The social responsibility revolution

It's not just about PR anymore. Firms see big profits in green solutions.

from the August 9, 2007 edition

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Actually, the change in strategy reflects GE's recognition of advances in markets for environmentally friendlier technologies such as wind power – one of the fastest-growing power sources in the world. It sees green technology for what it is: a great business opportunity. By 2010, GE plans to double its investment in such green solutions to $1.5 billion and double revenue from products included in the campaign from $10 billion to $20 billion annually. These green solutions, GE claims, can reduce energy consumption by roughly 30 percent.

Then there's Toyota. Its efficient hybrid power train that reduces emissions of traditional pollutants and greenhouse gases, once seen as a risky venture, is today selling like hotcakes. It's now a feature on more than 1 million vehicles sold, making it no coincidence that Toyota has surpassed General Motors as the world's largest automaker.

But it's the actions of Wal-Mart, the world's largest – and perhaps most controversial – overall retailer (serving 176 million customers each week), that signals the true significance of this trend. In February, delivering the keynote lecture at the Prince of Wales's Business and Environment Program in London, Wal-Mart CEO H. Lee Scott unveiled "Sustainability 360," which he described as a company-wide commitment to sustainability going beyond its direct environmental footprint to engage everyone the company touches: associates, suppliers, communities, and customers.

Like GE and others competing in World Inc., Wal-Mart is quick to recognize the opportunities that spring from sustainability. By requiring suppliers to reduce product packaging by 5 percent by 2013, it expects to realize savings equal to removing 213,000 trucks from the road and saving approximately 324,000 tons of coal and 67 million gallons of diesel fuel per year. They'll save millions more by making stores 30 percent more efficient by 2012, increasing fleet efficiency by 25 percent by 2010 and reducing solid waste from its US stores and Sam's Clubs by 25 percent by 2008.

Perhaps the most telling fact in all this is that these giant companies are acting voluntarily. They are responding to market forces and recognized opportunities, not mandates from Congress and government regulators.

We may be on the verge of historic change in the business world. Entrepreneurs, business leaders, and educators will all be watching to see how these companies, and others that follow them, build new profit centers by bringing socially responsible products and processes to the marketplace.

Each will be a model for future decisionmakers. Whether they will be models for success or failure remains to be seen, but the initial signs are encouraging. Welcome to World Inc.

• Bruce Piasecki, president and founder of the management consulting firm AHC Group, is the author of six books on corporate strategy. His latest book is "World Inc." ( www.worldincbook.com ).

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