Green and CompetitiveEnding the stalemate

Does going green mean companies have

The Dilemma

Does going green mean companies have

to be less competitive?

Opposing Views

Costly

• Preventive measures

Responsibility

• Social benefits• Preventive measures

• Implementation cost

• Non compliance cost

• Social benefits

• Social responsibility

• Sustainable growth

Traditional Views On Going Green

Stricter regulations mean higher cost

required to achieve compliance.

Environment concerns limit firm’s freedom Environment concerns limit firm’s freedom

when coming up with innovations.

It raises production cost and generate no

profit to the business.

Are there any changes from the

The Current Situation

Are there any changes from the

traditional view?

Survey Results

58%Say green issues have

58%Say green issues have become more important to their organization strategy.

*Source: KPMG Labour Market Outlook summer 2007 survey conducted on 1,000 HR professionals

Survey Results

47%Believe that employees

47%Believe that employees prefer to work for firms with a strong green stance.

*Source: KPMG Labour Market Outlook summer 2007 survey conducted on 1,000 HR professionals

Survey Results

44%Of the companies have an

44%Of the companies have an environmental policy in place.

*Source: KPMG Labour Market Outlook summer 2007 survey conducted on 1,000 HR professionals

Green Energy Projected Growth

1.4

20.5

15.6

80.9

Fuel Cells

BiofuelsMarket growth from 2006 to 2016

(In $US Billions)

55.4

17.9

15.6

226.5

60.8

69.3

0 50 100 150 200 250 300

Total

Wind Power

Solar Power2006

2016

Source: Clean Edge, 2007

Change Factors: The 6 C’s

CostsCosts

CapitalCapital

CompetitionCompetitionCompetitionCompetition

ChinaChina

ConsumersConsumers

ClimateClimate

The Green Advantage

� Generate cost savings.

� Promote innovation.

� Command premium pricing.

� Enhance the brand image.

� Differentiate from competitors.

Putting It Into Action

What strategies can firms employ to What strategies can firms employ to

gain the green advantage?

Competitive Environmental Strategies

Eco-EfficiencyEnvironmental Cost

Leadership

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Beyond Compliance Leadership

Eco-Branding

Competitive Focus

Organizational Process Products and Services

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Strategy 1: Eco-Efficiency

� Savings through eco-efficiency practices.

� This strategy generates savings in virtually

every firm.every firm.

� It is an internal initiative as consumers will

not pay for environmental protection.

Strategy 1: An Example

Over 50% in savings by changing from incandescent light bulbs to energy saving light bulbs

Strategy 2: Beyond Compliance Leadership

� Acknowledgement from public and

customers for their efforts.

� Substantial investment required for � Substantial investment required for

certification and publicity efforts.

� Beyond compliance practices can

give suppliers an edge over others.

Strategy 3: Eco Branding

� Consumers must be willing to pay for

the ecological differentiation.

� Reliable information about product

environmental performance must be environmental performance must be

available to consumers.

� Differentiation should be difficult to be

imitated.

Strategy 3: An Example

Switzerland hailed Toyota Prius as the world’s greenest

car. The Prius has sold over 1 million units worldwide

Strategy 4: Environmental Cost Leadership

� Production of cost competitive

products with environmental

attributes built-in.

� Radical product innovation such as � Radical product innovation such as

material substitution, packaging, etc.

� Better product design results in more

efficient use of resources which

translates to lower price.

Strategy 4: An Example

Cost savings and waste reduction through packaging design

Strategy Framework Review

� Boundaries between the strategies

are hypothetical.

� Distinction however allows better � Distinction however allows better

analysis and helps in finding

opportunities beyond the “low lying

fruits”.

Conclusion

Change factors have increased attention

on environmental practices

Change factors have increased attention

on environmental practices

Being green can be a new competitive

advantage.

Being green can be a new competitive

advantage.

Firms can adopt different strategies to gain

the green advantage.

Firms can adopt different strategies to gain

the green advantage.

Questions

“We do not inherit the earth from

our ancestors, we borrow it from our ancestors, we borrow it from

our children.”

Unknown

References

� Ron Pernick, Clint Wilder. (2007). The clean tech revolution. New York (NY)

� Lucy Phillips. (2007). Go green to gain the edge over rivals. People

Management, 9.

� Michael E.Porter, Class van der Linde. (1995). Green and competitive.

Ending the stalemate. Harvard Review, 120-134.Ending the stalemate. Harvard Review, 120-134.

� Renato J.Orsato. (2006). Competitive environmental strategies: When does

it pay to be green? California Management Review, Vol 48, 127-143.