One of my colleagues observed today that according to a recent survey in CFO magazine, US business managers appear only half as likely as their European or Asian counterparts to consider environmental initiatives as worthy of sustained investment. It’s possible, another suggested, that the Americans are just being more honest: most businesses consider, say, energy savings efforts as sensible cost-reduction measures, whether saving kilowatts is good for the planet or snail darters or whatever. Consumers’ decisions often get down to price: British Airways carbon offsets program—in which travelers willingly pay more their tickets so that BA can plant trees somewhere—has reportedly had a take-up rate below five percent.
In commenting myself, I made the point that I am very suspicious of survey opinions, as they are considerably cheaper than cash. Thus, I tend to look in my work at how people and organizations—and not just early adopters—actually spend their money. As Vinod Khosla recently said, in explaining the up-and-down sales rates of the Prius, “five percent of Californians will buy anything.” A perennial money-loser for Toyota, the car could be derided as a marketing stunt—or it’s quite possibly a little something more.
Suppose that I run an airline, and I think that a government, in whose jurisdiction I have assets or operations that are difficult to relocate, is going to tax the life out of my petroleum usage or carbon emissions or something like that. Getting ahead of the curve and figuring out how to fly on pixie dust would be green, but more to the point, it would keep my business from tanking. If I’m running Toyota, I might some money on that Prius thing because the R&D and the burnished image will keep me ahead of my rivals.
This is obvious, of course, but we might ask ourselves how aircraft manufacturers and military contractors might crassly pursue self-interest in this environment, either by surfing the tide of policy, or by attempting to influence its direction in seeking rents. If build a cleaner jet engine, I’d want airlines required to buy the cleanest engine they could; if I build a cleaner diesel engine, I’d want EU military forces signed up for the maximally restrictive emissions controls.
Almost every significant military contractor appreciates how influencing legislation and policy important aspects of strategy, but the efforts are usually focused on the end products—getting governments to buy one’s own kit instead of the other guy’s. Influencing the requirements-setting process is more subtle, but upstream of that is influencing regulatory action. Engine manufacturers, energy firms, and construction companies understand that, but the more clever military contractors could probably do more for themselves in this arena.
And by the way, my VW New Beetle does sound a lot cooler than any of my Austinite neighbors’ Priuses.
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