Climate change is on everyone’s lips. Images of burning forests, flooded areas and landscapes destroyed by storms are repeatedly appearing in the media. And the fact that we are all partly responsible for such events has been proven again by the coronavirus pandemic: During the various periods of lockdown, significant reductions have been recorded in emissions – at least temporarily.
Joe Biden’s climate policy has also reignited the debate on climate protection. His ambitious goals could have a major impact on the whole world: The American economy aims to become climate neutral by 2050. In his new legislative bill, he highlights the opportunities for renewable energy, which can create a cleaner environment while boosting the economy and creating numerous jobs. In this way, he is addressing the exact issue of the “green economy”, which has been an important buzzword regarding the topic of environmental protection and climate change for several years.
What is the green economy, though? Is it really just one of many buzzwords, or is there more to it? In this article, you will learn what the idea of green economy is all about, and the opportunities it offers to companies.
What is the green economy?
The green economy refers to earnings-oriented economic activity that takes ecological sustainability and social factors into account. It therefore relates to balancing the economy with ecological and social factors. In this context, interdependencies and conflicting goals play an important role.
Behind the concept is the acceptance that an economy which fails to take our natural resources, environmental protection and social justice into account is unable to create lasting prosperity.
The term “green economy” was originally coined by the OECD (Organization for Economic Co-operation and Development) and the UNEP (United Nations Environment Program), although the approaches of the two institutions differ.
The basic idea is to create jobs in green industries, and to thereby boost the economy on the one hand and slow down climate change on the other.
Why the green economy?
Closely linked to the guiding principle of the green economy is the far-reaching change in our society that it requires. The alarming figures on CO2 emissions, species extinction and hunger in the world demonstrate the need for fundamental change. The focus must no longer be solely on earnings for the already prosperous western nations: a healthy balance is now required. It is obvious that in terms of climate change and dwindling resources on the one hand, and a growing world population and the associated increase in consumption on the other, we cannot continue to operate as we have done in the past: we can’t keep doing business as usual.
The current developments are also posing major challenges to the economy: The effects of climate change, a steadily increasing world population and dwindling material resources, combined with increasing competition surrounding them, are having an ever greater impact on the success of business – both globally and for each individual company.
Extreme weather events caused by climate change, for example, can affect the availability of raw materials, which can, in turn, lead to greater competition and therefore to rising prices.
Sustainability, social compatibility and environmental protection are also becoming increasingly important to consumers, placing demands on companies, products and production conditions.
Therefore, the green economy does not only mean technological optimization, but should also be understood as being a far-reaching process of transformation towards sustainability and social justice. We need to take action right now!
Goals of the green economy
In the green economy, avoidance, reduction and replacement are the key approaches. The primary goal is, of course, to avoid emissions, pollution and waste. Where this is not entirely possible, the goal is, at least, to reduce these things as far as possible. This can be achieved with the help of recycling, for example, which is ideally part of a loop economy. The increased use of renewable resources, which means energy as well as raw materials, also contributes.
In this respect, the key tools are modern technologies, the use of which makes production processes more efficient and therefore protects both resources and the climate. However, efficiency alone is not enough, as it quickly leads to the “rebound effect”, i.e. the saved resources are immediately used again, and the overall result is higher production with an even greater consumption of energy and resources, which means that the opposite effect is achieved. Therefore, rather than just focusing on efficiency, we need to question our patterns of consumption and set clear limits.
In this context, the social dimensions of the green economy must not be ignored, namely social justice, gender relations and the (global) distribution of labor. Creating jobs and ensuring fair working conditions can help to fight poverty over the long term.
The opportunities of the green economy
Becoming greener as a company does not necessarily mean higher costs – on the contrary. In fact, greening a company holds great economic opportunities and future prospects, such as a high savings potential, especially in terms of the resources used. A proactive approach usually pays off as well, rather than making adjustments only when the laws and regulations require them.
Furthermore, sustainability is increasingly becoming a competitive factor. In industries with a large number of market participants in particular, a greener approach can be an important way to stand out from competitors and fulfill customer expectations. Increasing numbers of consumers are attributing importance to the social and ecological compatibility of products, services and processes. This is also taking place among investors.
This not only allows for completely new business models, by opening up new future markets, for example. An alignment of this kind can also have a significant impact on the motivation of the employees and increase the ability of a company to attract skilled staff.
Criticism of the green economy
In addition to working towards the ambitious goals of the green economy, companies are required to remain internationally competitive – which is no small task. And it is naturally the case that there are also voices which oppose the green economy: Critics express doubt that it is really possible to run a company with respect for the environment, climate and people without sacrificing growth.
Without doubt, an issue that is this complex and has such far-reaching consequences can be daunting and difficult to keep track of. The fact is, however, that the path must be taken, even if the initial steps forward are small. The idea of the green economy helps guide companies towards a greener and more socially responsible way of doing business.
How can your company contribute to the green economy?
Even if your company doesn’t operate in one of the new green industries, there are still things you can do to get a little closer to the green economy. And, as previously described, these can also be associated with cost savings.
An analysis of the production processes provides clues on where raw materials and energy can be saved or replaced using sustainable alternatives at little overall cost.
And even those who are not part of manufacturing industry but operate in the service sector, for example, can make a difference. Here, too, it is worth taking a critical look at the processes in the company.
Contrary to the widespread fears, the coronavirus pandemic has taught us that as long as it is well organized, working from home, and avoiding business travel, will not necessarily lead to a drop in the quality of work, and can yield a significant reduction in CO2 emissions.
Additional food for thought is the idea of the paperless office. This has existed for some time – yet here, too, the past year has given us all a nudge in the right direction and ensured that the digitalization of operational processes has finally being driven forwards. The digital mapping of previously paper-based workflows, such as the processing of incoming invoices, not only offers considerable potential for conserving physical resources – in this case, paper – but also provides the possibility to use the manpower of the employees in other ways due to the associated automation. This, in turn, increases economic efficiency – in line with the green economy.
A sustainable approach to business therefore offers a wealth of opportunities for managing both the environment and people with greater care and, at the same time, for increasing the economic output of your own company.
Would you like to learn more about the green economy and the opportunities for your company? Then watch our webinar recording “Through the digital looking glass: The future of work in the green economy”.