732 The Marketing Book
upward ‘ratcheting’ of legislation. In the USA,
the trend towards forcing the CEOs of
polluters to make personal court appearances,
and in some cases jailing them, has helped to
focus corporate minds.The economy
Conventional wisdom viewed investments in
environmental protection as involving a trade-
off with economic growth (Porter and van der
Linde, 1995). Recognition is growing that the
two are interlinked in many complex ways, and
that long-term economic growth will be
dependent on better environmental protection.
Many business opportunities are now emerg-
ing for technologies, goods and services which
address environmental problems, or at least
make less of a contribution towards them. The
European Commission estimates that by 2010
‘environmental industries’ will be worth $640
billion, and that their growth will provide an
additional half million European jobs.
Key areas where environmental concern is
influencing economic issues include:
Production economics.Environmental
considerations are radically altering the
production economics of some front-line
industries such as cars, chemicals and power
generation. Rising landfill costs and tougher
regulations on emissions mean that production
costs are increasingly influenced not by what has
gone into a product, but by what is discarded
when making it. The BSE crisis within the UK
beef industry has also demonstrated the
economic damage that poor eco-performance
can inflict upon an entire industry.
Investor pressure. The Ethical Investment
Research Service estimate that the value of
investments in the UK held in ethical investment
funds passed the £4 billion mark by mid-2001.
Although this is a relatively small proportion of
total funds, the impact on corporate reputations
of being de-listed from a particular ethical fund
gives them a disproportionately large influence
in public relations terms. Interest in ethical and
environmental investment looks set to intensify,
with new initiatives such as the FTSE4Good
index of socially responsible companies and
changes to legislation requiring institutional
investors to focus more on the social and
environmental performance of holdings.
Green taxes. A new generation of
environmentally related taxes including landfill
taxes and climate change levies are being
introduced in many countries. There are also
product-specific taxes being used to encourage
particular changes in consumer behaviour in
favour of smaller engined cars, or reusable,
rather than disposable, shopping bags.
Access to capital. Environmental performance is
seen by lenders and investors as an important
influence on risk in many industries. An effective
environmental strategy is becoming important
to guarantee access to capital and insurance in a
number of environmentally sensitive industries.Industry structure
Industry structures have conventionally been
visualized as composed of linear exchanges and
value chains. The green challenge is one of many
forces encouraging a more relationship-based
view of industry structures, particularly
through an emphasis on recycling and supply
loops. These feature relationships in which the
customer returns products or packaging to the
manufacturer, and in the process become
another form of supplier. Xerox are veterans of
recycling, having begun the routine reuse of
components in 1968. By 1997, Xerox were
reclaiming and reusing about 1 million parts
and 150 000 office machines each year. For its
‘Eco Series’ copier line, the company has
achieved recycling rates of up to 75 per cent for
components from end-of-life products.
The changes that greening is bringing to
industry structures includes: The threat of substitutes. Products with a
relatively poor eco-performance can become
targets for new substitutes. Concern about the
destruction of peat wetlands has led to a