Can green firms grow in today's downturn?
A monthly discussion with notable experts.
Green practices not only will survive in a slumping economy, they'll thrive, says Joel Makower, founder of GreenBiz.com in Oakland, Calif., and author of a new book, "Strategies for the Green Economy." Out of the spotlight, he says, corporate America is cutting pollution, resource use, and toxic inputs to become more efficient. The result is that, unwittingly, consumers are becoming greener, too. The Monitor's Laurent Belsie sat down with Mr. Makower recently to talk about the future of green. Here's an edited version of their conversation. (The views expressed here are for informational purposes and do not represent an endorsement by The Christian Science Monitor.)
Do sustainable firms have an easier path in a downturn – or a rougher one?
Makower: If you're selling a premium-priced product to a consumer right now, you may be in for a rough ride. Consumers are pulling back. We're keeping our wallets in our pockets and we're not spending on discretionary or luxury kinds of things. But that's a very small part of what's going on in the world of green business. If you can think of an iceberg, the tip that's above water is what we see in marketing [products]. But below that is this mass of company practices that they don't even talk about. It has to do with squeezing out waste and inefficiency, the toxicity of products and services, the carbon intensity, and the material intensity. That makes for more affordable business practices that actually can thrive during tough times.
Being green in some ways is being more efficient.
Makower: Yeah, greener businesses at the end of the day – done right and not done for PR reasons – are better businesses. [But] one of the interesting things that's happened in the last few years is that we've gone from this era of doing the right thing – doing well by doing good, which was basically about companies improving their bottom line by new efficiencies ... to a new era, which is simply: How do you grow the top line? How does being green provide a foundation for innovation, new products and services, whole new business models in some cases? And that's where this gets exciting and [becomes] a real business opportunity in any economy.
Can we tell what green means?
Makower: It's actually a big challenge.... We know what it means to be a green building. There's the LEED green-building standard. We don't have the equivalent for companies. So we're a little bit in the Wild West where anybody can say they're a green business.
Let's talk about the tip of the iceberg for a moment – green products. Will sales be tougher in the next few years?
Makower: Well, it's never been easy. Twenty years ago, I wrote a book called "The Green Consumer" and looked at this notion that there was a growing market for green products and that there were, more importantly, millions of consumers – 90 percent of Americans – who said that they wanted to buy green products from good companies. Well, guess what? That never really materialized.... The irony is that we're a lot greener consumers than we used to be – in spite of ourselves – because a [beverage] manufacturer, for example, has squeezed out the aluminum, tens of millions of pounds cumulatively over the course of a year, from aluminum cans without reducing the volume.
Is there a green product that really stands out to you?
Makower: Gosh, I don't know. I see what's coming and some of that's very exciting. But it has much more to do with the convergence ... of energy, information technology, buildings, and transportation. We're going to see some confluences of technologies where our cars and our homes and offices talk to one another through computing technology. And that's going to create a whole new world where we're thinking less about owning cars and more about door-to-door mobility and how we get to places; less about where we fill up than the demands of that [energy] coming from the grid.
Even automakers are using a green argument, among others, for a bailout. Do you buy that?
Makower: The irony is that the automakers are facing the challenges that they are just at the time that they are finally starting to understand the potential of the green technologies. General Motors has a very exciting technology in a vehicle called the GM Volt, which allows you to drive a battery-only vehicle for up to 40 miles. So if you have a 15-mile commute, you'll never use any gas. Then there's a little engine that kicks in to recharge the battery that's powered by gasoline, where you can go several hundreds of miles and get the equivalent of over 100 miles per gallon. We need them to be around to bring that to market. Or we need someone to be around.
Where should the average investor look for tomorrow's winners?
Makower: Computers certainly took off, but not all those companies made it. Some of those companies were too early or too late. Some of them weren't well-run. Some of them had other problems or were just swallowed up by bigger companies. So at the end of the day, this is really about finding companies that are well-run. Now, what we're finding, and what a lot of research shows, is that environmental performance is a proxy for good management. The companies that are well-run have good environmental policies and practices in place and have a strategy for how to succeed in a world where carbon is a constraint, where carbon taxes or cap-and-trade or any of those other geeky policy kinds of things begin taxing the amount of energy that companies use.
Are there any companies that you particularly like?
Makower: I do but I don't name them. They're both big companies – many of them have other problems, but I know they're really thinking about this in serious ways – ... and early stage companies. There are hundreds maybe even thousands of early stage companies that are thinking about some of the new technologies.... Those new technologies for the new energy economy and this convergence of energy, IT, and buildings and transportation, those are now starting to be built and there's a whole range of companies that I'm very excited about.
r Watch the entire conversation at CSMonitor.com/ethicalinvesting.