Environmentalism vs. The Need for Job Growth

Discretionary Economic Policy, who is right, Keynes or Hayek? Is environmental sustainability compatible with economic growth? The battle between environmental sustainability and economic growth is often portrayed as a zero-sum game: i.e., it is often suggested that environmentally-friendly policies are wholly incompatible with business-friendly policies. However, this supposed truism has been placed under scrutiny in recent years. A number of companies have demonstrated that 'going green' is not only financially sustainable but can also translate into gains in profitability. On a very basic level, environmentalism is a popular cause.

Worries about the long-term damage done to the environment have become increasingly part of the public's consciousness. According to the business publication Forbes in a recent poll:" "72% of consumers would recommend a brand that supports a good cause over one that doesn't, a 39% increase since 2008. 71% of consumers would help a brand promote their products or services if there is a good cause behind them, a growth of 34% since 2008. 73% of consumers would switch brands if a different brand of similar quality supported a good cause, a 9% increase since 2009" (Townsend 2013).

Companies that have leveraged 'green' concerns include Starbucks, which has made a commitment to selling Fair Trade coffee, for example. Virtually every major company has some section on their website devoted to their environmentally sustainable practices, not simply out of altruism but the fact that 'going green' is a potent selling point for consumers. Although most consumers still make decisions primarily based upon price and need, the relative greenness of a product is still a selling point.

Some companies are even transcending press releases and websites and are putting evidence of their eco-friendly nature on packaging, to ensure that consumers realize that they are the 'real deal' when it comes to going green. "Wild Harvest Organic Foods, a brand owned by American retail giant SuperValu, Inc., has committed to publishing their Eco-Profile for the public to see. They have experimented with printing their profile on the packaging of some products.

The bullet-point list of actions has appeared opposite the nutrient content of, say, a box of cheddar cheese crackers. In essence, the Eco-Profile could act as a nutrition facts label for planet Earth" (Townsend 2013). Ideally, to market to consumers, greenness must appear to be in the customer's self-interest as well as to the planet's benefit. An excellent example of this is the spike in demand for hybrid cars. Once thought of as a niche product, demand for hybrid products is likely to increase as concerns about rising gas prices spike.

Purchasing a hybrid car is viewed as a 'win-win' for both consumer and for the environment, as the consumer experiences immediate cost savings on gas while releasing less CO2 into the environment. "Fuel prices and fuel-efficient car prices seem to go hand in hand. In 2011, when gas prices approached $4 a gallon, fuel-efficient cars prices reached record highs" (Carty 2012). The Prius of Toyota pioneered the fuel-efficient hybrid while American car manufacturers resisted attempts to lower emissions standards and thus resisted innovation as they focused on producing gas-guzzling SUVs during the 1990s.

Although some vehicles produced by the American 'Big Three' have showed innovations in green technology such as the Chevy Volt, overall, these companies still consistently lag behind their foreign counterparts. A 2013 report revealed that "American automakers delivered poorer gains in fuel economy than their competitors abroad. The best-performing automakers were Mazda, Honda and Toyota. Nearly all manufacturers improved their gas mileage, but GM and Chrysler improved less than the others and so fell further behind.

Ford gained more than its domestic rivals, but its fleetwide fuel economy, like that of its Detroit competitors, is still below the industry average" (Becker & Gerstenzang 2013). If this persists, American firms will struggle to stay competitive in a nation faced with gas prices that have shown a steady climb upward. As well as responding to price-based concerns when purchasing vehicles, American consumers are also more mindful of the types of products they are putting into their bodies, based upon environmental impact.

Despite the recent recession, sales of organic foods are still robust. "The organic industry has exploded in the last decade, with $35 billion in sales and 10% growth just last year. There are more than 17,000 certified organic businesses in the country" (Cardy 2013). Because of the involved processes required to grow organic produce and to raise meat organically, these products do cost more but consumers once again perceive a 'win-win' in terms of products they see as more healthy for their diets and better for the environment.

Another example of the need to 'go green' to stay competitive is that even China, a nation long criticized for its focus upon development and willingness to ignore pollutants is investing in green companies. Businessweek noted: "China's leaders are supporting green businesses with policies and incentives. Beijing recently hiked China's auto mileage standards to a level the U.S. is not expected to reach until 2020.

Beijing also says it will boost the country's share of electricity created from renewable sources to 23% by 2020, from 16% today, on par with similar targets in Europe. The U.S. has no such national goal" (Aston 2009).

China is not doing this out of altruism, but with an eye upon the future and the expectation that demands for businesses to engage in sustainable practices will increase both in terms of consumer demand but also from international agreements between the major economic powers designed to facilitate a more positive view of the role of environmentalism in business. However, for real environmental improvements, companies must not simply 'tack on' green products and initiatives to their existing business models. They must innovate from the ground up.

Models clearly exist in the U.S. To do so, such as the sustainable Interface carpet company which boasts an ambitious zero-emissions target for itself, in terms of the waste it generates. For example, with every manufacturing process within Interface, there is a top-down analysis of the impact of the product upon the environment: "Life Cycle Assessment (LCA)...captures the materials, energy and wastes involved in each phase of the product's life cycle…LCAs measure key environmental impacts including global warming potential, toxicity and resource depletion" (Design process, 2014, Interface).

All Interface carpeting is recyclable and the product itself is generated from.