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New Bottom Line, Volume 1.5 – Competitiveness, Jobs and Environment

October 11, 1992

A major source of national and corporate competitiveness is now emerging: environmental performance and environmental products and services. This trend is driving developments in the economies of Japan, Germany and other nations, yet it is virtually ignored in U.S. policy on competitiveness. There is still time to seize this green advantage, which will create new business opportunities and jobs in the U.S. and help overcome our economic crisis.

Worldwide markets for environmental technology will grow from $300 billion to $600 billion in the next eight years, according to the World Bank. At the same time new generations of consumers will increasingly demand environmentally clean products from clean manufacturing processes.

Some corporations are addressing this opportunity by making environmental management a company-wide program and investing in R & D for innovative clean technology. A significant few–including 50 of the planet’s largest companies–have embraced, in principle, the concept of sustainable development.

Realizing these lofty concepts will require creative organizational change as well as technological innovation. But the payoff is likely to be well worth the effort. The largest emerging economic and employment opportunities are in environmental businesses and sustainable development. Millions of jobs will be created in technology for pollution prevention and control; waste reduction and recycling; energy and resource efficiency; environmental cleanup; ecosystem restoration; new transportation systems; green consumer products; eco-tourism; and other environmental products and services, to name just a few.

The U.S. could be the natural leader in this field, generating both new businesses and new divisions of old ones. Or it can lose by default, and leave the field–as it has with so many industries — to other countries.

Japan and Germany–our leading international trading rivals–have made major strategic commitments to the development of environmental technology, and to capturing the rapidly growing worldwide environmental markets. Japanese industrial and foreign aid policy is providing deep support to innovation in this area. Several European countries have made national commitments to fundamental improvements in corporate environmental performance, with the participation and support of their business communities.

Regional public/private “green plans” in the U.S., modelled on Europe’s, can build local economic strength, while moving toward a national strategy. U.S. industry can reverse its present disadvantage by drawing on the profound innovation in organization design and change management pioneered by leading corporations.

The challenge is not simply technological. We can apply these capabilities to achieve the system-wide redesign needed to make our corporations both sustainable and competitive. Technical and organizational innovation must work together to achieve this goal, guiding R & D within and among corporations and in the universities and federal labs. National and state policies and regulations must support this creative endeavor.

Unfortunately, half of U.S. all scientists and engineers are absorbed with protecting us from an enemy that no longer exists instead of applying their creativity to the competitiveness challenge. The federal budget is similarly a prisoner of the past. Some military contractors and federal laboratories are including environmental programs in their strategies for conversion to civilian work. Support for this trend will help ease the pain of cutting military budgets while freeing up public funds needed for the new environmental security agenda.

The potential benefits are staggering. If the U.S. invested in the new and existing technology needed to match Japanese energy efficiency, our national energy bill would drop from $450 billion to $230 billion–a savings equivalent to nearly half our federal deficit, and double our trade deficit. The savings in production costs would increase competitiveness of U.S. products. Pollution prevention, waste recycling, and other facets of environmental management will have similar macro-economic impacts as the scale of deployment reaches critical mass.

The economic benefits of environmental quality go beyond direct industrial impacts. Competitiveness studies frequently recognize the burden placed on U.S. business by a decaying civic and industrial infrastructure. The natural environment is, of course, a deepest level of infrastructure, providing immeasurable economic as well as spiritual value. While its degradation engenders a new level of economic disadvantage, its restoration can be a powerful engine of economic renewal.

Developing the foundation for long-term systemic change in a time of immediate crisis can turn present dangers into opportunities. Seizing the green advantage will serve both the self-interests of companies and the national interest, while contributing to the renewal of the global ecosystem.

(with Ernest A. Lowe, managing partner of Indigo Development)

(c) 1992 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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