The question asked in our most recent informal innovation poll was “What drivers of Green Innovation do see in your organization?” What did you say about this?
Two green drivers stood out in your responses: customer demand and competitive pressure. This is good news to advocates of green as it shows free market forces are aligning with the socially responsible business movement. This also suggests that the early claims of Porter and van der Linde1,2 may be proven true with a change in tide.
The debate over whether green innovation is compatible with the mission of business has been raging for years as has the debate over the role of environmental regulation. But, here we see that market forces out strip regulatory issues by a two to one margin. This suggests that there is a quantifiable value to going green.
At the end of the day, companies are faced with the challenge of finding the optimal strategy for responding to the pressure to go green. Regardless of the source of the impetus, the problem remains the same. Any investment is green must meet the same rigorous standard of return on investment as any other product investment. Whether the company is trying to minimize the eco-impact of its manufacturing process or attacking the bigger downstream issues of product operation and disposal footprint, the company’s scientists, designers, and engineers must find ways to change the future product that are cost effective and deliver value to the customer and the company.
In 1995, Alex Krauer, then Chairman and CEO of Ciba-Geigy, stated "Financial performance and environmental performance can go hand in hand. Eco-efficiency is the key to sustainability, in both economic and ecological terms. The key to eco-efficiency is innovation and productivity improvement." Mr. Krauer was spot on in his advice. Companies must move to green, sustainable business practices. Companies that have a strong innovation culture are more likely to success here.3 Building a sustainable innovation program is an important step on the path to green.
1 M. E. Porter and C. van der Linde (1995a), 'Green and Competitive - Ending the Stalemate', Harvard business review 73: 120-134.
2 M. E. Porter and C. van der Linde (1995b), 'Toward a New Conception of the Environment-Competitiveness Relationship', Journal of Economic Perspectives 9(4): 97-118.3 Thomas Bernauer, et al. (2006), ‘Explaining Green Innovation Ten Years after Porter’s Win-Win Proposition: How to Study the Effects of Regulation on Corporate Environmental Innovation?’, CIS Working Paper No. 17.