Question

In: Economics

Imagine that you are the CEO of a wind power company, and you operate under the...

Imagine that you are the CEO of a wind power company, and you operate under the theory of sustainability. You have been asked to give a presentation to your management team about the advantages of environmental leadership. How will you explain these motivations in the context of your company and your philosophy?

Solutions

Expert Solution

Advantages of Environmental Leadership:

  1. Improved brand image and competitive advantage: The improvement of brand awareness through “doing good” is becoming one of the pillars of advertising campaigns looking at our public awareness ads during Super Bowl promoting sustainability through wind powers. We can live without electricity or paper–people did just that for millennia–but humanity cannot exist without water, especially potable water. Encouragement and practice to conserve resources not only improves brand awareness, but also penetrates at a deeper level to employees, their families, and beyond. The opportunity to enhance brand image is lost if the company doesn’t do as it preaches.   
  2. Increase productivity and reduce costs: Detractors of sustainability claim that sustainable business practices eat into corporate profit. Development of sustainable business practices lends itself to efficient operation that streamlines effort and conserves resources, which enhances employee productivity and reduces cost. Reducing cost also encompasses energy conservation strategies that can be as simple as turning off unnecessary lights and insulating walls to more sophisticated efforts such as installation of geothermal heating and cooling systems. Those efforts having greater overall impact will likely be more expensive to implement, but the long-term results justify the investment.   
  3. Increase business ability to comply with regulation: With all the discussion regarding climate change, dwindling energy resources, and environmental impact, it’s no surprise that state and federal government agencies are enacting regulations to protect the environment. Integrating sustainability into our business will position it to meet changing regulations in a timely manner.   
  4. Attract employees and investors: People like to be associated with the positive, especially younger generations raised on a steady diet of environmental protection messages. They do not want to be linked to companies implicated in ecological disasters and social welfare scandals. So our company as respectful of the environment and of its employees and it will attract the caliber of people whom you want to employ and the funds your business needs to expand.   
  5. Reduce waste. This is likely the simplest and most obvious way to engage in sustainable practices. Beginning in the 1990s with offices collecting empty cans for recycling, the effort has grown to encompass waste mitigation in paper (conserving trees and forest habitats), value engineering of products (reworking or developing new processes that use less raw materials, waste less material in production of goods), to changing out incandescent lights for LED lights.   
  6. Make shareholders happy. Not only can sustainability be used to lower costs, but it can result in increasing profit. In their 2014 report “Profits with Purpose: How Organizing for Sustainability Can Benefit the Bottom Line,” McKinsey researched 40 companies to understand sustainability challenges and seek practical recommendations “to capture value from sustainability.” They report that a study by Deutsche Bank revealed that companies with high ratings in environmental, social, and governance factors outperformed the market in medium and long range terms. McKinsey reported similar results for studies. So our company is going to earn a greater returns which will make our shareholders happy.

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