Planet, People and Profits: What It Means to Go Green

Jakarta Globe, Catriona Richards, May 15, 2012

Leaders in green businesses like Shinta Widjaja Kamdani of Kadin, left,
and Felia Salim of Bank BNI, second from right, attend the Sustainable
Business Awards ceremony last week. (JG Photo)

         

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Many corporate leaders believe that going green is an expensive business. They think they have to make money before they start spending money on the environment. But what these leaders don’t realize is that sustainable business is just good business.

The inaugural Indonesian Sustainable Business Awards, supported by the Jakarta Globe, were presented in South Jakarta on Wednesday to recognize the progress businesses here have made in developing sustainable initiatives.

The first of its kind in Indonesia, the awards program was established by international consultancy firms Climate Business and Global Initiatives, and was also supported by Indonesia’s Chamber of Commerce and Industry (Kadin).

The winners, from small-medium enterprises to big businesses, showed that for them, making money does not have to cost the Earth. In fact, since implementing sustainability initiatives, many of these companies found that their businesses improved.

United Tractors, the heavy equipment unit of Astra International, emerged as the overall winner for its focus on the environment, corporate social responsibility and management of human resources.

“Our concept of sustainability begins with the company philosophy that United Tractors is here for Indonesia,” said sustainability director Edhie Sarwono.

For United Tractors, a well-managed sustainability division, along with outreach programs that communicate the company’s vision for a green future to its employees and host communities, has paid for itself in improving productivity.

So why is it that so many companies are reluctant to think long-term about the impact of their business on the Earth?

Green Sense and Cents

Speaking at the awards ceremony, Bank BNI Vice President Director Felia Salim said that for her company, going green just made sense.

“We are in the business of supporting sustainable businesses,” Felia said. “So for us, sustainability makes good business sense.”

As an intermediary for businesses, Bank BNI found that by implementing sustainable initiatives, it has been able to attract clients with similar goals. In this way, aiming toward sustainability has not cost the company, but brought it more business.

New clients may only be a short-term benefit, but in the long-term, all businesses will need to start thinking about sustainability sooner or later.

“Companies cannot afford to not look at sustainability,” said Shinta Widjaja Kamdani, Kadin’s chairwoman for the environment and climate change.

Shinta said that realistically it’s time for Indonesia to catch up with the rest of the world when it comes to sustainable business practice.

Since 1992, big businesses from around the world have shown their commitment to environmentally friendly practices through their membership of the World Business Council for Sustainable Development.

Speaking at the event, Tony Boatman from sustainability consultancy firm The Indela said that it is in every company’s interest to share their experience with green initiatives.

“We’re on the same planet, so it’s actually not a competitive thing. Business will need to transform,” he said.

Just last year, Kadin established the Indonesian Business Council for Sustainable Development, a body for Indonesian companies to share the best practices green initiatives.

“I think in Indonesia the idea of how to become a sustainable business is still in an early stage,” Shinta said. “There has to be a breakthrough if we want this happening faster.”

What Does Green Mean?

Going green basically means trying to reduce a business’ impact on the natural environment. The idea is to develop a sustainable business that makes the most of the resources at hand, without depleting those resources completely.

But it’s not just about the environment. A sustainable business thinks about its impact on employees and the community as well.

In business, this is referred to meeting the “triple bottom line,” comprised of planet, people and profits. The aim is to develop all three, without compromising one for another.

“You can be as green as you like, but if the workforce isn’t happy then business is going nowhere,” said Alex MacGillivray, executive director of Climate Business.

Planet, people and profits may sound like a lot for a company to focus on, but MacGillivray said that in fact, the three cannot be separated.

“You can’t sort of pull out the green stuff and say, ‘Well that’s something different,’ it’s very integrated into the way the company’s run,” he said. “Sustainable business is very much part of being a well-run company.”

Green It Like You Mean It

The first thing to know about going green in business is that you have to be sincerely committed to it.

Studies have shown that while most consumers are willing to pay a little extra for products that they know are environmentally friendly, they are not prepared to fork out if they don’t believe the hype.

When businesses treat sustainability initiatives as something to tack onto their portfolio, rather than a whole-hearted effort to clean up their act, consumers are unlikely to buy it.

“Sustainable businesses, if they do it well, will have an advantage,” MacGillivray said. “But if a company has a sustainability program because they think they should do, or because the CEO or the CEO’s wife, thinks it’s a good idea or because they’re following the latest trend, actually they could lose money.”

The key, he said, is good marketing to make sure that the consumer understands the company’s intentions in switching to a green product or business model.

Another important factor is to make sure that the cost of that change is not passed on to the consumer in the form of a green premium.

Consumers may say in surveys that they are willing to pay more, but when it comes to the crunch, many will still choose the cheaper option.

“If you really believe in this stuff then you have to find a way of making it affordable so that it’s not a dilemma for a customer,” MacGillivray said. “It has to be a no-brainer for the consumer so that they can do what they’d prefer to do, but they don’t have to decide on price.”

The real challenge for Indonesia is not just to produce green products, but to make them affordable for the country’s majority low-income population.

The growing middle class may be developing an awareness about making ecological sustainable choices, but for the rest of the country, price is always the clincher. Businesses that are serious about making an impact here will put low-income earners first by developing products and services that provide a future for this market.

“Markets move faster than the government can introduce regulations,” said Felia from BNI. “Markets and consumers also have to push.”

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