David Kuo's Blog

Recently, major companies and its CEOs have taken on the initiative to go green within their businesses, from saving energy to having a more environmentally friendly supply chain. The question is why would these companies take on added costs, and not maximize their profits?

I think these companies are changing the way they operate for the opportunities it will create. Short term it may incur more costs, but it will also bring about sustainable advantages such as lower costs of production or differentiated products. By being socially responsible and sustainable, the company gains a lot of opportunity to earn more profits through either diminishing costs in the long term, or more revenue (customers, differentiated products). The advantage is that the company can effectively market itself as innovative, and ready to adapt to the changing world and the diminishing amounts of resources.

By being innovative, new products and new methods of producing products will be discovered. These methods can make resources be allocated more efficiently, or use an alternative resource that’s much more sustainable. That, is what I think makes going green, the new gold. The bonus is the ability for the company to market itself and differentiate its products.