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Green businesses in the black

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When the banks failed and the recession hit last fall, lots of people predicted that the burgeoning green economy would get nipped in the bud. But that's not what happened. Julie Grant spoke with some business experts about the status of green companies.

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Julie Grant
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Transcript: Julie Grant, December 25, 2009

Last fall, the iconic supermarket of the green movement was in trouble. After years of growth, Whole Foods’ stock prices were plummeting.

Nancy Koehn is professor of the history of retailing and consumer behavior at the Harvard business school. She says despite the lingering high unemployment rate and the store’s notoriously high prices, things are looking better today for Whole Foods.

“They’ve rebounded very effectively over the last six months. their stocks trading up considerably, traffic is up in the stores, per customer tabs, or receipts, if you will, are up.”

But Koehn says Whole Foods customers might be a core group that’s committed to buying green. The jury is still out on whether green companies will win over mainstream consumers.

Lots of people rushed to Wal-Mart last Christmas – to get things as cheaply as possible in the wake of the financial meltdown. But Koehn says the large-scale flight to Wal-Mart has mostly run its course.

“The question now is - are consumers now, in this post crisis world, going to move to a new normal? - which includes a different way of thinking about the impact of our dollars on how what we buy affects a whole range of issues and people in the world.”

In other words, will people re-consider buying cheap goods made in China since many American jobs have been lost to that country, environmental concerns about products from China and that country’s record on human rights. And, Koehn says even Walmart is becoming greener both in its operations and its products. For example, it now sells only energy efficient lights bulbs.

Joel Makower is editor of GreenBiz –dot-com. He says changes at WalMart are just a small part of the green business story today. Although, he might not have said that a year ago.

“I think the remarkable story of 2009 is that the green economy did not disappear when the overall economy went south. that it’s not only remaining in place, but the number of products and services from better cars to better cosmetics to computers are coming in to the market.”

Even though we’re the ones who buy these things, Makower says the future of the green business isn’t really about consumer demand. He says there’s a confluence of green technology, government regulation and available capital that’s driving the green economy forward.

“We’re going to be seeing that in energy, we’re going to be seeing that in buildings, we’re going to be seeing that in vehicles. We’re already seeing that in information technology. Where these things are coming together and regardless of consumer demand are being made available and attractive to consumers.”

Makeower gives the example of the IPOD. He says it wasn’t developed because people demanded it, or because we were running out of material to make CDs – it just offered a better technology – and so consumers have been buying it. In the process, the IPOD saved tons of material that was to be used on CD packaging.

These new products aren’t necessarily being labeled green products. And Business historian Nancy Koehn says American companies are going through a huge transition that won’t make such labels necessary.

“Because pretty soon the core aspects of what we define as green today will be such a part of so many businesses that we won’t make this distinction, we won’t have this kind of differentiation by the word green.”

Koehn says companies that have already started going green might be ahead of their competitors right now – in terms of energy efficiency and offering a wider array of green- products. But because of stockholder demands, government incentives– and eventually consumers – other businesses will likely start catching up to them.

For the Environment Report, I’m Julie Grant. 

Copyright © 2009. The Regents of the University Of Michigan. Used with permission.

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