The business community and the environment: an important partnership - Business and the Environment

Business Horizons, March-April, 1992 by Lee M. Thomas

Complacency has never been a frind to American business. This country's long and exciting economic rise is the story of how imagination and hard work turn daunting challenges into profitable opportunities. Our ability to harness technology, absorb new ideas, and learn from mistakes has made the U.S. economy the world's most dynamic and most emulated.

Today American business faces its most difficult task and its greatest opportunity. As we move toward the next century, we are becoming acutely aware that what is needed to stem the tide of environmental decline is a clear vision of the problem and the energy and determination to overcome it. These are the same tools that have been wielded by American business for more than a century, and they have never before been so vitally needed.

THE GREENING OF THE BOTTOM LINE

Twenty years ago, corporate America, like many other institutions, faced the crisis of declining public confidence. The fledgling environmental movement was demanding a reckoning for the pollution and waste of resources that had characterized industry since the beginning of the Industrial Revolution. Government responded to American's growing anxiety over the state of their surroundings by creating the Environmental Protection Agency.

Upon charging EPA with a broad mandate to protect the nation's air, wter, and land resources, Congress quickly provided the agency with scores of new laws and regulations to implement and meet its mandate. The suddenness of the legislative action and the passion of the grassroots movement inspiring it caught business off guard. Companies found themselves dealing not only with a slew of new EPA regulations, but added layers of state and local regulations as well. Corporate cries of foul play and long bouts of litigation reinforced the popular notion that industry was truly insensitive to environmental degradation. It was a perception that public relations departments found difficult to erase.

Two decades later, the vast majority of U.S. corporations expend considerable money and effort to assure compliance with environmental laws. Industry and government together currently spend an estimated $100 billion each year on pollution control. Those funds have produced cleaner land, air, and water, and have spawned a pollution control industry employing more than 170,000 people. Though significant, this is only the initial investment of capital and human talent that cleaning up the environment will demand through the 1990s and into the next century. The EPA estimates that $160 billion--nearly 3 percent of the nation's GNP--will be spent on pollution control by the year 2000.

Clearly American business is in the midst of an explosion of environmentally oriented activity. Companies that are still only marginally involved must catch up if they intend to survive and prosper. They should take as their models the companies and executives that are weaving a large swatch of green into their corporate fabric. Indeed, companies whose "proactivism" keeps them atop the environmental wave will be among the more profitable in an economy increasingly influenced by environmental regulation and consumer activism.

CORPORATE ENVIRONMENT

RESPONSIBILITY

America owes its unprecedented level of prosperity to more than a century of industrial experimentation and adaptation. The economy mirrors people's expectations and disappointments. The concern voiced by Americans about the state of nature is surely becoming a most powerful trend.

The membership rolls of America's environmental groups testify to society's recognition of the problem: Greenpeace's membership is up 50 percent over 1988; the Natural Resources Defense Council has almost doubled its membership since the early 1980s; and the World Wildlife Fund has seen its membership jump from 212,200 to 667,000 since 1986. Polls repeatedly indicate that Americans, who consider themselves environmentalists, believe that more needs to be done to protect the environment. Environmetal protection is a nonpartisan, cross-generational cause, and given the enormity of the task humankind faces in stemming ecological degradation, the cause has an assured durability.

Industry must forcefully address these profound concerns in ways that do not stunt economic growth. It is a perilous tightrope to walk, often made more difficult by shortsighted public policy decisions that discount or ignore industry views. If the country is to sustain another 100 years of prosperity, business must take the offensive on environmental protection.

Technical, policy, and profit issues must be presented by industry in a way that balances economic strength and environmental accountability. Entwining the two into a successful business plan can only be accomplished by companies that recognize that public relations efforts alone cannot solve environmental problems.

As Americans come to expect the products they buy to be environmentally friendly, companies must fundamentally amend their cost-benefit calculations. No longer can pollution control be an unplanned debit on the balance sheet or a sinkhole for profits. Rapidly changing consumer behavior and the greater priority accorded environmental protection have presented corporate management with new reasons for taking the initiative.