THE BLOG
11/19/2012 08:41 am ET | Updated Jan 19, 2013

Sustainability by the Numbers: The Growing Reality of the Green Economy

Alamy

One of the more persistent myths in our political dialogue is that we must tradeoff environmental sustainability and economic growth. This is probably reinforced by a fact, pointed out to me recently by my Columbia faculty colleague, Michael Gerrard. Professor Gerrard noted that we have not had a major new piece of federal environmental legislation enacted in over two decades. The structure of U.S. environmental law is based on the assumption that economic development pollutes, and that the goal of environmental policy was to clean up or reduce pollution after it was created.

The sustainability perspective is quite different. Sustainability management is the practice of economic production and consumption that minimizes environmental impact and maximizes resource conservation and reuse. As opposed to the political debate regarding environmental protection -- which claims there is a tradeoff between environmental protection and economic production -- the sustainability management framework demonstrates that continued economic prosperity is dependent on the health of the environment. Pollution is seen as a form of waste that should be eliminated by careful and sophisticated production processes.

Economic growth requires the continued availability of high quality natural resources -- especially air, water and soil. We need to develop technology, organizational capacity and political will to make the changes necessary to ensure these resources continue. Society requires water, food and energy, and cannot exist in an environment dominated by waste. Sustainability management adds an emphasis on the physical issues in an organization's standard management practices that impact the natural environment. Under this framework, organizations:

  • Efficiently use raw materials to reduce the creation of waste;
  • Shift to renewable or recycled materials; and
  • Look for innovative materials or processes that have a lesser impact on the environment.

We are at the start of the development of a sustainable or green economy. To measure the green economy, it is possible to measure the presence of green jobs, green markets, and investment in green industries. Because sustainability cuts across industries and sectors of the U.S. economy, defining just what contributes to the green economy is a challenge. In general, the green economy can be considered the production of goods and services that benefit the environment or conserve natural resources.

The United States Bureau of Labor Statistics (BLS) recently began measuring green jobs with the introduction in 2010 of their Green Jobs Initiative. This is an effort to gather data on "(1) the number of and trend over time in green jobs, (2) the industrial, occupational, and geographic distribution of the jobs, and (3) the wages of the workers in these jobs" (BLS 2012c).

"The BLS defines green jobs as either: (1) Jobs in businesses that produce goods or provide services that benefit the environment or conserve natural resources, or (2) Jobs in which workers' duties involve making their establishment's production processes more environmentally friendly or use fewer natural resources" (BLS 2012c). Jobs are considered green if they produce goods or services directly related to:

1. Energy from renewable sources.
2. Energy efficiency.
3. Pollution reduction and removal, greenhouse gas reduction, and recycling and reuse.
4. Natural resources conservation, organic agriculture and sustainable forestry.
5. Environmental compliance and regulatory administration, education and training, and public awareness and advocacy. (BLS 2012c).

According the first Bureau of Labor Statistics data, in 2010, 3.1 million jobs in the U.S. were associated with the production of green goods and services, accounting for 2.4 percent of total U.S. employment in that year. Of the total, 2.3 million jobs were in the private sector, and 860,300 in the public sector (BLS, Mar 2012, 1).

Green products and services are increasingly important to the U.S. and global markets. "Sales of environmentally friendly products in the U.S. exceeded $40 billion last year, according to data from various market tracking services and Advertising Age estimates. This includes $29.2 billion for organic food, more than $10 billion for hybrid, electric and clean-diesel vehicles, more than $2 billion on energy-efficient light bulbs and $640 million on green cleaning products" (Neff, 2012).

During 2010-2011, global sales of low carbon and environmental goods and services were measured at roughly $5.2 trillion dollars with 48 percent of the total coming from low-carbon activities, 31 percent from renewable energy and 21 percent from environmental activities. This represents annual growth of 3.7 percent from the previous year (U.K. Department of Business, Innovation and Skills 2012, 13).

According to German-based Roland Berger Strategy Consultants, the global market volume for "environmental technologies" will reach a projected $2,740 billion by 2020:

1. Energy efficiency technologies (appliances, industrial processes, electrical motors, insulation, etc.): $1,233 billion by 2020
2. Waste management/recycling: $63 billion by 2020
3. Water supply/sanitation/water efficiency: $658 billion by 2020
4. Sustainable transport (more-efficient engines, hybrids, fuel cells, alternative fuels, etc.): $493 billion by 2020." (UNEP 2008, 54).

Another method of examining and understanding the growth of sustainability and the green economy is looking at corporate sustainability. The drive behind sustainability is evident at many top private firms. Massachusetts Institute of Technology (MIT) Sloan School of Management, in their Sustainability Initiative, has measured sustainability innovation by interviewing global executives for the past three years. Their most recent study, released in 2011, found that:

  • 68 percent of respondents say their organizations increased their commitment to sustainability in the past year. That's a dramatic increase from 2009, when only 25 percent of respondents said that. (Brokaw, 2011).
  • 67 percent say that sustainability strategies are necessary to be competitive. That's a 12 percentage point increase from last year. (Brokaw, 2011).
  • Sustainability is increasingly important to top management, survey respondents say: 28 percent percent believe it's a permanent and core strategic consideration and 42 percent say that although it's not a core consideration, it is nonetheless on the agenda to stay. (Brokaw, 2011).

A similar 2012 study conducted by Siemens and McGraw-Hill Construction also notes a growth in the importance of sustainability. This study tracked progress in sustainability and reported in three studies, noting that 42 percent of companies "say sustainability plays a key role in their business operations," which is up from 18 percent in 2006.

It is easy to dismiss this as a fad, but of course some people said the same thing about globalization, information technology and the internet. The need to conserve and reuse resources and build a renewable global economy is a fact on a planet of seven billion people. The rapid growth of nations in Asia and Latin America and continued consumption in the developed world makes sustainability a necessity. The environment is not a luxury to preserve because it is pretty; it is a necessity to maintain because our survival depends on it. The serious attention being paid to the emerging green economy by government and business is not a PR exercise, but a paradigm shift. It is clear evidence that the transition to a sustainable economy has begun. What we need now is a regulatory framework that recognizes these new realities and moves beyond the environmental legal structure we largely created from 1970 to 1990. In particular, we should try to move beyond command and control regulation to a tax code that provides incentives for green economic activities.

Sources:

Brokaw, Leslie. "Five Ways That Sustainability Commitment is Up -- Dramatically." MIT Sloan Management Review. 27 Nov 2012. Web. 15 Oct 2012.

Environmental Leader. "Sustainability is Key, 42 percent of Companies Say." Environmental Leader & Energy Management News. 29 Oct 2012. Web. 29 Oct 2012.

Neff, Jeff. "As More Marketers Go Green, Fewer Consumers Willing to Pay For It: Being Eco-friendly Is a $40B Business, But Shoppers Are Growing Resistant to Premium Pricing." Advertising Age. 24 Sept 2012. Web. 1 Nov 2012.

United Kingdom. Department for Business Innovation & Skills. "Low Carbon Environmental Goods and Services: Report for 2010/11" United Kingdom. Department for Business Innovation & Skills. May 2012. Web. 12 Nov 2012.

United Nations Environment Programme. "About GEI: What is the 'Green Economy?'" United Nations Environment Programme. No date. Web. 9 Nov 2012.

United Nations Environment Programme. "Green Jobs: Towards decent work in a sustainable, low-carbon world." United Nations Environment Programme/Worldwatch Institute. Sep 2008. Web. 8 Nov 2012.

United States. Department of Commerce, Economics and Statistics Administration. "Measuring the Green Economy." United States. Department of Commerce, Economics and Statistics Administration. Apr 2010. Web 9 Nov 2012.

United States. Department of Labor. Bureau of Labor Statistics. "Employment in Green Goods and Services -- 2010: News Release." United States. Department of Labor. Bureau of Labor Statistics. 22 Mar 2012. Web. 9 Nov 2012.

United States. Department of Labor. Bureau of Labor Statistics. "Green Goods and Services Occupations (GGS-OCC)." United States. Department of Labor. Bureau of Labor Statistics. 2012. Web. 10 Oct 2012. a

United States. Department of Labor. Bureau of Labor Statistics. "Green Technologies and Practices (GTP)." United States. Department of Labor. Bureau of Labor Statistics. 2012. Web. 10 Oct 2012. b

United States. Department of Labor. Bureau of Labor Statistics. "Green Technologies and Practices - August 2011: News Release." United States. Department of Labor. Bureau of Labor Statistics.29 Jun 2012. Web. 9 Nov 2012.

United States. Department of Labor. Bureau of Labor Statistics. "Measuring Green Jobs." United States. Department of Labor. Bureau of Labor Statistics. 2012. Web. 10 Oct 2012. c

United States. Department of Labor. Bureau of Labor Statistics. "Occupational Employment and Wages in Green Goods and Services -- November 2011: News Release." United States. Department of Labor. Bureau of Labor Statistics. 28 Sep 2012. Web. 9 Nov 2012.