Going “Green” – Is It Worth It?

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Going “Green” – Is It Worth It?

Businesses are always being told to get on the “green” bandwagon
– consumers want environmentally friendly products, they want to
know their food is produced sustainably, they want to know the
country of origin of their goods is not damaging its
environment.

The trouble is they want all of this, but they are not prepared
to pay anything more for it. Organic farmers have found this.
Their product is marketed at a premium, but only a small number
of die hard fanatics are prepared to pay.

The rest of the food-buying world just says it would be good, but
it costs too much. This is a long-term concern for NZ Inc, which
markets its clean green image in the hope of getting just such
premium prices.

It seems the reality is it will encourage consumers not to stop
buying produce from NZ, but it won’t be enough to make them pay
more. Any premiums will have to be found elsewhere.

It’s the old argument for this country – how to move from soft
commodities, for which we are price takers, to value added
products for which we could be price setters.

NZ Energy & Environment Business Week
www.nzenergy-environment.co.nz carried the bad news in this
piece.

“Forget A "Green Premium", Says UK Retail Boss

There must have been a few bubbles burst at the EDS conference
when Mike Barry, the head of sustainable business for UK retailer
Marks & Spencer told attendees while products have to be
"green," there is no price premium to be obtained from
environmentally friendly positioning for mass market consumer
items.

Barry says "people just won't pay for it." He should know,
since M&S is a global leader in sustainable business practice and
believes it has made a net 90m pound contribution to the
company's bottom line simply by cutting costs through
sustainability initiatives and from the virtuous circle created
by living its brand through staff and suppliers, as well as
demonstrating its commitments to customers.

But while this might make people happy to walk through the door
at M&S rather than a competitor's store, once inside they are
looking for the most keenly priced products. Instead, M&S has
used its positioning to expand its retail offering into
non-traditional areas, such as home insulation and energy
efficient products.

NZ’S LEADING INFORMATION SOURCE FOR ANALYSIS
AND INTERPRETATION OF THE CRUCIAL ENERGY
& ENVIRONMENT ISSUES AHEAD.

NEW ZEALAND ENERGY & ENVIRONMENT BUSINESS WEEK
Powerful and up-to-date, it covers Emissions Trading Scheme,
Climate Change & Carbon Trading, the Resource Management Act, the
Kyoto Protocol, Energy Supply Security, Electricity Generation,
Renewable Energy, Oil & Gas Exploration, Energy Efficiency, Water
Management, Sustainability. Covers policy announcements, draft
legislation, amendments to Acts and regulations. Also includes NZ
Energy & Environment Weekly Digest. Published every Tuesday. 46
issues per year.

http://nzenergy-environment.co.nz/home/special-introductory-offer

To get its home insulation offer right, it retro-fitted
employees' homes for free. Barry says "we are stretching the
brand" with sustainability initiatives. He says his CEO asked
five questions about the M&S sustainability strategy when the
global financial crisis hit, which any business considering this
path should answer first:

1) Is there evidence of social and environmental harm to the
planet? (The answer was yes);

2) Can M&S make a meaningful difference to that? (Again, yes);

3) Is this plan making us money? (yes, as above);

4) Do our customers expect us to do this? (Not only yes, but they
expect big businesses and Govts to do this so they don't have
to);

5) What are others doing? (Some of the largest multi-nationals -
e.g., Procter & Gamble, Walmart and Coca Cola had all made
efforts M&S found "humbling.")

The result from those answers? Rather than wind back the
sustainability push because of the global crisis, it was
accelerated.

But there's still no price premium in it.”

You can’t ignore the experience of Marks & Spender, one of
Britain’s biggest retailers. NZ businesses should be prepared to
listen and learn.

The country cannot turn its back on environmental issues, because
this may be detrimental to trade. (It obviously isn’t always bad,
because China would be out of business if it were), but there
should be no expectation of extra money from it.

Instead a way must be found to leverage good environmental
credentials to get more innovative high value NZ product to
market. The Govt’s new moves in the funding of science and
technology should help.

ends

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