for a fast food chain. This is new territory for the corporate world. We all have much to learn. Our mission is to help the process along by providing an easy source of information for those that can make a difference within their companies. 

Perhaps your business is only a light shade of green right now, or not green at all. That will need to change and you can lead the way. Staying informed is a good place to start. Feel free to participate by posting to our blog and by passing along our e-newsletter to anyone that may be interested. I hope you will join us on the journey to greener pastures.