Green business opportunities and challenges

2012 Green business opportunities and challenges

Green business opportunities and challengesAs business optimism in the general economy falls, GreenWise asks business leaders, NGOs and academics what are the opportunities and challenges for green business in 2012?

On business sustainability 

Jon Bentley, Smarter Energy lead, IBM Global Business Services
2012 will continue to offer opportunity for green businesses, but it is clear that success will rely on their ability to translate sustainable outcomes into cost savings. A year ago, I was optimistic for 2011 because major corporations were beginning to bring sustainability into the mainstream business agenda. I believe this continues to be the trend, but as sustainability becomes business-as-usual, the imperative for it to align with and reinforce other priorities becomes ever stronger. There is no doubt that businesses are expecting to face difficult times next year, so the spotlight will be on costs.

Capital will remain difficult to secure and there will be intense competition between alternative projects. Minimising up-front investment and securing a reliable flow of benefits that can be monetised will be vital. So, projects that foster the efficient use of resources, reduce waste and avoid taxes, penalties and mitigation costs from what waste does remain will be the most attractive. Unfortunately, cleaner sources of energy that are also more expensive are likely to suffer with less generous Government support.

Despite the gloomy outlook, the essential energy challenges remain and billions will be spent in the coming decade as we address them. Our economy remains energy dependent, yet the UK is committed to its carbon targets. We have no choice but to replace much of our existing generation capacity as it reaches the end of its life and a smarter end to end energy system is needed to secure supply and deal with the variability of renewable generation and electric vehicle charging. The government is pressing ahead with the nationwide smart meter programme and is bringing in the Green Deal to foster energy efficiency.

With the amount of change and investment in the energy sector, there are opportunities for businesses large and small. The winners will be those that can combine innovation and collaboration with practical, efficient execution. Results will count more than vision in the years to come.

Magued Eldaief, managing director, UK, GE Energy
The opportunity, which is also the challenge, is to focus on cost for the various green technologies that will contribute to meeting the UK’s decarbonisation goals. In view of the pressure on subsidies, green businesses will have to work on coming up with more cost effective alternatives that will accelerate technology innovation as long as there is a continued commitment and demand by the UK Government.

Tom Delay, chief executive, Carbon Trust

The central challenge facing green business in 2012 is to show the synergy between sustainability and cost reduction, while busting the myth that there’s any contradiction between the two. This means winning the argument that times of austerity demand more efficient organisations. 2012 will therefore be a particularly strong year for demonstrating the financial value of and the direct, measurable profitability from green innovation. Products and services delivering enhanced energy efficiency and reduced resource use will naturally perform well in an economically pressurised times.
Dax Lovegrove, head of business and industry, WWF
It is increasingly evident that both economic and ecological austerity are with us for the foreseeable future and so to be fit for purpose, companies will need to re-think their way of working. Businesses that adapt and increase efforts around innovation will be more resilient.

There is a glimpse into future business resilience at Small nimble enterprises are racing ahead with leaner business models and perhaps in 2012, we will start to see such approaches migrate across to big business in order to secure increased future-proofing.

For example, there is a raft of emerging peer-to-peer social networking sites that enable and even glamorise collaborative consumption – the re-use of household goods and clothes. This approach could start to spread into mainstream retailing.

There are also many opportunities for businesses to support the reversal of biodiversity loss. Leisure and tourism companies have options to invest in biorock projects, which are currently aiming to restore coral reefs in Bali and Indonesian waters or food businesses could encourage the scale up of agroforesty programmes where native trees and crops are planted in the same space.

Open loop initiatives are also on the rise where numerous web platforms act as dating agencies to help match waste with resource requirements. Greater collaboration within and across business sectors will achieve a more circular economy.

We are just scratching the surface of new innovative approaches to doing business in ways that protect the world’s natural assets and this will start to escalate in 2012.

Liz Goodwin, chief executive, WRAP

When money is tight, business naturally seeks ways of economising. Those organisations, which take the opportunity to improve business performance by using less energy, wasting fewer raw materials and looking for ways of re-using resource, are more likely to weather the economic challenges. Actions that can have a real impact range from simply turning down the heating right through to extending the service life of equipment.
On green policy

David Powell, economics campaigner, Friends of the Earth

Janez Potocnik, European Commissioner for the Environment, describes the move towards resource and carbon efficient business as a “global megatrend”, particularly as the economic squeeze continues. Doing more with less is a huge opportunity, if not an imperative, for business of all shades – whether they consider themselves ‘green’ or not.
And, despite the stumbling steps taken in Durban earlier this month, there’s no doubt that the opportunities for new markets is going to continue to grow: the estimated £4 trillion global market for green goods and services is only going to continue to grow.
If there’s a challenge for UK businesses wanting to nab a piece of the pie, it’s the very stiffness of global competition: firms that may do best will be those that can compete on price or can offer a vital service that can’t really be imported – such as insulating people’s homes.
How successful the Government’s policies will be, like its new Green Deal to encourage homes and businesses to improve the energy efficiency of their buildings, will to a large extent define how big the opportunities are for domestic firms. One thing is clear: more than ever, and given the tribulations of this year, business needs to know that the Government is committed to building a green economy and not pulling the rug from under our newest, most exciting industries.
Jane Burston, founder, Carbon Retirement
What I’ve realised, having been at the climate summit in Durban [last month], is that the UK Government is still doing a lot to lead the world on the issue of climate change. One of the challenges for UK green business is going to be to convince investors that that commitment is still there. George Osborne’s rhetoric combined with policy moves like the highly visible U-turn on Feed-in Tariff (FiT) has created an uncertain environment in which it is going to be very difficult to get new green businesses off the ground.
Gideon Middleton, senior lecturer, Norwich Business School

By far the biggest challenge for most businesses is the lack of certainty around the overall national and international direction of green policy and the potential financial implications and the increasing quagmire of UK legislation – especially around energy and carbon. This creates problems for all business as energy and carbon are ubiquitous costs and the overall lack of a clear direction means that business cannot effectively plan because there is a large uncertainty around strategic energy and carbon costs as well as the potential size of any Feed-in Tariffs.
Andrew Lee, head of international sales, Sharp Solar

Opportunities for business in the solar industry are now severely limited since the Feed-in Tariff has been structured in such a way that it is only suited to wealthy homeowners and very small scale projects. The last 18 months have shown that solar technology and its incentive scheme is effective and there is a demand for it, but these changes mean investors will no longer drive the market, which is chopping this promising and growing industry off at the knees. Our research indicates that domestic solar is the preferred technology homeowners would like to see more of in their community, with 40 per cent of those polled choosing it over other methods, which makes the Government’s decision to stifle this industry even more baffling.
Juliet Davenport, chief executive, Good Energy

Because we need so much investment in our energy infrastructure the fact remains that the renewables sector is one of the few areas where growth is certain for the foreseeable future. Offshore wind continues to get the lion’s share of attention, but there will continue to be opportunities in the onshore sector too. Despite the ongoing issues with solar and the sub-five megawatt Feed-in Tariff, that technology will have an important role to play going forward, particularly as the technology costs fall. The development of marine renewables will continue to be exciting and there is an opportunity for the UK to really lead the world in developing the full potential of this technology.
The challenge is whether the Government delivers the certainty businesses need to invest in those technologies. The way it has handled the FIT for solar has harmed its efforts to provide that certainty, but it’s worth remembering that not all the blame for that lies at DECC’s door. It’s also worth bearing in mind that it is just one technology up to a certain scale. All the signs are that the review of the Renewables Obligation has, broadly speaking, been handled well, though that scheme hasn’t faced the same kind of budgetary pressures as the FiT.
What is key that the processes behind the reformed FiT and the new FiT Contract for Difference are transparent and easy to understand. That will provide green businesses with the certainty they need to invest.
Andrew Warren, director, ACE

The Government is at last committed to examining thoroughly whether running more purposeful energy saving programmes can reduce the need for new power stations. However the “jury is out” as to whether there are as yet sufficient policies in place to minimise electricity demand in particular.
At present, the proposed electricity market reforms focus entirely upon creating a framework to ensure sufficient electricity generation is in place to deliver the Government’s climate and energy security objectives. Hence the claim that £200 billion will need to be spent on new power stations this decade, particularly under DECC scenarios regarding the electrification of heat.
The senior civil servant, Jonathan Brearley [...], speaking at a British Institute of Energy Economics conference,credited unidentified “external commentators” with drawing policy attention to the demand side alternative. He said that, over the next year, there would be “strenuous consideration” of policy options designed to reduce overall demand.
Brearley’s announcement precedes the official formation of a new division within DECC, to be called the Energy Efficiency Deployment Office. The new Office is recruiting 50 new staff, drawn from across the civil service.
It is now over 30 years since the House of Commons Select Committee on Energy first raised the question as to why public policy fails to compare investment options. Since then, innumerable Parliamentary energy and environment reports have reiterated this argument, without any substantive response from Government. Until now.

On renewables

Maria McCaffery, chief executive, RenewableUK

Job creation in the wind industry is continuing even though other sectors are contracting during the economic downturn. In December, Siemens submitted a planning application to build a wind turbine factory in Hull, which will employ 700 people, and many more in the supply chain. The wind turbine tower manufacturer Mabey Bridge in Chepstow has just announced plans to double its workforce to nearly 200, and to operate 24 hours a day to meet demand. Announcements like these serve to boost business confidence and optimism as we approach 2012.

RenewableUK has published a report demonstrating the employment potential of the sector between now and 2021, outlining various market development scenarios. Under the medium growth scenario, nearly 90,000 people will be working in the wind and marine energy sectors (including the supply chain) by 2021. Research such as this strengthens the mood of optimism in this dynamic sector.

In October, RenewableUK announced the creation of a new organisation called the Renewables Training Network (RTN), which aims to tackle the critical skills shortages within the sector. I’m confident that the RTN will start to make a real impact in 2012, helping to provide courses at every level for workers wanting to make the transition into industries we represent.
We also have to emphasise the message that we are committed to driving down costs. We are proud that ReneweableUK’s chairman, Andrew Jamieson, has been appointed Head of the Offshore Wind Cost Reduction Taskforce. Their aim is to bring the levelised cost of electricity generated offshore down to £100 per MWh. We are determined to show that we are committed to offering value for money to the consumer.
On green tourism

Andrea Nicholas, managing director, Green Tourism Business Scheme 

The priority for the green tourism sector for the coming year is undoubtedly that of demonstrating the business value of sustainability – its potential to drive savings and to bring competitive marketing advantage to help attract customers. Increasing the accessibility of information about green savings is part of building on existing momentum. From the GTBS for example, there will be new online information pages, which detail exactly how and where energy (and therefore cost) savings can be achieved.Despite economic pressures, the business travel and events marketplace is looking more than ever to mind the ‘green imperative’. Reflecting this, the GTBS has been fortunate to form partnerships with two influential booking agencies, BSI and Inntel, over the last few months. Both are working on featuring GTBS gradings in their venue listings to help guide bookers to the greenest options.On the leisure tourism side, it is vital that consumers’ interest in green is maintained during an uncertain economic climate, and a revamp of our own consumer-facing site is underway.Another opportunity for green tourism stems from the disappearance of many tourist boards and regional development agencies, meaning that business and marketing support at destination level is almost non-existent in parts of the UK.

The GTBS is planning to help fill the gap by introducing an online project whereby any destination can have a web page, which can be populated with locally-based business support information on how to go green.Finally, there is an opportunity to be found in the development of the ‘green’ context. Social and community dimensions to sustainability are increasingly relevant (thinking about the ‘Big Society’) and the updated GTBS criteria, which are being worked on this year, will reflect the benefits of initiatives, which are not just climate-focused but take into account also, in the broadest sense, sustainability.

Are you contributing to the digital wasteland?

A report by the world’s largest research company has revealed how brands are not connecting with consumers online, with many people resenting ‘big brands’ invading their timelines.

The global study, the TNS Digital Life Survey 2011, says businesses are “wasting time and money” by not listening to what consumers want. Consumers in 60 countries were surveyed by TNS, a Kantar company and part of WPP (NASDAQ:WPPGY).

The survey drilled down to regions, and showed how sub-Saharan Africa reflects the same attitude as those surveyed around the world. It found that 57% of people (online) in Sub-Saharan Africa do not want to engage with brands via social media – rising to 60% in the South Africa.

Businesses across the world have developed profiles on social networks such as Facebook and Twitter and YouTube so as to ‘speak’ to customers. But TNS’s research reveals that if these efforts are not carefully targeted, they are wasted on the majority of people.

TNS says “misguided” digital strategies are generating “mountains of digital waste”, from friendless Facebook accounts to blogs no one reads.  This is being combined with ever-increasing content produced by consumers – the study shows 47% of consumers, globally, now comment about brands online. (This is in contrast to only 7% of those online in South Africa, one of the lowest incidences in the world and South Africans are clearly less interested in commenting on brands in the social media space).

“Winning and keeping customers is harder than ever,” said Matthew Froggatt, chief development officer, TNS. “The online world undoubtedly presents massive opportunities for brands. However, it is only through deploying precisely tailored marketing strategies that they will be able to recognise this potential. Choosing the wrong channel, or simply adding to the cacophony of online noise risks alienating potential customers and impacting business growth.”

TNS’s Digital Life study asked online consumers around the world whether they actually want to engage with brands on social networking websites – either to find out more or to make a purchase.

Although, globally, 44 per cent of people admit social networks are a good place to learn about products (and 57% of South Africans share this sentiment), the research shows brands must harness digital more carefully if they are to use it to their advantage and deepen relationships with customers and prospects.

The study also reveals big geographic contrasts that highlight the risks of brands employing a catch-all approach that does not take the needs of different consumers into consideration.

Froggatt explains: “Digital waste is the accumulation of thousands of brands rushing online without thinking who they want to talk to – and why.  Many brands have recognised the vast potential audiences available to them on social networks; however, they are failing to understand that these spaces belong to the consumer and their presence needs to be proportionate and justified.

“The key is to understand your target audience and what they want from your brand – social networks aren’t always the right approach. If consumers in one market don’t want to be talked to, can you use an alternative online method – creating owned digital media platforms, targeted sponsorship or search campaigns – to engage in an appropriate way that will achieve business results, without adding to the digital waste pile?”

TNS’s Digital Life study also sheds vital light on why people do engage with brands online. Forty-six per cent of global internet users who are motivated to post comments on companies do so for the simple desire to impart or ask for advice.  This compares with 41% in South Africa.

Findings showed that more people like to praise than complain online (13% vs 11%). This is true in South Africa too, with 17% more likely to praise vs 9% who post comments to complain. The Spanish are the least likely to praise online, with just one in ten people saying that they would do this, and Nigerians are the most likely to complain about brands online (15%).

However, motivations of online commentators can be self-serving.  Sixty-one percent of online consumers are driven to engage with brands online by a promotion or special offer.  Again, South Africans show very little interest in brands or offers online with only 10% engaging with brands on social networks because of promotions or special offers.

When examining global contrasts, TNS found that consumers in fast growth markets are keen to spend more time and money online than they currently do – presenting major growth opportunities for brands.

There are, however, infrastructure challenges still to be overcome in these countries before businesses can really tap into the enthusiasm for the digital world. Forty-eight of people in fast growth markets would use the internet more if it was less expensive – rising sharply in Africa, to 81% of people in Ghana, 71% in Nigeria, 68% in Kenya and 51% in South Africa.

Likewise, while just a quarter of people in developed markets see social networks as a place to buy products, this rises to 48% across fast growth markets and 64% in Sub-Saharan Africa (and 40% in South Africa).  And when it comes to online shopping habits, Asian consumers are leading the adoption of group buying and purchase via mobile. Almost half (46%) of consumers in China already use group buying tools – this is still low in Sub-Saharan Africa and South Africa at 9% and 4% respectively.

Adoption of shopping via mobile is also high in the region – 34% of mobile internet users in China and South Korea shop on their phone, but again, only 5% of South Africans shop using their mobile phone.

“There is a huge appetite for increased internet access and mobile services among consumers in fast growth markets. Digital Life shows that as online communities mature, brands that can cut through the digital noise have fantastic potential to drive rapid growth from this nascent consumer base,” Froggatt said.


65% of adults use social media sites

A recent report made public by the Pew Internet and American Life Project indicates that almost two-thirds of adults who access the Internet say they use social networking sites such as Facebook, Twitter, and LinkedIn. This amount is up slightly from where it was a year ago.  The research also reveals that social media use among Baby Boomers is growing at a faster rate as consumers aged between  50-64 years state that they visit a social network daily. This amount is a 20% increase from last year.

Among online adults:

  • 83% of 18-29 year-olds
  • 70% of 30-49 year-olds
  • 51% of 50-64 year-olds, and
  • 33% of those ages 65 and older

use social-networking sites.

According to the study, users generally enjoy their experiences.

SA turning to social media

“SA turning to social media for work”

Almost one-in-four South Africans use social media as a tool to look for work, but are concerned about the potential career fallout from personal content on social networking sites, new data out on Tuesday from JSE-listed training and employment specialist Kelly Group (KEL) has revealed.

The Kelly Global Workforce Index, which is an annual survey, revealed that 29% of respondents secured their most recent position through word-of-mouth referrals, the leading source of jobs, ahead of recruitment/staffing firms, used by 26%, direct approaches from employers (20%), print advertisements (10%), online job postings (8%), other methods (5%) and social media sites (1%).

The survey contained the views of about 97,000 people in 30 countries, including the opinions of more than 1,000 South Africans.

Even though a small percentage of people actually secured their most recent job through social networking, 24% of respondents said they had looked at social media sites, such as Facebook, LinkedIn and Twitter, seeking job openings or promotions.

The survey, conducted from October 2010 until January 2011, showed that while social media was active as an employment tool, so too was apprehension about the damage it could have on careers. More than a quarter of respondents admitted to deliberately editing content on their social networking pages to avoid career problems.

“The use of social media in finding work is becoming more common because it allows people to target exactly the job they want, and even the organisation where they want to work,” said Tracey Czakan, Kelly Group sales and marketing director. “Candidates and employers are becoming more adept in using this medium, which will see it grow and evolve as a means to find work and advance careers.”

Kelly Group noted that Facebook was the most popular social media site for Gen Y (aged 18-29) and Gen X (aged 30-47) respondents to look for work, but blogs and other specialist sites were preferred by baby boomers (aged 48-65).

A quarter of respondents said they were worried that material from their social networking sites could adversely affect their careers.

Half of Gen Y respondents said it was essential to be active on social media in order to advance their careers, but only 39% of Gen X and 19% of baby boomers felt the same way.

Half of respondents said their employers had social networking policies that regulated use at work.

Industries where employees were most active in online conversations included oil/gas, education, transport/distribution and utilities.

Those most active in searching for jobs online were in Kwazulu-Natal, where 29% used social networking to seek work, followed by Western Cape (26%), Eastern Cape and Gauteng (both 23%).

And despite the rise in popularity of social networking, the vast majority of respondents (68%) spent an hour or less per day on social media sites, while 24% spent no time at all. Only 8% spent an hour or more each day, the survey revealed.

“It’s clear that social networking is changing the way that people seek out work and engage in conversations about work opportunities. Like any new technology, people are learning that there are positives and negatives, and they need to be careful that they are tapping into the best elements of the internet when their careers are involved,” said Czakan.

Source: Business Report