"Irrational Greenness" – Avoiding the Potential Erosion of Image and Reputation from the Growing Allure to Overvalue “Corporate Greenness”

Summer has arrived, and so is the warm weather. In some cases, so has the hot air. In other’s it’s a breath of fresh air. Needless to say, it’s been a busy month.

The G8 Summit took place June 6-8, 2007 in Heiligendamm, Germany. During June 2-7, Los Angeles hosted 7,000 people for a record breaking attendance for WindPower 2007 sponsored by the American Wind Energy Association (AWEA). And, during the same week The Economist magazine put out a 15-page report on how business is tackling climate change. One of their features is “Everybody’s green now: How America’s big companies got environmentalism”. I like the title, almost suggesting that big firms finally “got religion”.

All major media outlets have been covering the politics, market potential, technology potential of climate change strategies. We see the Senate seeking to raise gas mileage standards, new opportunities for ranking corporate performance on climate strategies and technology options for enhancing electric grid reliability while getting more fuel economy from hybrid vehicles. And if its not enough that climate change is being discussed diplomatically, negotiated into new policies, re-engineered into new products, and given a new line of credit through independent ratings of financial groups – it will make its way to the stage July 7th at the Live Earth global concert to raise awareness.

Live Earth will feature hundreds of performances and stage official concerts at Giants Stadium in New York; Wembley Stadium in London; Aussie Stadium in Sydney; Copacabana Beach in Rio de Janeiro; Maropeng at the Cradle of Humankind in Johannesburg; Makuhari Messe in Tokyo; the Steps of the Oriental Pearl Tower in Shanghai; and HSH Nordbank Arena in Hamburg.

As more green news breaks, as more policies are debated, and as more products are launched – it will become increasingly important to keep a keen eye on what’s realistically doable, plausible and possible. It’s a gold rush in the environmental and clean energy and technology market – and venture capitalists are financing new ventures like it was 1999. Government policy makers are seeking to balance an old world economy with newer thriving industries that have not had enough market experience (primarily with consumers) to know how to provide incentives, taxes or new policy mechanisms to focus growth.

For some firms, keeping their “greenness” to a respectable level will become important. The erosion of reputation, brand value, market share and stock price is very real – for those firms that risk going to green to fast. There is so much momentum behind this new wave of environmentalism and social responsibility in the market. It’s pent up and needs to release. We see it growing for another 3 to 5 years with intensity, but ultimately washing ashore many winners and many losers. Keeping an eye on the “Irrational Greenness” during the next decade will be as important as growing the right firms, technologies, policies, talent and infrastructure.

A few years ago we predicted this avalanche of social and environmental change that is transpiring in government and business. The green revolution has turned in its rose colored glasses and is now looking at the world through some fashionable spectacles. And the vision is grand and clear. Understanding the economic potential to do what’s morally and socially right, the world’s largest and most prominent corporations are shaping our world with new innovations, products and services that answer public expectation for environmental change. Sure there remain some policy hurdles and market challenges, but it is clear – we have entered a social and industrial revolution worldwide. We’re living it. And we’re driving a future focused on responsible government and business practices and consumerism. It’s healthy. We put on all of this extra CO2 and industrial waste weight over the past 100 years of industrialization; and now its time for a diet; a change in our behaviors; and a change in how we consume goods and services.

So, as you listen in to the global climate change conversation in the next few weeks – either from the global diplomats in blue suits or the global rock stars in blue (but hopefully “green”) jeans – keep an open and critical mind toward what everyone is actually saying. Leadership and reputation is about slowing down that big moving train and its constant momentum to the point where irrational exuberance can be better understood and managed.

Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com