Can the “Green Economy” Sustain Itself?

green-economy.jpgby Stephanie Chenard
At the Opportunity Green conference in Los Angeles earlier this month, one of the prevailing themes for the weekend was the health and sustainable future of the green economy. How this was defined greatly depended on who was speaking. But one thing was certain – green business and technology is feeling the pinch of the national economic crisis.
Up until now, there has been a reasonably well-supported assumption in the market that the ever-growing “conscious consumer” segment would pay a premium for green products and sustainable services. This is evidenced by the popularity of the Toyota Prius, Mrs. Meyers cleaners, the demand for organic cotton and bamboo textiles and clothing, organic foods, etc.
However, as the Dow Jones continues to tumble and jobs become scarcer, the green advantage is quickly losing ground. Josh Dorfman, green entrepreneur and author of The Lazy Environmentalist comments, “The green premium is not playing out in the market.” Dorfman specifically cited the recent demise of Whole Food’s stock valuation as an example where consumers are resisting paying more when comparable products will better fit their shrinking budgets. Tom Szaky of TerraCycle Inc. firmly contends that “price is the most important factor” for a consumer when making purchasing decisions. He goes further to suggest doing with green branding and differentiation explaining that a “green” product should really just be a product that can stand alone on the merits of its superior quality and competitive pricing. The green aspect, if not the base standard, should be the icing on the cake.

This seems to be troubling news for many products and services built on the business model of the green premium. So where does that leave the entrepreneur and green business person? Josh Dorfman says that green business needs to reframe the conversation regarding green purchasing choices in terms of self-interest. Choices that will save money right her and right now are what get priority. Walking through and chatting with the sponsors, there were several different companies who were already promoting the green benefit, rather than the green premium. Cecil Schmidt of Really Fake Digital explained that the graphics company was already offering green options at competitive pricing. However, with the launch of their subsidiary company, Happy Planet Printing, they have incentivized green choices by offering 5% discounts on orders that selected green options, making green a more economical choice than standard options.
So, if the economic pinch is signaling the disappearance of the green premium in consumer goods and services, what does this mean for the development of clean technology? In a panel discussion with Russ Walker from Grist and Matt Kahn, economist and professor at UCLA, the question was posed as to where the money would come from to boost the green economy and technology when there is seemingly only enough to cover Wall Street’s blunders and the widening deficit. One prediction they could both agree on was that the silver lining of the current recession would be that rising prices would instigate resource reduction and spurn innovative and less costly technology. This point was punctuated later by Andy Funk of Funk Ventures who advised that the business and technology that his firm is looking to fund needs to have an immediate impact now – not a few years from now.
The message from this conference was not necessarily a gloomy forecast for a green economy, but instead, challenging companies to bring their ‚ÄòA’ game both in price and innovation.
Stephanie Chenard is a Business and Education Consultant. She obtained an MBA in Sustainable Management from the Presidio School of Management and now specializes in finding sustainable business solutions for businesses and educating business managers and professionals in a variety of areas focused on green business.

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One response

  1. True: The green premium is not playing out in the market. Today. However, it would be more interesting to see the various models by which this assessment is made. That would add one real dimension: time. Are we expecting wide-scale, market-leading returns in year 1, 2, 3? We can’t really; and, given the reality of infrastructure based investment, I think in addition to the costs, benefits, and possibilities, we should bring Time to the front of the conversation.

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