contamination, sustainability, desertification, a swelling population and
decoupling are just a few hot topics which are debated and examined under the
scientific disciplines such as environmental management, ecological and
environmental economics. Let’s put aside all these smart terminologies for a
while and look at the interaction of economy and business taking the principle
Almost everybody heard about the green business, the
one refers to the companies and organizations providing us with ecologically
friendly products and services. The popularity of this kind of business is
increasing among companies willing to emphasize how green they are as well as
among customers who pay particularly attention to how ethical the product is.
At first glance we have the model – win-win: the companies get the customer
satisfaction and boost in employees’ morale while customers – an eco-product.
However, the point is that as a rule this green product costs more and
sometimes substantially more. Thus, we have the dilemma: an unethical product
for less or sustainably produced one with a certain price premium.
Dr. Remi Trudel and June Cotte have carried out the
experiment which allows us to clear up this dilemma. They gathered a random
group of 97 adult coffee drinkers and asked them how much they would pay for a
pound of beans from a certain company. They used a brand that is not available
in North America, and none of the participants would be familiar with it. What
consumers were willing to pay for a pound of coffee based on what they were
told about the company’s production standards. The following data were
Ethical standards - $9.71
Unethical standards - $5.89
Control (no information) – $8.31
Therefore, the customers are ready to pay $1.41 more
for the green product and $2.42 less for the environment unfriendly one. So,
negative information had almost twice the impact of positive information on the
participant’s willingness to pay. Of course, to say that we will get the same
results in a small Russian town would be not so reasonable. Such factors as the
living standards, understanding and appreciation what the green business is
itself, and customers’ ethical expectations should be taken into account.
Coming back to this experiment, we can notice that consumers with high ethical
expectations of companies doled out bigger rewards and punishment than
consumers with low expectations. Again, what each group was willing to pay for
a pound of coffee based on production standards:
Consumers with high expectations:
Ethical standards - $11.59
Unethical standards - $6.92
Consumers with low expectations:
Ethical standards: $9.90
Unethical standards; $8.44
The important point of this experiment is the fact
that our customer has an alternative between two products. Anybody is unlikely
to be judged for his/her unethical choice if one doesn’t have enough money to
afford more expensive ethical product. However, the management of our
university, who had implemented the new charged printing system WEPA and kept
the idea of sustainable business, didn’t give students any choice. Now, all of
us have to pay for printing, leaving no alternative green idea.
Many companies practice the same thing. Emphasizing
green business they kill two birds with one stone: increase their reputation
and minimize costs. Bank of America reduced the weight of its ATM receipts from
20 pounds to 15 pounds, saving paper, transportation, storing, and handling
costs to the tune of $500,000 a year. Toyota with introduction of the new
hybrid car decreased costs substantially and simultaneously increased a market
share. Continental Airlines had on staff some 13 environmental
specialists, full-time, working to find ways its company can be greener.
Continental had spent more than $16 billion during the past decade to bring
into its fleet more efficient aircraft to replace aging, less efficient planes.
Does this mean that only big companies can benefit
from being green, diminishing costs? Not at all. There are some easy steps to
become green and decrease costs at the same time. For example, based on just a
few criteria we can conclude how green The Light Club is. Do employees turn off
the equipment when it is not being used? Do they communicate mostly by email
and read on screen, saving the paper?
Do they use a fax-modem and produce
double-sided documents whenever possible? Do they care about plants in the
class rooms? If the answer to all these questions is yes, the Light might be
considered a green business at least theoretically. To get a real green label,
the organization should meet some eco requirements which vary based on type of
business and type of the label itself.
These requirements happen to be particularly important
when to say how sustainable the business is impossible without detailed
analysis of special organizations. For example, an industry group for palm oil
(palm plantations), one of the most environmentally destructive industries on
the planet that is responsible for the death of chunk, continued existence of
orangutans, Asian elephants, Sumatran tigers, rhinoceroses and Indonesia’s
forests in general, advertised all palm oil as "sustainably grown”. Another
example is some tobacco companies which are rushing to highlight how green they
are to customers and new potential smokers based on eco processes which
companies implement, failing to mention the massive environmental problems
associated with tobacco growing today. Thus, even if one or another
organization proclaims itself like a green business, be cautious to conclude
how sustainable it is in reality. Obviously, there is no green cigarette.
Organic tobacco does not mean safe one.