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Climbing up the ‘Green Ladder’!

April 4, 2012

With ‘green’ being the buzzword in present times, it is the best time for SMEs (Small and Medium Businesses) to gear up for climbing up the ‘green’ ladder…

A Green Ladder??? What on earth does that mean?

Well…..by using the word “green ladder’ I mean the strategies or the practices which ought to be taken up by organizations in order to switch to an environmental friendly mode.

A ladder is required to climb from a lower to a relatively higher level—a term we all  learnt  during our kindergarten days…

Taking it from the grassroots ‘a green ladder’ can be imagined as the set of practices or strategies which are incorporated by an organization to rise from a region of lesser security, market competitiveness and social recognition to a region of higher efficiency, competitive advantage and more than all…profitable returns!

Instead of a steep jump which can be risky…a ladder-approach is safer…it’s gradual, step-wise… a systematic approach thus ensuring greater chances of success.

………………………………………………………………………………………

Last few years have witnessed a number of large multinational companies like Vestas, Suzlon, Philips and Siemens, and even some small start-up businesses taking the ‘green’ issue seriously and willing to offer a helping hand to tackle climate change and ensure a healthy planet for ourselves.

But while a negligible number of Indian corporate biggies, and mainly the European businesses are showing their eagerness to go green, the situation in India is far away from satisfactory as a whole;  a few businesses are doing it willingly, others, particularly those that are energy-intensive, have the requirements to do so to some extent as a result of government legislations.

Overall, the concepts of greener strategies are not gaining enough popularity in the country – neither among the large businesses nor among the SME community – partly because of a lack of awareness and social responsibility, and partly because the businesses fail to understand fully the extent of devastation that is being caused by the menace of climate change and global warming.

But sooner or later, Indian businesses will have to change their attitude and rectify their procedures – if not because the earth is going to melt down due to global warming or some new environmental legislations will make them to do so, then only because of growing awareness of their customers – especially the importers from the European countries and the US.

Let us discuss the situations in European countries as a case example. According to the Eurobarometer survey on “SMEs, resource efficiency and green markets” published on 27 March 2012, 37% of EU SMEs have at least one full or part-time green employee. Green jobs are largely created in SMEs as opposed to large firms: In 2012, 1 in 8 employees of small and medium-sized firms had a green job or almost 13% of all SME jobs (in large firms it was only 1 in 33 equivalents to 3% of all large company jobs). Green jobs in SMEs are also estimated to expand dynamically with a rate of 35% in the next 2 years.

The Eurobarometer survey also reveals other sources of untapped potential which could be used by SMEs. For example, less than a quarter of SMEs take advantage of the single market for green products or services. Bureaucracy is considered as one of the obstacles: 20% of SMEs says that it would be easier to do green investments if cross-border administrative and legal procedures were not so complex.

SMEs in green industries are also maturing. Three in five (61%) SMEs selling green products or services have been active in green markets for more than three years compared to 52% in the US. Food and beverages (25%) and electronic and mechanical machinery and equipment (23%) are the most commonly sold green products and services by SMEs in the EU.

European Commission Vice-President Antonio Tajani, responsible for Industry and Entrepreneurship unveiling today the Eurobarometer results said: “I am happy to see that SMEs are taking on this huge untapped potential which will pay off with more innovation, more competitive SMEs and more jobs. However, there is still a lot of work to do. Only very few European SMEs extend their green business to foreign markets. Knowing that the EU makes up roughly one third of the world market for environmental industries this reveals a huge potential for SMEs to grow.”

Customer demands play a major role in Europe to encourage SMEs to think green. In fact, in the European countries, the number of a new group of customers classified as LOHAS (Lifestyles of Health and Sustainability) is growing at a rapid rate. This LOHAS group of customers takes their purchasing decision depending upon how a business operates itself. They have a profound sense of social responsibility and they are most likely to buy environmentally responsible products.

In India, we lack such customers till now but days are not far away when Indian businesses will have to deal with such consumer groups. And when it comes to the SMEs, engaged in export, particularly to the European countries, they are already in a race against time to turn green and tap into the wielders of a new economic power – the LOHAS.

What businesses are going to lose or gain implementing a ‘green’ strategy into their business? Let us take an example; it is estimated that a company with 1,000 employees and $100 million in revenue uses 30 million pages of paper a year. It equivalents to cutting down 1,369 trees and producing approximately 300,000 pounds of CO2 every year. If the company uses e-papers instead of papers, they can not only save a huge sum of money but also contribute keeping the environment cleaner.

So, going green is about saving the environment and saving money. India is a large country with thousands of SMEs (as compared to large companies and MNCs) catering to a population well over one billion. If these SMEs adopt a green strategy, it could help a lot in reducing negative environmental impacts or, at least, stop aiding in global warming.

So, where should SMEs start? They are free to experiment with ‘going green’ as there are no pressures of meeting compliance regulations. Instead of accepting the ‘going green’ concept as a lofty ideal not practical enough to be implemented into daily operations, businesses should start concentrating upon using raw materials efficiently, choosing renewable raw materials, reducing and recycling of waste, reducing energy use in production and transportation related operations, using alternative energy sources like solar power instead of electricity, and anything that prevents negative environmental impacts.

There is not a ‘one size fits all’ formula to going green, and small steps are enough SMEs can take to make a start. Green machinery such as wind turbines, solar panels; green fuels such as bio-diesel, biomass power; green production house such as low carbon factories; green transportation means such as electric vehicle; green office accessories such as papers, fabrics, building materials, packaging materials made of recycled materials; green housing accessories such as bamboo flooring, furniture made of bio-plastics; and many more nobody has even thought of yet –  every product, every activity, every industry can have a shade of green.

So, small businesses can experiment with anything while taking their first ‘green steps’. It will not only help them to reduce global warming emission and save input costs but also to earn immediate recognition from their customers, employees, shareholders and even the media.

Remember that green will soon mainstream and it is the right time for Indian domestic businesses and exporters – small and big – to capitalize on the phenomenon. The SMEs can even find a lot of opportunities in the ‘green’ sector. For example, there is enough growth opportunity for SMEs in the organic product sector. Again, they can even consider new uses for a specific garbage item which could be a business in itself.

Concluding, it is time for SMEs to start climbing up the green ladder, not just merely to escape the cold hands of legal compliance or an easy means to win over customers’ preferences. A green strategy helps cost savings through efficiency or productivity gains, offers unique opportunities, and the best thing about it……..

In this game, we all win!!

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One Comment
  1. nice article….from my experience,there are approx. 400-500 SMEs(mainly production units) in a small district of India…and going by the no. of districts in India that is around 650…you can imagine how much potential the green sector has….

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