Green businesses: building value over the long term.(Reprint)

LACKING APPROPRIATE MARKET signals, current business practices often harm both ecosystems and human communities. A green business simultaneously enhances natural capital, social capital, and economic capital. It creates new opportunities for itself by optimizing this "triple bottom line". It reduces costs for raw resources, wastes, and management of toxic compounds by enhancing resource efficiency, participating in sustainable materials cycles, and using waste as resource. A green business runs on renewable energy and uses green procurement throughout its supply chain to identify products and services consistent with a conservation economy.

A green business assumes product stewardship assessments for its products, providing customers with ways to return a durable product at the end of its life for disassembly and remanufacture into a new generation of products. It provides tangible social benefits to its employees, customers, suppliers, vendors, and local community. Green businesses improve their ability to use resources efficiently, close their materials cycles, employ renewable energy, and practice green procurement. A green business reliably builds value over the long-term, rather than seeking unsustainable short-term results. They measure, report on, and base decisions on their triple bottom line.

The business case for participating in a conservation economy is strong. Many of the typical investments--for instance in energy-efficient lighting, native landscaping or transportation reduction--offer a direct payback time of under three years. Other investments require the evaluation and internalization of social and environmental costs over a project's entire lifecycle. This internal use of true cost pricing allows green businesses to anticipate broader market shifts.

A green business is transparent in its activities, carefully reporting on its environmental and social performance, as well as financial performance. This can create better relationships with the community, speeding regulatory and permitting processes. Products and services that are sustainable--and that can be given credible product labeling to that effect--create differentiation in the marketplace, and in some cases capture a price premium. Enhanced employee morale from a values-based approach reduces turnover and improves productivity. Reduced environmental risks and liabilities decrease the cost of insurance and bank loans. Social and environmental commitments attract investment from the rapidly growing socially responsible investment sector.

Long-Term Profitability

Short-term business decisions do not ensure the long-term viability of living systems or human communities. They also fail to deliver profits over the long run. A conservation economy is designed to be reliably prosperous, generation after generation. This requires green businesses to make decisions on a much longer time scale--decades or even centuries.

Studies of companies with great longevity show that they share several key features: a commitment to ongoing learning, adherence to a well-articulated set of core values providing a sense of identity, and a fiscal conservatism that allows them to act flexibly as opportunities arise. Many of these companies are publicly held, and have been able to convince their shareholders that their strategic focus on growing long-term value is consistent with short-term returns. In contrast, maximizing profits for a single quarter can be accomplished with mere accounting tricks, and has become a suspect business practice in the wake of recent accounting scandals.