Green innovation: Does managerial concern matter?

posted July 15, 2018 at 11:06 pm
Global warming is one of the alarming worldwide issues today. A recent report from the Department of Environment and Natural Resources (DENR) revealed that ASEAN countries had experienced frequent weather related disasters and had been highly affected by climate change during the past 10 years.  As early as 2009, the Philippines had been warned by the World Bank that it topped the list of countries most vulnerable to storms. In 2016, the Global Climate Risk Index of German Watch listed Philippines as one of the four countries among the 10 nations most affected by climate change from 1995 to 2014. These threats to environmental sustainability, including pollution and deterioration of natural resources, have resulted to a growing social awareness that business activities have adverse effects to the natural environment.  

Economic development highly depends on innovation and companies rely on this to achieve competitiveness, but there are studies that connect business innovations to environmental problems. If more companies will continue to focus on the economic benefits of innovation without considering its environmental effect, it could lead to greater problems that would require more costs for firms, and for society in general, to resolve.

In the Philippines, Central Luzon is considered as an important contributor to the Philippine economy, having registered the fastest growth among the regions. The growing numbers of different businesses particularly in food, services, manufacturing and other sectors, coupled with good spending habits of the people, have attracted major national and global retailers and other investors. Teresita Sy Coson, the chairperson of BDO Unibank Inc., shared during the 57th General Membership Meeting of the Pampanga Chamber of Commerce and Industry (PamCham) that Pampanga is the major driver of this economic growth.  With the current administration’s plans to expand Clark International Airport and Manila-Clark Railroad Project, more developments are expected in Pampanga. Since economic growth can bring in potential harm to environmental sustainability, there is a need to examine the changes firms incorporate in their activities to ensure that such growth will not result to environmental degradation.  

Today, the idea that innovation could help resolve climate change and environmental problems is gaining popularity. There are firms that incorporate sustainability in their innovation strategies to produce products with lesser environmental impact, to redesign their operations to conserve resources like water and energy or to lessen waste that may lead to pollution. This innovation is known as green innovation.

In my study titled “Green Innovation: For Profit or For Environmental Protection?” which surveyed 74 companies in Pampanga, it was shown that green innovation is moderately being practiced by most firms. For green product innovation, companies are more inclined to using eco-friendly materials and eco-packaging compared to recycling and eco-labelling. However, it was found that some companies that make use of materials and packaging with less harm to the environment do not communicate this with their customers through eco-labelling.  While most companies recycled their products such as used oil and cars for car companies and damaged or substandard furniture for furniture makers, there are companies that do not practice these.  

Green process innovations, on the other hand, are being practiced to a greater extent. Among the green innovation practices, reducing toxicity is often practiced. Managers shared that they reduce water, electricity and fuel consumption primarily to reduce cost, to comply with company regulations or for them to attain company rewards for reducing cost from utilities.

The same study also revealed that managerial environmental concern is an important factor of green innovation practices, while doing it out of expected benefits may not significantly translate to such practices towards sustainability. While there is a growing number of companies that try to incorporate sustainability in their innovation strategies, intention is an important factor on whether this will translate into meaningful green innovation. Managers should ask themselves, for what am I really doing this for? And hopefully the answer is the answer we need toward a future worth wanting.

Joy Anne Evaristo is a Doctor of Business Administration student of the Ramon V. Del Rosario College of Business of De La Salle University (DLSU). She is also a faculty member at Holy Angel University. She welcomes comments at [email protected] The views expressed above are the author’s and do not necessarily reflect the official position of DLSU, its faculty and its administrators.

Topics: Greenlight , Green innovation
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