Guess it might quite difficult to find an analogy for externalities, in economics textbooks it’s always a paper factory and a lake.

And, an interesting insight into ‘The Corporation.’ Maybe I should read/watch it after all. I do think that ethics and profit can be compatible to some extent and in other ways it doesn’t work at all. For ethics to work, you need to work in an ecosystem where everyone has similar values. Sometimes these values can be enforced by law and other pressures, sometimes they can’t.

As many scientists have pointed out, we need solutions for reversing the global warming, not just decreasing the speed of it.

Vince, there’s one thing that bothers me with your analogy with smoking. As you say, smoking is (directly) self-destructive and therefore no “rational” being would do so. So far so good, but smoking does not have (almost) any effect on the enivornment or people around the smoker (there are no externalities other than causing discomfort in crowded places), companies being wasteful of the natural resources on the other hand are externalities and on the short/medium-term have no effect on itself (other than through the 5 reasons you point out).

Probably I’m just nitpicking, but there’s just something that doesn’t work with your smoking analogy. You’re correct though that the only way smoking has been in decline is because of the environment has changed (stricter legislation, image of smokers, health concerns…)

As far as the Tata Nano goes, I hear that it’s trying to meet certain eco-standards. But I’m not knowledgeable enough to pass comment on that, except that no car produced right now is ever 100% green.

I included it in the point under business-climate, but you’re right, it could be considered as separate source of pressure as it’s definitely an important and complex driver for businesses to change.

Beautiful post.

I would add a sixth pressure case if you don’t mind: competitive pressure.

A sound green strategy coupled with a perfect execution (that as of today includes too often communication only) is a way for companies to differentiate from their competitors and hence attract & retain the best talents as well as position themselves as foremovers in the minds of their stakeholders (clients, suppliers, investors, business partners, etc.).

How do you feel about this addendum?

But no matter what business you operate in the world profits are their main goals. Lets look at Tata Nano(the cheapest car in the world) produced by India, how bad can it damaged our planet?

No, of course you are right. Ethics should be on top of that list. Without ethics, no one would care or do anything.

That said, I still see a lot of parallels to the non-smoking movement here. People have been told that smoking is bad, both for them and their environment. It was both ethically and morally right to change, but it was only after certain pressures were applied, that we are seeing big changes.

Philosophically speaking, I don’t think ethics is a reason exactly. It is an emotion. Reason is something that directs logical operations, and to me, business-logic is dependant on economic principles such as demand, the cost of operating, and the tools to change. Combine logic with emotion however, and you have a very powerful strategy for change.

That’s just my interpretation though…

I would even put it #1 in your list… More and more people -as you said in your consumer point- are “green”-friendly, but these consumers are also, at some point decision makers for their companies, given by this mean a true “ethics” dimension to the choices they make!

A company is more defined by its “employees” as human, than by the country in which it resides, the consumers to who it sells, the competitors it competes, or the technologies it uses…

As far as stakeholders go, their interest is determined by several things, most of which surrounds profit. That includes keeping costs low, meeting demand, and growing the company. All of which, I argue implicitly or explicitly, is compatible with operating in a green fashion.

And yes, the sales-aspect of green is a given and also implied by point two: consumer-pressure.

As far as niches go. It’s hard to tell how small or large the consumer-interest is at present, but it’s hard to ignore the amount of media-attention environmentalism is getting. Therefore, in combination with other pressures, I have little doubt that the niche will eventually become mass-market.

Interesting that you mentioned green car adverts. In the links I covered on my blog this Sunday, I discussed a measure in Norway where they ban adverts from any innovation that’s causing carbon-related problems. That includes cars. I think there should be stricter regulation on what companies can advertise, though clearly there are plenty of loopholes, e.g. vista-capable, HD-capable, and green, and the only way out, I fear, is a more informed consumer.

Wasn’t the basic tenent of the book you, Vince, got your avatar from that the corporations will only optimize their value to their shareholders?

The government and climate pressure have, in some cases, lead to companies build their wasteful plants in developing countries with lax environmental and governmental standards instead of succumbing to these pressures in the western world.

And while there are activist-consumers, they are still a small niche. The rest are easily mislead with clever marketing. I fail to see the logic of selling something as green when the only green alternative is not buying said product.

Without global, supergovernmental action, I’m afraid there will not be any change. As long these safe havens for non-green activities exist, there is choice.