The following post was published in the July 17, 2020 edition of the Rochester Business Journal
The pandemic has knocked a surging economy flat on its back. Predictions on its recovery range from the V-shaped curve we’d all like to see to the forecast by the Congressional Budget Office that implies it will take a decade to return to our former glory. Many, including Wall Street Journal columnist John Stoll suggest we put our green dreams on hold saying, “businesses that were trying to save the world are now simply trying to save themselves.” It’s a fair point. But it ignores some fundamental principles of how we should analyze our businesses at the bottom of the cycle and make strategic investment decisions.
Guiding a company out of distress into a stable and competitive future is no small task. Survivors will have spent time reevaluating their companies with an eye toward eliminating unproductive activities and unprofitable products and services. The outcome for those who succeed will no doubt be a leaner, more efficient enterprise. A disciplined approach to restructuring balance sheets and operations will yield an opportunity to develop new strategies for the future. And, those new strategies should include green energy and carbon neutrality.
We all know the big picture. Nicely summarized by the Trump administration’s National Climate Assessment, “Human-induced climate change means much more than just hotter weather… These changes… [will] affect human health, water supply, agriculture, transportation, energy… with increasingly adverse impacts on the American economy…” The Boston Consulting Group has quantified the impact in a report titled “How to Change Course on Climate.” BCG projects a 30% decline in per capita GDP by mid-Century if we do nothing to address climate change. Reversal of that decline calls for us – all of us, locally, nationally and globally – to eliminate carbon emissions by achieving carbon neutrality in our operations.
Fortunately, we have reached a point where it is not only economically feasible but also advantageous to deploy green energy. There are local businesses offering community solar power with no upfront investment at a cost lower than conventional energy. Others will help you electrify your fleet. The Greater Rochester Regional Economic Development website provides examples of local companies who have improved their businesses as well as their carbon footprint by deploying green energy.
Resources are available and the table has been set. The next step is to include green energy and carbon neutrality as critical strategies for your business. Raising the consciousness of your management team, exploring green options and implementing those that place you on a more sustainable path will undoubtedly improve your results both in the near term and long term.
No one solution applies to every business. But there is a solution for your business.
WHO WILL LEAD?
In autumn of 2008 as the shock of the national/global financial free fall took hold, my CEO roundtable met for what turned out to be a day of hand wringing. After a round of check ins by bleary eyed members caused by lack of sleep due to angst over having to layoff some of their people, we reached a conclusion. Every one of the CEOs had been avoiding running their companies in an appropriately lean fashion, largely because cash flow allowed them to do that. It was time to start running their businesses properly. I'm wondering if the painful lesson was retained over the intervening 12 years. If not, this is another bleary eye time of angst.
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