• Getting to Green

    An administrator pushes, on a shoestring budget, to move his university and the world toward a more sustainable equilibrium.


A slice of bread - Why companies aren't greener

According to a couple of recent reports, many large US companies want to be operate more sustainably, but really don't know how. As lame as that might sound, I think it's likely to be true.

August 10, 2010

According to a couple of recent reports, many large US companies want to be operate more sustainably, but really don't know how. As lame as that might sound, I think it's likely to be true.

One study, conducted by Ipsos Public Affairs on behalf of Proctor & Gamble, points to the plethora of "green" rating and labeling schemes and describes corporate purchasing managers and other decision makers as being confused, even bewildered. Focusing primarily on the "green cleaning" space (it's Proctor & Gamble calling the tune, after all), Ipsos found that lodging companies (hotels, etc.) do the best job, far ahead of health care and general commercial enterprises.

A broader study by Deloitte concluded that corporate executives have major aspirations for sustainable operation, but that companies' actual performance lagged significantly behind those goals.

I worked for a couple of decades in the for-profit sector, and each of these findings resonates with what I experienced there. For one thing, I rarely spoke to a corporate leader who really understood how his (or, less often, her) organization did business. "C-level" executives tend to understand what their companies do, and what external factors influence business volume and profitability, and who their competitors and customers are, but their grasp of day-to-day realities tends to be lacking. Purchasing managers are even less likely to understand business operations. The larger and more complex the corporation gets, the stronger these patterns exhibit themselves. If anything, complexity is a stronger driver even then size.

Take the hotel industry, for example. Ipsos found that hotels, in general, did a better job of greening their cleaning than did firms in other markets. I can think of a couple of reasons for this. First, hotel operations (ongoing operations, not the market research, siting, real estate negotiation, permitting, construction, etc.) just aren't all that complex. For upscale hotels in competitive markets, the quality of operations is a key success factor, but the function of hotel operations (reservations, check-in, cleaning, concierge, dining, etc.) is pretty standard. In terms of perceived quality, then, greening your cleaning (and promoting that fact to your customer base) can be a produce differentiator. For other types of companies, though, cleaning is not so much an opportunity as it is a requirement. It only becomes an issue if it (visibly) doesn't happen. Thus, greening the cleaning becomes a "nice to have", and thus somewhat unlikely.

Looked at more broadly, sustainable operation across a large company becomes a significant challenge. Any step in any process can, in effect, create an unsustainable situation. So each step in each process needs to be designed to operate sustainably with every other step, every other process. And the truth of the matter is that no single person or identifiable group of people know what all the processes are, much less all the steps. Not that a complete inventory couldn't be prepared, of course. But it almost universally hasn't, and doing so would be costly.

So, some tentative and intermediate conclusions.

  1. All other things being equal, many corporate executives see sustainability as virtuous.
  2. The more complex a company is -- the more products it creates, and the more different ways it creates them -- the more difficult it is to measure, manage, achieve sustainability.
  3. The larger a company is, the more variety (complexity) it's likely to embody.
  4. Sustainable behavior gets decision-makers attention if (and pretty much only if) it's visible to the customer in a competitive market (the customer has other choices, and no strong brand loyalties).
  5. The people who end up making the real-world decisions which affect the sustainability of a company's operations aren't generally in positions to have the information necessary to optimize those decisions and their outcomes.
  6. The current plethora of "green" evaluation and rating programs isn't yet helping very much, in part because these programs don't address the complexity problem.


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