Concerns about the state of the environment, and our collective contribution to it, have been building for some time. In some cases, the impact is felt across the globe – with climate change being the obvious example. In other cases, those impacts are more local; you might think of a polluted city center.
This shift in attitudes has resulted in a shift in consumer behavior. But this is mostly a matter of branding. If consumers have green concerns on their mind, they’re more likely to reach for products labeled as ‘organic’ or presented in a green package. What matters a great deal more are environmental laws, which impose specific requirements on the businesses in question.
What are the downsides?
New changes in regulation mean that business has to spend resources taking stock of the requirements, identifying any changes that need to be made, and then actually implementing those changes. If the rules are constantly changing back and forth in arbitrary ways, then the business is robbed of the certainty that it needs to thrive.
Keeping an eye on the direction of travel is worthwhile if you want to avoid getting blindsided. It’s partly for this reason that the UK government has been so explicit in its ambition to ban the sale of new petrol and diesel cars and vans by 2030.
If your supply chain or consumer base extends to other parts of the world, then it’s not just domestic law that you need to take stock of, but the international mood. Much of the time, the progress of the international regulatory environment takes place using small steps. But landmark moments, like the Paris Climate Agreement, have far-reaching implications for business.
The safest strategy is to pro-actively think about how your business might reduce its environmental impact, and ensure that you’re able to keep pace with the changing law over time. Many investors are looking at environmental, social and governance factors (or ESG) which would include green concerns, and therefore making these changes might affect your bottom line in the more immediate future, too.
Is it worth it?
Of course, the benefits might often outweigh the cost. But these benefits are often specific and considerable. For example, a US study found that the benefits of reducing emissions from industrial plants far outweighed the cost. The reduction in morbidity and morality means enormous knock-on benefits for the wider economy, which might not otherwise occur. Fewer illnesses mean more people turning up for work, and fewer people having to go through the stress of looking after a dependent. Then there’s the fact that people who live for longer can also work for longer. In some cases, the benefits can outweigh the costs by several orders of magnitude.
