Environmental Trends in Business

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A large tree with fog in the distance (Image: shico3000/iStock/Getty Images)

Companies around the world are realizing that not only are sustainable business practices popular with the public, they also can lead to higher profits. Businesses are working to shrink their carbon footprint, use more renewable energy sources and create greener products and services, and sustainability is seen more as a competitive advantage, as opposed to being a costly requirement for doing business.

Shrinking Carbon Footprints

Ernst & Young reports that governments and corporations around the world are focused on reducing their carbon footprint for social and financial reasons. However, EY also notes that a gap exists between the capital needed and capital available to achieve a low-carbon global economy. Emerging markets are expected to spur a rise in the demand for energy, which is likely to pose challenges in some parts of the world in relation to carbon emissions. The general trend in the economy, though, is an effort to reduce such emissions. In an effort to reduce their footprint, companies are switching to energy-efficient lighting, digitizing records and making recycling a priority.

More Renewable Energy Sources

The International Energy Agency predicts that the use of renewable energy sources will triple between 2010 and 2039. Wind, solar and hydroelectric energy sources are among the clean energy options being developed for governments and corporations to power their operations. However, these technologies are expensive relative to traditional energy sources, which hinders their proliferation over the short term. As the technology becomes cheaper to use, renewable energy sources are expected to grow in number.

Reporting on Environmental Compliance

Public companies, in particular, are working toward greater compliance with environmental laws and standards. According to Market Watch, stock exchanges and governmental oversight organizations worldwide recommend that companies disclose compliance with environmental regulations in their financial reporting. As a result, environmental protection and preservation are becoming a larger concern for companies and investors. The World Resources Institute reports that pressing issues like climate change, deforestation and air pollution are prompting the need for corporations to enhance their compliance efforts.

Sustainability as a Competitive Advantage

The Environmental Protection Agency defines sustainability as the practice of creating and maintaining the conditions for humans and nature to exist in productive harmony. Companies large and small are using sustainability as a selling point directed at investors and consumers, claiming that it will support the long-term success of their operations. As an example, Wal-Mart touts sustainability goals that focus on energy, waste and products. The company says it is working toward creating zero waste, using 100 percent renewable energy and creating products that sustain the environment and people. Sustainability is being used and advertised by Wal-Mart and other corporations as a distinct competitive advantage.

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