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Green production

The high cost of not going green

“You snooze, you lose.” Failing to seize an opportunity will result in disadvantages later, applies nowhere more than in business. Going green is no exception.

One-hundred years ago, if you were still relying on horses and carts to move goods while your competitors used trucks, your company probably wasn’t going to last. Twenty years ago, if you felt that the Internet was a fad that would pass, then your market share probably ended up plummeting.  

Today, that opportunity is green technology. And missing out on it will mean getting left behind. While it is true that the initial investment for some environment-friendly equipment may be higher, a reduction in production costs and other benefits will quickly recover that difference and more. 

That is why the real question executives should be asking is not “What is it costing my company to go green?” but rather “What is it costing my company not going green?” 

The answer is “a lot.”

Higher production costs

Looking after the piggy bank
Most importantly, companies that refuse to go green will miss out on substantially lowering their production costs. While their competitors generate their own power with solar plants, recover energy with innovative recuperation systems, or reduce their electric bills by investing in green technology, businesses using outdated equipment will be stuck with higher energy costs.

This effect is magnified when it comes to machinery that uses a lot of energy, such as compressors, where the purchase price constitutes only a fraction of the total cost of ownership while the money spent on energy accounts for 80 percent of it.

The additional expenses that are occurred by companies that do not use green technology leave them with a bad choice: They can either pass on the extra costs to consumers or make cuts elsewhere.

They are also much more vulnerable to fluctuations in the cost of energy. If, for example, a country decides to increase taxes on non-green energy, companies that still rely on traditional, inefficient technology will end up having to pay even more.

Finally, they would not be eligible for subsidies and tax incentives that many governments are offering companies that purchase environment-friendly equipment.

Loss of reputation

While their production costs will go up, businesses that refuse to go green will likely see their reputation suffer. In a world in which people are increasingly concerned about the state of the environment, companies that invest in green technologies are more attractive for customers and potential workers alike. These companies can use their commitment to a cleaner world in marketing activities or on product labels.

Conversely, businesses that make no such investments will be seen as an obstacle to a sustainable future. In addition, green technology is widely perceived as innovative. As a result, companies that continue to rely on “old” technology will be viewed as being a step behind their competitors. 

This is especially important when it comes to the recruitment of promising employees. In order to attract and retain top employees, companies simply cannot be viewed as standing in the way of progress. 

Uncertainty

In our fast-paced world, being able to plan ahead is incredibly important to managers. In most cases, surprises are bad for business. Using older, inefficient equipment makes companies vulnerable to sudden, drastic changes, such as a new environmental law or a court ruling that bans certain machinery. Businesses that are ahead of their times with innovative, green technology do not have to worry about their equipment all of a sudden having to be replaced. 

While each of these reasons should be compelling enough to get companies to go green, perhaps the best argument is that environment-friendly technology is inevitable. Each year, consumers will demand companies to be more responsible. Each year, environmental standards will get tougher. And each year a company fails to act, it is going to be left further behind.