Green Industry from many points of view

15 Jun

First of all, what exactly is “green industry”?

On many blogs, you can find a lot of definitions that define “green industry” mainly as any activity or service that performs at least one of the following:

· Generating renewable energy

· Recycling existing materials

· Energy efficient product manufacturing, construction, installation, and maintenance

· Education, compliance and awareness

· Natural and sustainable product manufacturing

What do consumers think about “green industry”?

As I can say from my own experience, the attention of many consumers begins to shift more and more toward environmental concerns. If you are interested in more posts about that issue, check out this post about recycling and sustainability or that post concerned with CSR and “greenwashing”.

So there is no doubt that the demand for “green products” is steadily rising as the consumers get increasingly conscious about environmental issues, sustainability and ecological renovation.

What do managers think about “green industry”?

In the internet and media we can read a lot about companies “going green”. But despite of the increasing interest of the consumers on green products, companies probably don´t take the initiative to make these changes to their companies out of good will or to make the world better.

Managers have mainly economic incentives for reducing waste and moving toward more sustainable business. They reduce costs by producing more efficiently and increase sales because of better reputation. Moreover, “green enterprises” are more future-oriented and therefore are more likely to stay in business also in future.

Some decades ago, there was no monetary cost for emitting greenhouse gases, so managers had little reason to consider it, as it didn´t increase costs to emit a lot of carbon dioxide. The trend was also that shareholders focused more on short-term results, on rapid profits ignoring the means and side effects.

However, the situation has changed. Nowadays companies have to pay for emitting carbon dioxide. Nowadays in the USA the right to produce carbon emissions is also treated as a scarce resource, as a consequence these rights of emission are traded as any other items among enterprises. So the managers have to include explicit cost to produce environmental damage, therefore it becomes more expensive to produce greenhouse gases. Consequently, managers tend to invest in renewable energies and “green ways of production” in order to reduce costs and, of course, increase profits.

What does the government think about “green industry”?


To give a good example, the German government highly supports the “green industry”, above all renewable energies and “green developments” in the automobile industry, like hybrid motors. So enterprises, which are involved in alternative fuels and sustainable energy sources are getting a helping hand from the government through subsidies or tax breaks.

What do investors think about “green industry”?

There is an interesting trend in investment named “Green Investing”. “Green Investing” means to focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources and their implementation and other environmentally conscious business practices.

“Green Investing” is closely linked to “socially responsible investing”, that allows investors to express their political and ethical views through investing in companies that share their core beliefs. Socially responsible investors exclude companies because of moral, and not economic, reasons.

So to conclude, there is a trend of investing increasingly in “green industry”, not only because of ethical reasons, but also on long-run these future-oriented industries are likely to stay competitive, expand and have higher margins. However, on short-run the risk of “green industries” is higher to have drawbacks and not to grow and innovate fast enough, therefore the dividends that investors gain by buying shares of these industries are higher.

Are there any losers?

Yes, there are. The main losers of the trend of moving to “green industry” are the heavy industry and energy. For example, the coal industry is a big producer of carbon emissions, consequently it has to pay a lot of taxes, buy rights to produce greenhouse gases and compete with renewable energies. Nevertheless, we still can´t avoid or subsidize it entirely, but for example in the German Ruhrgebiet the coal industry is step by step dying and disappearing from business environment.

Conclusion 

All in all, new industries are emerging and new markets are opening their doors for “green products”. In the end, both, society as a whole and the markets will determine the long-term development of the “green industry”. However, it seems to be inevitable to go into the “green” direction, because of scarce resources and global environmental problems.

If you´re interested, here you find more information on future-oriented investments.

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3 Responses to “Green Industry from many points of view”

  1. rosepanama June 18, 2012 at 9:02 am #

    Hey Sabrina,

    I enjoyed reading your post. You have a very smooth writing style and it is easy to follow your argumentation. It is great how you’ve created some subheadings. That makes it a lot easier to understand. The topic you’ve chosen to write about is one that I am very interested in, too.
    One thing I notice is that you do not provide any pictures to support your argumentation. I am wondering, if you forgot about it, because you used a lot of impressive images in your last posts. Also I would have found it interesting to know, who exactly opinions that managers have mainly economic incentives to reduce waste and pushing forward more sustainable businesses. Have you found any managers arguing about while doing your research on that topic? In one of my last blog posts I found out that Donald Bubar, the CEO of Avalon Rare Metals Inc., complains about the difficulties to raise money that managers are facing when trying to set up a CSR strategy.
    Have you thought about the financial aspects to develop to a green industry?
    Nevertheless, I love that your provide paragraphs of the different voices and opinions of consumers, Government and managers!

    Cheers,
    Rose

  2. MonaMondschein June 25, 2012 at 4:00 pm #

    Hey sabrinacz!
    Thanks for this informative post! It was a pleasure to read it as you keep it simple, yet sophisticated. I am personally definitely not an expert in this field, which was my main motivation for reading your post. 😉
    I would have loved to read some quotes, they would’ve made your post even more credible & sophisticated than it is now. Stats could’ve maybe supported your arguments – but from my own experience I know that it is not always possible to gather all the visuals that would’ve made your article perfect.
    All in all – content-wise – a very well-written article though! Keep it up!

  3. melissano18 June 26, 2012 at 10:19 am #

    Hey Sabrina!
    That is a very interesting and well written post you developed! The topic, itself, is not just interesting, it is also very important and crucial for our world and for our future.
    I really enjoyed reading your post, also because of the structure.
    You start by explaining the term “green industry”, which is excellent to introduce the topic to the reader.
    It is great that you showed so many different opinions and views of all the diverse groups of people!
    Your post displays very well that you did a lot of research and that you now your topic.
    I agree with Rose that I miss some pictures, which could underline and support your topic.
    Nevertheless this is a great and interesting piece of work!

    Well done!

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