Going Green Can Be Good for the Bottom Line By Yevgenia Nayberg These days, almost every company supports the idea of a greener planet. Most acknowledge the ethical case for building supply chains that conserve energy and cause less environmental damage. But according to Ozge Islegen, an assistant professor of managerial economics and decision sciences at the Kellogg School, there is increasing awareness that it also makes good business sense to design ones operations around social and environmental sustainability. With the rising cost of raw materials, shifts in stakeholder expectations, increasing complexity of global supply chains, and new government standards (including the U.S.s Clean Power Plan and the U.N.s commitments to fight climate change), reducing ones impact on the environment is more than just a public serviceit is becoming part of the value proposition. Everyone recognizes that this is the direction we need to go, Islegen says. Now its a matter of making environmental performance a part of corporate strategy. And we find that there actually are strategic reasons to build sustainable operations. It might even give you an edge. Becoming an Industry Pioneer There has always been at least one incentive for companies to focus on environmental performance: avoiding negative publicity. And with the explosion of social media, that incentive has only strengthened. Any news of severe pollution or lax environmental standards will spread instantaneouslyand leave a mark. Volkswagen found this out after designing engines to cheat on emissions tests in 11 million of its diesel cars. The company is now reeling from customer anger, product recalls, and plummeting shares, not to mention fines worth billions of dollars. At the same time, business leaders are learning that clean operations and higher growth can go hand in hand. Now that customers, investors, activists, and even a companys own employees are voicing concerns about environmental impact, a greener record does more than simply guard against public-relations disasters. It can bolster a firms reputation. Even in cases where a sustainable operations strategy drives up costs, the advantages that come with a good reputation can go a long way towards offsetting those costs. Becoming an industry pioneer, for example, can strengthen a firms appeal among potential customers and partners, and grant that firm a prominent voice in global civil societyall of which ultimately serves the business. The outdoor apparel company Patagonia is one such industry leader. In 2010, Patagonia helped found the Sustainable Apparel Coalition, an alliance of 30 companies from the clothing and footwear industries.

Companies that improve their environmental performance need not surrender competitive advantage, Islegen says.

1. How can becoming green be an advantage to a company? Justify your side.

2. Do you believe that reducing ones impact on the environment is more than just a public service and is becoming part of the value proposition? Explain this statement and give examples of 3 companies that are into this practice.

3. Research about Patagonia and relate how it reaches to be an industry leader.