Disadvantages Of Green Economy

Due to the increase in the ecological pressures by business interventions, and alarming economic inequality in the world, countries are slowly adopting the concept of green economy for sustainable and holistic growth and development.

Being instrumental for amalgamating the social and environmental concerns with the economic vision of a country, green economy focuses on integrating sustainability with the business activities to result in high return on investment. Additionally, it caters to the socio-economic growth and ecological risk mitigation of the country.

Government of countries across the globe are introducing the concept of green economy through various public policies, incentive schemes and promotional activities to drive the market

Reduction in capital expenditure/working capital

3. Taxation and cost of capital

4. Preference for sustainable goods and services

5. Job creation

6. Independence from natural resources

But, integration of green economy is a slow-moving process which is substantiated by small initiatives and investments in pursuit of a prolonged effect. It requires slow redefining of the business model by inculcating key sustainable agents. Thus the transition needs to be carefully strategized and timed to manoeuvre the business towards sustainable development. It requires adoption of new skills, continuous innovation, risky investment and change in the value proposition. Some of the key business actions that need to be adopted in attempt of a green makeover are:

1. Considering human, society and nature in valuation techniques

2. Looking at a wider network of stakeholder as a part of the company

3. Creating incentive schemes to embed sustainable development in the core values of the company

4. Shifting towards renewable resource for their core business activities and use of technology for finding out innovative ways of doing so

Drivers of change

1. Resource

Growth in sales and profit margin:

It has been observed with time that customer are willing to pay premium price for the products and services which are produced keeping the environmental risk under check and are inherent with the betterment of the society. Thus sustainable intervention and proper communication of it will lead to sales growth and the willing of the customers in paying premium for such product will ensure higher profit margin. For example, with introduction of organic farming in the agricultural practices and proper communication of its properties, the market demand for organic food products has increased significantly.

2. Reduction in capital expenditure/working capital:

Better use of fixed assets results in increase in resources efficiency which leads to reduction in the capital expenditure. In addition to it, more resilient supply chain plan will lead to more operational profit even in uncertain market situation. In this regards continuous evaluation of current scenario, identification of the potential flaws and necessary innovation must be incorporated for a sustainable growth. For example carpet manufacturing company FLOR, being a petroleum-intensive firm uses its waste product as one of the manufacturing inputs thereby reducing its expenditure on working capital. In this way, FLOR endeavours to contribute towards green