Embrace the sustainable supply chain… Or suffer the consequences
GreenTech, CleanTech, EnviroTech… It doesn’t matter what you call it, as long as you’re doing it. There is no avoiding the sustainability agenda, which, given the steady deterioration of the planet, can only be a good thing.
Businesses have been trying to improve their green credentials for years, but their efforts have intensified in the last few years as awareness of the climate crisis has grown. Organisations have to walk the talk, and demonstrate that they have accepted their Extended Producer Responsibility (EPR). Adopting or investing in GreenTech is one of the ways that this can be achieved.
50 shades of green
GreenTech is an umbrella term for a variety of approaches, models, and technologies. It can refer to a company’s general goals to become more environmentally friendly, or to a specific technology for renewable generation and distribution. It can even describe different operational models like the circular or sharing economy.
In each case, GreenTech hopes to improve or reduce the impact that businesses have on the planet. It aims to answer a number of questions: how will we provide renewable power when fossil fuels are exhausted? Where will the food needed to feed a growing population come from? How can we ensure that products and services are supporting instead of exploiting communities and the environment? GreenTech is the application of technology and strategies to address these issues.
It isn’t easy being green: one small change can completely skew the rest of the supply chain. Organisations need to be able to preempt the implications of GreenTech before introducing it, or simply build their business around green considerations from the get-go.
Why do companies need to go green?
A recent UN report found that in 2017, investment in green and renewable processes exceeded $200bn. Interestingly, the largest chunk of that investment – $126.6bn – came from China. Haunted by a history of pollution, the country has embarked on a cutthroat policy to reduce its carbon emissions. Last year, as part of the strategy, the Chinese government banned foreign plastic waste imports. Other countries (and the companies within them) suddenly had to confront a problem that they had largely been able to ignore. This spurred a tirade of legislation, making it a legal requirement for businesses to move towards more sustainable supply chains. In the UK, for example, companies will have to use a percentage of recycled plastics in their products and packaging or face a fine.
Alongside legislation has come a new breed of customer that is environmentally and ethically conscious, and not afraid to vote with their feet when it comes to brand engagement. They want their money to support companies and initiatives that don’t cause harm to the natural world or the communities that live in it. The upshot is that GreenTech companies – or, at least, those that are working on green strategies – are far more attractive to consumers. There are certainly still those who don’t prioritise green products and services, but when the younger generation turns pester power into purchase power, the environmentally ignorant will undoubtedly be drowned out.
Going green for green
If saving the world wasn’t motivation enough for companies to go green, GreenTech businesses also tend to be more investable. There are various reasons for this, including the direction of market preferences and legislation… Both consumers and lawmakers threaten to clobber companies that don’t meet environmental expectations. As such, investing in a GreenTech laggard is unlikely to yield high returns. Fuelled by ESG investment and Socially Responsible Investing (SRI), there are now specialised ‘green funds’ that seek solely to invest in GreenTech leaders.
Companies with green assets are considered to be more resilient to change because they are forward thinking, and develop their products and services with awareness and conscience. Perhaps it’s unsurprising that some investment firms have stopped investing in unsustainable businesses entirely. Teamed with Extended Producer Responsibility and the demands of consumers and legislators… Well, it’s no wonder that companies are keen to go green.
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