An analysis by the Sequoia Lab Team
The term “differentiated green” refers to companies who pursue green strategies to go beyond clearing regulatory and negative PR hurdles. It refers to companies who create green strategies for reasons such as cost savings and creating a larger and more loyal customer base.
The most notable country to not sign the Kyoto Protocol is, as we know, the United States of America. Despite the size of its economy and the living standard among its citizens, the U.S. has historically been behind its sovereign peers as far as adopting regulations and in turn encouraging its corporations to adopt sustainability strategies. However, on an optimistic note, three of America’s most iconic companies find great value in pursuing comprehensive green strategies. At least to them, “differentiated green” is real, valuable, and achievable.
1. General Electric
From 2004-2008 General Electric’s new Ecomagination program not only reduced its greenhouse gas emissions by 30% but also delivered $100 million in cost savings to the company. The profitability of Ecomagination did not stop there. By focusing on green initiatives through this program, the company has made innovating energy-efficient products a core competency. While often the value of sustainability programs are discussed relative to the bottom line, for GE, the real value has been realized in its top line. The $100 million cost savings of this period seems minuscule compared to the $17 billion ANNUAL revenue GE generated in new energy-efficient products such as light bulbs, MRIs, and locomotives.
In addition to financial results, GE has leveraged Ecomagination to improve customer retention and brand awareness. The company recognized that it had an opportunity to boost its brand by educating the public on its commitment to environmental responsibility. According to Interbrand, “GE Ecomagination is cited as a leading contributor to the 17% rise in GE brand value since its launch in 2005.”
Ford Motor Company recently rolled out its impressive Ford Focus EV. It seems that everyone is going after the Electric Vehicle market and it is looking like Ford may have nailed it. In addition to product development, Ford has also hired in-house climate scientists to set scientific mandates on its production as a whole in an effort to guarantee that the company does not contribute to certain catastrophic climate change metrics. All this has resulted in a wealth of good publicity for the company and is promising to give Ford a drastic image makeover. Not only is it acquiring a reputation as a socially conscious organization, but also, perhaps something no one thought it would ever be, an environmentally friendly company.
This is the type of marketing magic that cannot be bought with expensive advertising or a massive PR campaign. Ford saw the future and decided to make the real changes earning them praise from even some of their toughest critics in the grass-roots environmental blogosphere and from formerly skeptical consumers who may even be converted into brand evangelists.
Nike recently produced jerseys for world cup teams made of plastic bottles found in landfills in Taiwan and Japan. Nike’s focus on repurposing started in 1993, by reusing materials from old shoes to produce basketball courts and track surfaces. Since their first decision to “go green” in 1993, Nike has been an early adopter of numerous sustainable strategies. It has taken a serious stance on selling recyclable components, reducing waste, and reusing byproducts like rubber or plastic to create new products. This has resulted not only in cost savings but in a wave of positive PR.
Its financial results are also staggering. In the last 10 years, Nike’s stock price has increased 216%, and year to date, has increased 31%, relative to the S&P 500’s 4% decrease and 19% increase respectively.
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As a business owner, American or otherwise, are you missing out on an opportunity for growth and brand equity? As discussed above, cost reduction is now only part of the equation. If embracing green leads to top line growth, there is no time like the present, especially in the United States. We are on the cusp of another commercial revolution. The advent of electricity caused a revolution that built GE. The advent of the automobile did the same for Ford. The wellness revolution that started in the 1970s opened the door for Nike. Most recently, the technology revolution has created some of the largest market cap companies in the world.
The green revolution is just starting and there is plenty of market-share up for grabs. The United States has historically been known as a great innovator and has led the pack in many of these revolutions. If US companies actively embrace sustainability, they stand to see great profitability from this global movement. If your business embraces it, so can you.
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