Salivation, 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 KISS. 

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 obtained:

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.