August 31, 2009

Why Green is Growing (When Not Much Else Is?)

Harvard Business Review Editorial

When an economy slips into recession, the pattern is familiar: Growth slows, unemployment rises, and governments fiddle with interest rates and stimulus spending to jump-start a recovery. But every recession brings a few surprises, as well. For instance, in this downturn companies and governments didn't walk away from green initiatives. Quite the reverse, in the case of a couple of 800-pound gorillas. In July, Wal-Mart announced plans to create a universal rating system that scores products on how environmentally and socially sustainable they are. That system should have a huge effect on consumer products worldwide—and on competing retailers such as Target and Tesco. China, meanwhile, allocated 210 billion yuan, or 5%, of its stimulus spending to sustainable development.

To what extent will this enhanced commitment to sustainability cascade through the global economy? The lead article in this issue's Spotlight on Sustainability and Innovation makes the audacious claim that companies won't innovate successfully—and as a result won't grow—unless they throw themselves whole hog into green initiatives. "Smart companies now treat sustainability as innovation's new frontier," write Ram Nidumolu, C.K. Prahalad, and M.R. Rangaswami. The Spotlight also offers six leading-edge approaches to clean energy and a passionate essay by former U.S. president Bill Clinton about programs in Africa that both support a cleaner environment and create entrepreneurial opportunities.

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