TAKE THE RISK: Problems and prospects of companies practicing sustainable efforts

Weighing the negative and positive effects of “going green”

The challenge to address environmental problems has always been a no-win proposition for large companies thriving in a society that solely runs on technology. The recent uproar of industrial activities has led many companies to consider their environmental impacts. With this, the term “going green” is highly related to environmentally-friendly methods that one can implement. However, it is worth noting that going green does not equivalent to being sustainable. Being green is assumed when we are able to make a process or product sustainable.

If doing so seems positive, why is the practice not evident within most of the big corporations in our world? Large corporations that want their businesses to be viable enough to pass as “green” are exposed to intertwining risks, which may affect the company’s financial and regulatory aspects and overall well-being. However, a few local companies have shown willingness in tackling the idea of “going green”. Some of these are known corporations such as Coca-Cola plants in various regions in Luzon, Nestle Phil. Distribution Center in Bulacan and Shell Phil. Gas Refinery in Batangas [1]. These companies attained a seal of approval by DENR to recognize their efforts in implementing green policies in their respective platforms. Environment Secretary Ramon Paje gave his regards to the said companies saying that “Their policies on self-monitoring and self-regulation deserve to be recognized and emulated by other companies.”

Furthermore, existing advocacies that aim to counter the damaging effects of climate change are practiced by other local ventures. For instance, the trend of using tote bags and pouches made out of tetra packs continues to thrive in the local business scene. Bus companies that integrate point-to-point transportation also contributes to the betterment of the environment by lessening the use of individual vehicles. Grab and Angkas also play a vital role in promoting carpooling, lessening the number of motorists and automobiles that further harm the environment. This goes to show that companies in the Philippines are generating methods with an attempt to go green. However, it is important for these companies to weigh in both the benefits and consequences of going for a more environmentally friendly business. What are the risks that these companies face to oppose the growing issue of climate change?

CONS: Why companies remain indifferent to environmental efforts

Competition with neighboring companies in the field

Implementing earth-friendly methods is not easy given the many economic forces that are at work in the industry. Being in an ever-growing world wherein profit is so deeply valued, businesses are most likely to prioritize “cheaper” sustainable options instead of completely changing their business model into one that is truly sustainable with higher initial costs. For example, some business owners may find that it is less “convenient” for coffee shop chains to substitute plastic cups and straws with other environmentally friendly products if other coffee shops provide incentives for those who will bring their own tumblers. In this instance, businesses are more likely to go for the latter, as it saves them on cost, while consumers would probably enjoy the benefits given by businesses in bringing their own cups, thus leading them to lean on the latter end as well.

Growing risks in the workplace

Given the harms of both plastic and paper products, one common method of going green for some companies is to minimize or even eliminate the use of paper in producing documents and other computerized files. Paper records are deemed to be “traditional” since almost everyone is adept with the use of new technology. However, data risks may be imminent if software systems malfunction in laptops and computers. Furthermore, if policies on going green are strictly observed in companies, employees may have a hard time to keep up, given that it is challenging for some people to sacrifice old routines and adapt to change.

Rise of expenses and marginal impact

The switch or adjustment period can be expensive for some companies. In addition, it is important to take into consideration the applicability of these renewable energy sources. For instance, the geography or climate of a country is essential to determine what energy sources companies can utilize.

For example, the Philippines utilizes both solar and wind energy, given the tropical climate of the country. Major solar farms in the country can be found in Cavite (Cavite Eco Solutions) and in Raslag, Pampanga (Solenergy Systems Inc., 2019). In the context of companies utilizing renewable energy, initially it can be costly for a corporation to go green, given that switching energy sources will require a larger sum of money.

On the contrary, businesses can benefit from renewable energy overtime. In fact, using renewable energy sources are much cheaper than using nonrenewable energy sources in the long run. Through the use of renewable energy sources, companies can also propagate jobs and stimulate the economy. Imploring the use of energy sources such as solar and hydroelectric energy will require more manpower compared to traditional fossil fuels [3].

Moreover, the switch in using green materials can lead to higher costs in the production process. For instance, a certain food chain who switches suppliers to buy only plastic-free products will most likely have to pay much higher prices than their initial ones. Due to this, companies usually prefer the use of plastic in their products. Aside from the material having low costs, they are also lightweight. Plastic products are adaptable in many ways possible, in contrast to that of the alternatives present today. (according to Susan Selke). This may impact the overall marginal aspect, which can either make or break the company’s business and image within the industry.

Though going green aims to lessen the negative impacts that plastic or nonrenewable energy sources have on the environment, every individual (or in this context, company) can often be negligible in participating in this cause. Now that we understand why not a lot of companies are environmentally-friendly, it’s important to note why they should be by discussing its pros.

PROS: Why companies should take the risk

Attract consumers’ trust and positive feedback

Businesses that promote their eco-friendly methods are shown to attract the favor of like-minded consumers. By going green, a positive image of the company will emerge and can be built up within the vast consumer market. The Nielsen Global Corporate Sustainability Report found in a survey that 66 percent of respondents are willing to pay more for eco-friendly goods, which may tackle the risk of expense. Consumers tend to consider these companies socially responsible and will offer their support to the efforts established by these corporations to advocate for the betterment of the planet.

Though cases of greenwashing is still a dilemma, companies can earn its consumer’s trust through advocating for a relevant cause. This entails how transparency is essential when it comes to companies taking a bold stride in societal and environmental causes. In addition, it is also important for companies to consider their customer’s perspective. With this, business brands can be encouraged to mediate from the current flow of the industry and take a step in saving our earth.

Development of good public relations with neighboring companies

Emphasizing an earth-friendly approach in business can gain positive attention, not only to environment-friendly consumers, but other company brands that work within the same spectrum. Additionally, being environmentally informed can create opportunities that will raise the companies’ involvement in the local community and charities that can solidify its influence within the industry.

Though a relevant factor in the business field, PR opportunities weigh far more than competition. Companies promoting green activities will raise both its brand appeal and exposure to other neighboring businesses. Additionally, as stated by Warren (2019) in an article by PR Solutions, companies that also engage in environmental charities can solidify its influence amidst all the competition within the industry.

Foster a healthier workplace

Establishing a healthier workplace can retain the best talents within the field. A study conducted determined that 70 percent of workers prefer to work for companies that inculcates a sense of environmentalism in the methods it undergoes. A socially responsible company can inherit the trust of its employed with the green practices it incorporates to its respective business. A healthier workforce can also produce healthier employees; physically and mentally, with the work a company provides.

With this, reinforcing a healthier setting for employees overshadows the looming risks that can easily be countered through a period of adjustment. It is in fact inevitable to face risks if a company is striving to take a bold step. However, overcoming these risks will yield positive outcomes once the company has emerged from its adjustment. For sure, if the company’s objective is for the collective good, its success is sure to be set in stone.

Tax incentives and overall societal impact

One essential benefit of going green is its viability in saving money on taxes. Many tax deductions and credits are provided for business owners who go green, and the decision to establish a sustainable company can result in the perk of being able to pay later off when it comes to the business’ taxes. These incentives can be viewed in R.A. №10771 or also known as the Philippine Green Jobs Act of 2016 which also promotes the granting of tax incentives for green businesses. Moreover, the Bureau of Internal Revenue also published the Revenue Regulations №5–2019 which backs up and states the tax provisions mentioned in the Philippine Green Jobs Act. With this, qualified businesses that exercise green jobs are entitled to a special deduction from the taxable income that is equivalent to 50% of the companies’ total expense intended for skills training and development expenses. This grant of tax incentives will aim to promote the “greening” of the country’s manufacturing industry [4].

The Board of Investments (BOI) has implemented a scheme that would uphold tax incentives for local manufacturers that go green. This scheme proposed by BOI would be implemented through the Climate Incentives for Manufacturing program (CLIMA). CLIMA is presented in the guidelines by Investments Priorities Plan in 2017: [5].

By implementing these changes, companies are most incentivized to yield a smaller carbon footprint, which will most likely reduce the number of toxins injected into the environment every day. Thus, pushing the advocacy to ‘go green’ in neighboring businesses and corporations, encouraging many to take a step in lessening the effects of the worsening climate change, instead of turning a blind eye to what we are all facing as one planet.

The underlying silver lining for companies that intend to “go green”

Being green can be both a risk and a worthwhile business pursuit. A concern for social responsibility can increase a company’s significance as consumers search for sustainable goods and products. Consumers may prepare to part with a larger sum of money, in order to support these efforts. Though it is a great risk for these emerging businesses to make, it is important for them to incorporate environmental-friendly methods, given that large corporations emit a larger carbon footprint and the manufacturing industry is the main contributor to pollution. Even in the smallest of ways, these companies should start adjusting to earth-friendly methods to lessen their carbon emissions amidst giving their consumers better products.

The advantages and disadvantages presented are merely windows to what these companies are bound to have as their benefit and consequence. Though we, as individuals, can act and change our ways in favor of having a more environmentally friendly lifestyle, it is still in the hands of companies to decide if they are going to do something about the effect their actions have on our world. It may be a challenging transition, like that of the expected challenges presented in this essay, but it will surely yield an effect that can impact the current situation of our dying planet.

References:

• 4 Advantages for Companies Looking to Go Green. (2014, April 28). Renewable Energy World. Retrieved from https://www.renewableenergyworld.com/2014/04/28/4-advantages-for-companies-looking-to-go-green/

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