Sir Stuart Rose’s post points to the first test of how durable the current corporate green wave is. With an apparent global economic downturn imminent or underway, we will soon find out if there is a true business case for the sustainability craze, as many advocates claim, or if it’s just an added economic burden taken out of shareholder’s … well, share of profits. Many of the sustainability initiatives in the post appear to create business value in terms cost savings or brand and reputation benefits irregardless of their greenness. The decision to abandon a photo-genic wind turbine on an M&S store because it would produce more energy elsewhere also seems to make economic and environmental sense. The big question is would that 200 million pounds slated for Plan A be better invested elsewhere? M&S have made themselves publicly accountable for implementing Plan A, but it would be interesting to hear from others about what types of sustainability initiatives are most likely to be sidelined in an economic downturn. Investments in carbon offsets, for example?

Gregory Unruh
Thunderbird School of Global Management

Moral vs Money, or Moral is Money?

It may appear quite naïve, but, is “sustainability expense” a matter of altruism, moral duty or a matter of investment for the company’s future cash-in-flow? Whether you like it or not, listed companies’ activities including sustainability management are constantly monitored by capital markets, and the stock price is usually a foremost concern for management. Given the power of the capital market, sustainability expense has to be framed as part of the investment for future growth, at least to some extent, or to large extent for many companies. In a short term, however, sustainability expense certainly suppresses the level of profit, and conventional theories imply that investors do not like it.

Sir Stuart’ article reflects on such an aspect of the balance between costly sustainability management and the capital market expectation. Given that the general business is currently adverse for M&S, their unchanged effort for sustainability (Plan A) is much appreciated at least from the altruism point of view. Good news is that there is at least one good supporter of M&S. Is it from today, in the UK, M&S charges 5p for a plastic bag? I certainly keep shopping at M&S as a matter of my moral attitude, which I sense, is shared by increasingly many customers and investors.

I have even better news for them from a capital market theory point of view, and it seems to be empirically supported as well. In Oxford, drawing on an emerging research technology, we run a ‘quasi-experimental simulation’ to test the hypothesis: “Those companies which consistently spend X% of their PBIT for sustainability management, get more investments from markets than others over 10 years (including economic ups and downs)”. Real people participate in this experimental research and play a role as (A) a company management, (B) a consumer, and (C) an investor. Every year, over 10 years, (A)s decide the level of sustainability expense for their companies, which (B)s and (C)s monitor through (A)s’ financial statements, which forms the basis of consumer choices and investment decisions. The rule of the game is simple and the same for everyone – to make the biggest money for himself or herself. So, it is not really about altruism but about money that the participants are concerned about.

The result? To make a long and complex story short, the hypothesis was positively confirmed, quite clearly. That said, with a simple financial statement regulation, we can create a market in which those who constantly care about sustainability can get more money, and as a result of this, the general level of sustainability management can be improved in the market. This is so not only as a matter of altruism but also as a matter of profit and market mechanism. Quite exciting! This implication is so significant that one of the most powerful emerging countries is considering to adopt this regulation for their fast growing companies and the economy.

But, for this, we need some investments to make our experimental research more sophisticated. My problem is that we have not managed to find investors who could donate some money for our research. I think, as a creative accountant, this investment can be accounted for as sustainability expense on your financial statements. So, would you consider this donation opportunity for both sustainability and growth? Let us share our excitement for greener and sustainable growth.

Tomo Suzuki
Oxford University

Two points for consideration.

In order to make the emergence of Sustainability Management more sustainable than fashionable, overly critical cynicism and pessimism should be avoided. I appreciate Sir Stuart's and M&S' efforts. The following is just for further considerations.

1. Famous multi-nationals can gain the benefit of being the market leader in the field of Sustainability Management, which attracts attention of investors even if Sustainability Management is costly for the company. BP for example sees a strategic opportunity in this, and they openly say so. However, what about the rest, non-famous companies? Unless they, the majority of the business world, change their management behavior, the impact of sustainability management is limited on our planet. I sense that we need an institutional design to come up the solution.

2. The same is true particularly in fast growing emerging economies. Efforts in already developed countries are of course welcome, but their impacts on the planet are limited, unless we take care of the developing countries. This may have been taken care of by methods such as the international carbon trade market. But, something more can be, and should be done, I feel.

Tomo Suzuki
Oxford University

Lester Brown, whose work I hold in great respect, is now up to Plan B 3.0 in his series of books on "a planet in stress and a civilization in trouble" (http://www.earth-policy.org/Books/PB3/index.htm), compared to which the Marks & Spencer Plan A may seem quite modest. But, as Sir Stuart Rose's opening post underscores, this is a major initiative for the UK retailer. 100 target areas may seem a bit of a brain-full, but so far I have been impressed by what I have seen Rose and his colleagues doing to make good on their pledges.

The potential impact may be smaller than that in prospect from Wal-Mart's parallel initiatives, with the US retail giant's 61,000 suppliers under intensifying pressure to improve their performance in areas as diverse as energy efficiency, packaging and sustainable fisheries, but - to be honest (and, interest declared, Wal-Mart have been a client) - my sense is that the M&S venture is more deeply rooted in the company's traditional core values than Wal-Mart's.

That said, I find it interesting to think back to 1988, when I co-authored The Green Consumer Guide, which sold around one million copies in the space of eighteen months - and (as it went into some 20 foreign editions) helped bring growing consumer pressure to bear on supermarkets, manufacturers and growers. At the time, M&S was among the more recalcitrant supermarkers, we found, insistent that its customers were mainly interested in price and quality, not in green issues.

The following year, however, we followed up with a supermarket version of the book, based on a 99-page questionnaire. M&S was already building momentum in the green space and a couple of years later I recall visiting the company, and having its manager of sustainability issues pull open his top drawer and show us his marked-up version of the questionnaire, which he was gradually working his way through in terms of targets.

Supermarkets have a crucial role to play in what some call 'choice editing,' not only informing consumers on the key issues but also moving beyond the simple option of offering customers a choice between 'good' and 'bad' products, to actively weed out the poor performers. That is what Wal-Mart is doing by killing an entire product category, incandescent light-bulbs, and replacing them with compact fluorescent bulbs - so that consumers don't have a choice in the matter, other than buying bulbs elsewhere.

Too often, major companies launch major initiatives, with bold, ambitious promises, and then quietly bury them under competing announcements over time. With Plan A, M&S have done us a considerable service by setting both specific expenditure targets and explicit time-scales. We, at least, will be watching this space.

John Elkington
Founder & Chief Entrepreneur, SustainAbility - and co-author of The Power of Unreasonable People: How Social Entrepreneurs Create Markets That Change the World (Harvard Business Press, 2008)
(http://www.sustainability.com)
Personal website at http://www.johnelkington.com

Sustainability as a Value Creating Strategy

Sir Stuart's discussion of M&S's commitment to Plan A raises a number of issues of interest to any company considering the role of sustainability in strategy.

Plan A incorporates a number of elements that my colleagues and I believe are fundamental to any sophisticated sustainability strategy. By actively engaging NGO's, M&S has done more than educate itself as to the standards by which they will be assessed by an important constituency. They have gained access to a community which often possesses the deepest knowledge of best practices globally. The spirit with which Sir Stuart states that they fully intend to ask NGOs for help is to applauded, as is the insight that stance reflects. Moreover, by investing in building such a dialogue, M&S will have established a degree of credibility with a constituency that will prove critical if the company falls short of the metrics it has announced.

By making their metrics public and linking them to financial goals, M&S does more than demonstrate their commitment. They engage a constituency of growing importance in sustainability-- the asset management community. The growth in the number of mutual funds focused on companies with environmentally sound strategies is impressive. Companies with explicit, longitudinal metrics will undoubtedly benefit from a more buoyant market for their shares as more capital flows into those funds.

Sir Stuart's commentary also raises some interesting question. He cites data that 75% of English consumers are "interested" in green issues. Does "interest" translate into greater customer loyalty or a higher propensity to purchase? That is, at best, a speculative proposition. Our work suggests that such interest seldom translates into greater market share or loyalty, unless the product or service associated with the brand are highly competitive. While specific customer segments find green offers appealing, they remain limited in size. Some consumers may "pay a premium for a great reputation," but such reputations are usually built by providing those consumers with value along traditional measures of value, such as price and product performance. M&S's iconic status with many English consumers may be sufficient to cause consumers to broaden their basis for evaluating value.

How will challenging economic conditions affect the willingness of companies to follow in M&S's footsteps? Unless companies see a clear path to gaining a competitive advantage by adopting a green strategy-- a path Sir Stuart sees for M&S-- they are likely to proceed cautiously and "ditch the fluffy stuff" to quote Sir Stuart. Many are likely to regret it

I'm a bit confused by this posting - is the logic basically not cutting Plan A because "75% of customers support green"? I could be missing something, but that just seems incredibly vague. I can think of an array of reasons not to cut it: staff retention, fostering innovation, risk management, PR/Marketing, etc. but none of these seem to be under consideration.

While Sir Stuart indicates "While we've estimated Plan A could cost around £200 million over five years, we haven't actually done a hard cost-benefit analysis. What we know is that individual decisions within Plan A need to make financial sense" - but this is really only the cost-savings/eco-efficiency card. There is so much more to this initiative than just cost savings, and NONE of these aspects are being considered - or perhaps more importantly - tracked? While I strongly applaud M&S, I'm floored by the apparent lack of metrics to assess cost-benefits for a £200 million initiative!

I wish to applaud Sir Stuart Rose for his strong leadership. An increasing number of companies such as Marks and Spencer have taken bold action to pursue investment to make their enterprise and products more sustainable. Starting just 3 years ago, GE's bold commitment to ECOMAGINATION grew GE's bottom line by $14B in green product sales in 2007. Green is truly green.

A decision to aggressively pursue sustainable business policies and investment strategies is as much a moral and ethical decision as a financial one. For example - are there short term costs to a company that decides not to do business with a corrupt government or a supplier that employs young children? Yes there are. But over the long run, I believe that companies that rigorously pursue and enforce strong ethical management policies reap significant operational and market valuation benefits. Further, as an employee and consumer, I would not want my name associated with nor purchase the products of a firm that did not rigorously pursue and enforce such management practices.

I predict that companies such as Marks and Spencer that make thoughtful, hard economic investments to creae a sustainable enterprise will reap operational, social, economic and market valuation benefits in the future. It truly is more than just a good thing for company management to do, it is absolutely the right thing to do.

Leadership matters.

Whilst applauding Mark's & Spencer's plan A and its apparent success to-date I have to question why its suppliers do not appear to be a significant part of it? A supermarket chain is only the tip of a very flat pyramid and I guess M&S has well over 10,000 suppliers of every conceivable size from around the globe. I am aware from other sources that they are co-funding sustainable factories in emerging economies such as Sri Lanka and this is positive but appears to be isolated. The sustainability-related opportunities within its supply chain dwarf what is possible via Plan A and the handful of new eco-stores it can build each year. Wal Mart appears to be going further in this regard, as a previous posting indicates. One question I have is, does the sustainability agenda imply we need to see a consolidation in the supply base of retailers, similar to that we have seen in other industries such as auto? Is it really possible for retailers to have the control and transparency necessary to implement their own sustainability policies across such as broad supply base?

Question: Can you please advise how we might obtain a copy of the Marks & Spencer Five-Year 100-point plan? Other retailers might benefit from M&S thinking.

Thanks,
Sharon Weiner
Honolulu, HI

You can click the link in the "resources" box (right hand channel on this page) to go to much more detail on Plan A.

Web address is http://plana.marksandspencer.com/

Karen Dillon
Deputy Editor
Harvard Business Review

As Sir Stuart points out, there are definite commercial advantages to maintaining the sustainability focus--as there are with pretty much any values-driven commitment (as an example, signing the Business Ethics Pledge, at http://www.business-ethics-pledge.org ).

But the advantage is only there if companies understand how to harness that advantage in their marketing and outreach. Showing how has been the focus of my speaking and writing the last few years--and in that time, I've seen a definite tilt toward mainstreaming these once-"way out" ideas.

Shel Horowitz
Principled Profit: Marketing That Puts People First and founder of the Pledge

I believe Alexis Morgan's comment is important, since it points out that such initiatives have value that transcend the traditional "customers value this..." logic. Green initiatives can, when well crafted, motivate employees and potential employees in important ways. If the corporate world is engaged in an epochal "war for talent", initiative such as Plan A promise to help M&S win their skirmish in that war.

Brendan Murphy's observation about suppliers also merits consideration. Our work suggests that firms need to consider the "green" impact of their strategies across their supply chains. I suspect that the M&S initiative has done much to educate their "10,000" suppliers as the need to factor sustainability into their strategies.

Bill Olsen's commentary is, in my view, highly relevant. Companies that persevere in pursuing such strategies will reap benefits with customers and other critical constituencies.

While I appreciate the Plan A initiative and the resolve shown by Sir Stuart Rose to implement it in spite of rough times, I am disappointed at the last sentence: "So, responsible business is good business, provided we don't get too far ahead of our customers. I think half a step is about right: Any more and you can't sell to them; any less and you lose the lead."

The last sentence strengthens the view of Gregory Unruh; it appears that Sir Rose has kept the door open - in case some elements of Plan A need to be reviewed in future !!! To me, it is an indication of lack of commitment to Sustainability. I wish I am wrong!!!

The five pillars are good; a few more pillars would have made the programme solid. It appears that quite a few elements of Plan A are there just to reach the magic figure of 100. I would have loved to see commitments on bribery, corruption, diversity, inclusion, discrimination, employee Health & Safety etc., at Mark & Spencer and its supply chain. Or are they covered elsewhere ?

By the way, Sustainability as a stand alone subject no doubt costs money. This was the case with Quality a couple of decades ago. Now "quality" is integrated into various functions, not entailing excessive cost, bringing benefits to organizations. Unless Sustainability principles are embedded in the organization, integrated into various functions, we will be talking about "Cost" of Sustainability for years to come. Unless Sustainability is the way of doing business (or responsible business), probably even the 200 million UK Pounds in five years many not be enough to meet the targets set out by Sir Rose.

By the way would you like to call the money spent on Sustainability initiatives as "investment" for building the organization for the future ?

L. Ramakrishnan

There are many ways to start saving resources today for a mere fraction of the bonus dollars our high profile CEO's are saving for themselves. While technology is fortunately coming at us we still have to jump in at some point. A waterless urinal can save 40,000 gallons of fresh water annually in a commercial location, there are light harvesting dimmable light ballasts, there are motion sensors and soon affordable led replacements for florescent lighting that both cuts electric consumption and disposal issues to the minimum. THis list as we all know can go on for some time but when is the decision made to do the right thing? Is it always about customers? Why do I not read that we are thinking of our childrens children?

Unfortunately our North American multi location clientele looks for a ROI of 16 months or less. Some of these small investments may take 24 months but they are small investments into doing the right thing. I also applaude Mark's & Spencer's determination and integrity in doing what is right. It's about time.

Michael Cocuzza..

I was struck by M&S's commitment to become carbon neutral by 2012. That's a laudable goal. But is it doable, and what will it cost to try?

Of course companies should reduce their carbon footprints, both because it can make strategic sense and because it’s the right thing to do. But reducing energy consumption – which most any company can profitably do – is only a piece of the carbon-neutrality equation. M&S, in addition to admirably cutting its energy use, is using biodiesel in its trucks, powering its stores with renewable energy, and buying carbon offsets in its multi-pronged strategy to achieve net zero emissions.

As many companies that try these tactics will discover, renewable energy is often more expensive than the dirty energy it replaces; biofuels (depending on their source) may produce more carbon in the course of their production and use than conventional fuels; and purchasing carbon offsets may not actually reduce a company's carbon footprint. The point is, it may be possible for a company to make its operations look carbon neutral on paper, but, handled poorly, such initiatives could eat into profits without substantially reducing emissions.

I'm all for businesses reducing their carbon footprints. The questions for any company considering a zero-emissions plan are a) is it possible to achieve zero emissions? b) What will it cost to try? And c) what will this expensive effort buy us? For many companies, setting a less aggressive target for emissions reduction might be more strategic, cost effective, and achievable.

M&S's commitment to reporting out - and through an NGO - is putting their mouth where their money is. If followed over a 2-3 year period, M&S will either be the living the example of responsible leadership or become a victim of their own doing.

They appear to be taking a pragmatic approach by shelving the funds for roof-top turbines as this investment can be better used for other initiatives. They are not working with a blue print on how to ensure their success but a part of the M&S legacy will be a blue print for others to follow and avoid the inevitable errors M&S will make which is inherent by early adopters and movers in the market.

They will likley reduce some of their suppliers as a result of the M&S philisophical commitment to their customers. Some of the M&S suppliers will find "easier busines to go after" I'm quite sure. These suppliers will go to the lesser green conscious chains. There is a lot of room for choices in the market.

Elkington's comments of 'choice editing' are going to continue to be applied more stringently. Brand survival should be influenced on the ability of the brand to meet the functional needs of the consumer while ensuring it meets the test of "no harm" - to the best of the manufacturer's ability. The long-term effect of using responsible products can only benefit us all. The fact that M&S can contribute to this in a positive manner while making a profit is a great model which others will hopefully follow and improve upon.

Sir Stuart Rose's decision to commit to Plan A appears to me to be a bold strategic choice, designed to blend consumer insight and principled leadership into a brand positioning and a business practice that can create sustainable leadership for his company. This moment's market conditions or this quarter's stock price are interesting context, but they are not the data on which strategy choices as new as this can be evaluated. No--Plan A will need to be birthed, and to struggle in the marketplace before any real conclusion can be reached.

In order to succeed, Plan A has to move from the boardroom to the shopfloor, where it will be challenged at every turn. In my mind, the intellectual challenges are interesting, but the marketplace challenges are the true test. We know consumers respond, not simply with words but in consumer deeds, when the food industry floods the market with coupons. Demonstrating through time that great brands can move consumers from lip service ("sure, green is desirable") to action ("what a great company, what great products, what an irresistible blend of desirable and affordable and principled") is a proof yet to be rendered at any meaningful scale. This to me is the daring of Plan A--Marks & Spencer bets that they can make consumers reach into their wallets and buy responsibly, in a way that will create sustainable profits for M&S and its shareholders.

To me, the central question for Plan A is, can M&S make practical virtue desirable? Can the merchants and the operators within the Company create products and shopping experiences that compel consumers, on a platform of thoughtful environmental activism? How will Sir Stuart ensure that in the aisles, everyday, average consumers' hearts are sent soaring with the irresistible goodness and personal relevance of Plan A?

For brand builders like me, the question is not merely interesting. In our company, we have committed to our equivalent of plan A, with the same blend of intuition and consumer data that Sir Stuart references. Like Sir Stuart, we compete principally in markets where our products are purchased not from necessity, but as a result of desire. And like M&S, we are confronted with the seemingly dialectic--the imperative to deliver quarterly profit, and the exigency to pursue a principled path in our daily business. Building environmental thoughtfulness into our business system is on the one hand easy enough to do--other posters have pointed out, from light bulbs to transportation choices, there are a whole host of input choices any CEO can access to reduce his/her carbon footprint. But to make environmental thoughtfulness part of a compelling offer to consumers--this remains our number one challenge with consumers. When we introduced EarthKeeper boots this past Fall, with recycled content and thoughtful assembly, we were absolutely delighted to see the product leap off the shelf. But the post consumer data was clear--consumers reacted first to the aesthetics ("cool looking boots"), next to the performance ("I needed waterproof") and only when we reminded them, to the sustainability of the product ("oh, yes, definitely, I appreciate that too..."). Hmm. For Plan A to go all the way to sustainable, brand builders and product merchants at M&S are going to have to do better than that....

We are absolutely rooting for Sir Stuart to stay the course, and see Plan A all the way to success with consumers. Plan A is principle and commerce joined in one strategic thrust; our world will be richer by far, when Sir Stuart's Plan succeeds.

Jeffrey Swartz
Timberland

"Investor fury at M&S role for Rose" was the front page headline of the 11 March edition of the Financial Times. Americans may find it hard to believe, but the Marks & Spencer piece upstaged even the news that Wall Street crusader Eliot Spitzer was being pressured to resign in the wake of prostitution-related allegations.

And the reason for all this fuss? Sir Stuart, who kicked off this HBR debate with his essay on his company's 'Plan A,' had cut across - intentionally or not - the UK's corporate governance code by accepting the role of executive chairman. Although he had previously said he wanted to remain as CEO through to 2009, this new appointment means that he is now likely to stay on until 2011.

"In one swift move," the Financial Times declared, "the recently knighted Sir Stuart Rose has swapped his front-row seat in good corporate governance for one at the back of the class."

All of this may seem a storm in a distant teacup to most American business people, used to having the same individual serve as Chairman, CEO and even President of the same company. But in the UK this is now a real issue. While some observers may see this development as affording a welcome opportunity for a thoughtful, future-oriented business leader to ensure that, among other things, his Plan A is disseminated throughout the M&S value chain, this latest news has certainly upset some major M&S shareholders. It remains to be seen what the impact of the controversy will be, both in terms of Sir Stuart's future prospects - and those of Plan A.

John Elkington
Founder & Chief Entrepreneur
SustainAbility

Former American vice-president Al Gore has been putting a great spin on global warming with the Cannes Film Festival award winning, An Inconvenient Truth. He and loads of others have really missed the biggest of problems for the World; - the population doubling in ever decreasing time scales, but that is for another time.
Consumers Prefer Green Brands

This groundswell of awareness has led consumers to favour brands that have a green element in their culture and products.

According to WPP, American and British consumers perceive the top green brands to be; Toyota, Honda, Ikea, Body Shop, Aveda, Sub Zero and now M&S.
Here in South East Asia, Habitat5, PJC Wood and Nikolsons have taken the initiative. There is no real reason to suppose that these brands are seen any differently in other countries as the trends tend to be similar.

So how are these brands seen as being green? Consumers associate green brands with environmental conservation and sustainable business practices. They appeal to consumers who are more and more aware of the need to protect the environment.
Green brands boost sales and corporate image

They are a point of attraction to clients and prospects. You must however, act on the promise to be green. The increased awareness of Global warming means that prospects and clients are more likely to support a green company.

Corporations can no longer just say they offer fuel efficiency, organic foods, or energy efficient products - it is now a cost of entry in many industries and corporations need to start thinking and planning strategies ahead.

Marketers must consider the next level of greenness such as ensuring their overall business practices are sustainable or that the products and services represents greenness in the bringing of items to the marketplace.
Develop A strong Green Brand

Strangely enough a study by the Hartman group indicates that the average greenie has no brand awareness! So companies that have spent years developing consumer confidence have the most to gain from the trend away from the mass market. As a result many companies not associated with the organic lifestyle have managed to capitalise on this new consumer base through product development and the acquisition of small well being companies and spa’s appearing under company banners.

Consumers believe that these are the things required for them to feel better. It's about choice - a real culture shift. We marketers need to be well aware that, who makes the product- with what- and how, are all questions that compete for consumer attention.
Sp let's not knock M&S lead initiatives; anything in the urgent race against certain extinction is welcome.
It's time to go green now or risk your brand wilting in an arid wilderness

I'd like to circle the conversation back to the economics of being green and come in from a different angle. Marks and Spencer's Plan A is about greening the company's operations and the compelling commercial reasons to do so. Greenness, of course, extends far beyond a company's walls, throughout its supply chains and products. At the same time companies like M&S are trying to calculate the benefit (or cost) of greening their operations, they're pulling their hair out trying to calculate the benefit (or cost) of serving the hard-to-gauge markets for green products.

Speaking at the Wall Street Journal ECO:nomics conference in Santa Barbara yesterday, GE CEO Jeff Immelt put GE's green strategy plainly. "I am not an environmentalist. I'm a capitalist and a businessman," he said. Immelt sees a pot of money to be made in selling products that will satisfy a gargantuan global appetite for clean technologies. Global demand for GE's gas and wind turbines and jet and locomotive engines outstrip supply, Immelt says, because they're "the cleanest [and] most competitive in the world." He added, "I think [clean technology] could be one of the great export industries of our lifetime" (for more on Immelt's take go to http://blogs.wsj.com/environmentalcapital/).

GE is a singular company and clean technology is a narrow product line. But Immelt's broader point seems relevant to this discussion, and to a broad swath of companies. As the cost of energy rises (how far off is a $120 barrel of oil? A week or two?) and carbon emissions are increasingly priced (in the US it's just a matter of time), companies that sell products that consume less energy and emit less carbon either in their manufacture or use (ideally both) will profit. Soon it may not be necessary or relevant to appeal to consumers' environmental consciousness; whether you're selling a light bulb or jet engine, the products that are the most efficiently manufactured, and most efficient to use, will win because, ultimately (and simply), they'll cost less. Judging from Immelt's comments, and those of some other heavyweights at the conference including Walmart CEO Lee Scott, companies that don't invest now to get out ahead of this will be left in the dust.

Gardiner Morse, senior editor, Harvard Business Review

Picking up on Gardiner Morse's posting, I was at the Wall Street Journal ECO:nomics conference in Santa Barbara he mentions - and it was indeed striking to hear not only Jeff Immelt of GE on the green agenda but also Lee Scott of Wal-Mart discussing how that huge retailing company sees the challenge. There is a passion in the way such people now speak of this agenda that would have been inconceivable a few short years ago.

But on the flight across to LA, I had read much of Thomas McCraw's stunning biography of Joseph Schumpeter, 'Prophet of Innovation' (Belknap Press, 2007),and it reminded me of just how long processes of fundamental change take. Arriving in Santa Barbara, I was also reminded of the 1969 oil spill that helped catalyse the nascent environmental movement. A decade later, in 1980, I wrote my first book on the greening of business and my second, The Green Capitalists (Gollancz, 1987), nearly 21 years ago. To be honest, market adaptation has taken longer than I then imagined.

For various reasons, including such time-scales and the political inclinations of its editorial team, I have long tended to see the Journal as a lagging indicator of change. In tis context, the fact that is now focusing on the greening of capital is a very welcome development. But the historical record shows that, to date at least, our periodic greenings have tended to coincide with the late phases of economic booms, with consumer and business enthusiasm waning fairly quickly once recessionary times arrive in earnest.

More positively, much of the really useful work tends to get done in the downwave cycles (so, from 1973, 1991 and 2001 in terms of the three main societal pressure waves we have tracked since 1960). As recessionary pressures build I have no reason to doubt that the same will be true this time around. But it will be fascinating to see how 'Plan A' and its retail sector counterparts survive what I expect to be a very much tougher trading environment in the next year or two.

According to Lee Scott, Wal-Mart sales have been picking up as recessionary pressures force consumers to be more price-conscious. Fine for Wal-Mart, for the moment, but - as he also pointed out - their consumers seem to be running out of money earlier and earlier in the month. Factor in oil prices and a major downturn and it is not at all clear that the typical Wal-Mart customer will be prioritising green products. Scott accepts this, which is why he sees the central challenge as one of making green products available at the pretty much the same price points as competing options - and, in cases like incandescent light-bulbs - removing the most unsustainable choices altogether.

Retailers have a crucial role to play in what has been called 'choice editing'. But if I had to bet whether Wal-Mart or Marks & Spencer is most likely to stay this particular course and still be pushing ahead with the current level of enthusiasm 3-5 years from now, I don't know where I'd place my money. True, these are evolutionary pressures that markets and leading corporations will find it very difficult to duck completely, but some will try. And, in the process, I wonder whether they might not open up the way for radically new retailing models, along the lines of a vigorous hybrid between, say, Patagonia and Amazon?

The comments of Gardiner Morse and Jeffrey Swartz capture the twin themes of strategies that rely upon sustainability. The strategy espoused by Immelt-- a sensible one for a company that focuses on business customers-- relies on a traditional ROI logic. Products with strong sustainability features will be in substantial demand in the future; GE will prosper if it offers differentiated products that meet that need. That logic treats sustainability like any other investable proposition. Changes in regulation, marginal economics or demand open new investment opportunities for companies.

The story of the EarthKeeper boot offered by Swartz is much more relevant to Sir Stuart's Plan A strategy. Our experience echoes that of Timberland. Consumers, beyond a narrow segment of "greenies" who are not brand oriented (as the mysterious Bald Chemist notes), in the dozens of markets we have studied demonstrate no willingness to pay a price premium or to "shift share" for a product that has a superior "green" performance. Consumers are happy to embrace a green product if it meets or exceeds their expectations on traditionally important buyer purchase criteria, such as appearance and water-proofing in the case of EarthKeepers. Had the boots been unattractive or failed to meet expectations along important performance criteria, it would have failed despite its "green" features. We have observed that story repeatedly in multiple markets. That descant suggests that Plan A may ultimately face some turbulence. While Sir Stuart asserts that M&S's customers find green products appealing, the success of Plan hinges on generating superior returns from both models-- the traditional ROI model and commanding the loyalty of customers because of the value offered (including a green quotient). While M&S's performance has improved markedly under Sir Stuart, it must continue to to excel along traditional dimensions of performance, using Plan A as a gratifying accent mark to its core competitive strategy. That may enhance M&S's brand further. But if management believes that Plan A will enhance its competitiveness purely as a function of stapling a green claim to M&S's brand, they will be disappointed.

The recent kafuffle about Sir Stuart's organization role is unrelated to Plan A. It pivots on another critical obligation of a CEO-- succession management. It appears he will be in place to see Plan A through 2011, even at the expense of the affection of inflexible adherence to the UK's corporate governance model of separating the chairman and chief executive's roles.

Joseph Fuller
CEO Monitor Group

Make it global

No one is addressing Tomo Suzuki's point which is most important fore the sake of our world. We have to make it global, taking SMEs and developing countries seriously. We need an institutional system to make it happen. Otherwise, Green economics is just a matter of normal ad.

Any comments from business leaders on this?

This is in response to John Balliol. My research shows that SMEs are equal to or even better than many multinational companies including those referred to by Tomo Suzuki in their environmental performance per economic value added in their products or services. Many discussions on environmental performance point to a "poor" performance by SMEs. I am not sure if this is based on hard data, especially indicators related to value addtion and employment generated. The amount of waste in multinational companies and in developed countries (per capita waste for example) is quite high, compared to SMEs and developing countries. A blanket view covering SMEs and developing countries need to be avoided; facts and data should speak.

L. Ramakrishnan

Reply to the previous comment.

But, we cannot wait for the "facts" and data, right? We did it, that is why we are too late.

Environmental economics is a matter of moral, not hard science.

Have you been to India and China? I have seen the "facts" with my eyes, and if you want us to come up with academic "facts" and data, it is your fault to be so slow.

SME's Green Performance

In the above, L. Ramakrishnan (esq) suggested that SMEs are actually performing better than multinationals, and s/he has evidence. I am interested in learning more about it. Could s/he help us more?

From my and my colleagues' research experience in Japan, where Green activities have been strong, the hard data on SMEs' green activities are difficult to get. But our sense is that SMEs are not particularly paying much attention to the green activities, partly because there is no demand for info of their green activities (whereas multinationals and listed companies are watched via environmental / sustainability / CSR reports).

I think the only way to truly achieve sustainability is for companies to not have to choose between morals and money. We can save the future without having to sacrifice profits by creating high-growth profit strategies by solving the environmental and social problems that threaten our future—to make money by saving the future. Look at it this way. Every problem is an opportunity. In the next decades we will have to re-invent every product we use to be ecologically friendly, energy efficient and recyclable. Just the opportunity to change all the light bulbs in the world has a mind-boggling upside.

Will Marre
CEO, Realeadership Alliance
http://www.realeadership.com