Profits, or an environmentally-friendly business? It doesn’t have to be a choice. How, you ask? Read on and find out all about profitably running an environmentally-friendly business.
Your business asset, should you choose to protect it, is the environment in which we live. And while you may never have thought of the ecosystem as a business asset, maintaining a viable ecosystem is essential to the livelihood of everyone on earth including your staff, your customers, and hence your business.
This thinking needs to lead any action on the environment, says Fiona Wain, CEO of Environment Business Australia. “What’s coming is atrophy of the most fundamental capital we have,” she warns. “The market as an entity doesn’t understand the urgency. It doesn’t understand the value of the natural capital that we take for granted. It doesn’t understand the cost of degradation to that asset.”
Environment Business Australia represents the environment industry and the clean-tech sector, encompassing technology, infrastructure, systems, and financing. “We’re looking at how to create the next great technological era. Australia has always benefited from past eras, such as the recent IT one. The ET—environmental technology—one will be a lot bigger because it impacts on everything,” she predicts.
The urgency involves avoiding an average temperature rise of 1.5 degrees Celsius, which, by scientific estimates, will reinforce a feedback loop that will cause irrevocable damage. On current levels, the world will hit this mark by 2030. Wain admits that it’s a monumental task for both developed and developing countries, but she can identify Australia’s major role. “The one area where Australia can lead is to demonstrate that an energy intensive economy like ours can retain prosperity—rather than growth—by putting in clean energy systems that reduce greenhouse gas emissions.”
She takes issue with artificial advantages given to damaging industries, which means new, more efficient technology without subsidies struggle in the marketplace. “This is something that has crept up over decades of artificially deflating prices for things like energy and water and then assuming that that’s what we can keep on doing,” says Wain. “As consumers we have to start paying the right price for everything.”
Established sectors see the removal of subsidies and other artificial advantages as a threat to their profitability, but Wain says it’s not about eradication and replacement in one fell swoop. She suggests a combination of government policy, private enterprise, and financial incentives for efficient technology may well do the trick. “Alongside private sector innovation we have to see government using their policy levers. Alongside regulations, we need fiscal incentives so we’re taxing the bad and rewarding the good,” she insists.
The government itself is a big consumer, which may be where they can shape the market. Wain proposes that if all three levels of government only bought or leased a benchmark clean vehicle, it would create a market of scale to help consumers access these vehicles at an affordable price. “The auto companies will yell, kick and scream, but if you give them 18 months to retool their plants and set the benchmark, that cleans up a whole slew of things,” she says.
Additionally, auctioning permits in a carbon emissions trading scheme could create about $10 billion per year, enough to help polluting industries fund research and development to increase energy efficiency. “This is the biggest opportunity for wealth generation the world has ever seen, but the window is rapidly closing,” states Wain. “We need to create a framework to overhaul the entire marketplace. It may take 20 years, but it has to start immediately. We can no longer delay saying ‘India, China, US—we’re not going to move if they’re not going to move’.”