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By Susan Williams (MALD '00) The era in which companies gained a competitive advantage by being located in nations with relatively low environmental standards is ending, according to environmental strategy consultant Richard Wells. The Fletcher alumnus and president of environmental management consulting firm the Lexington Group spoke to a Fletcher audience on the "Environmental Disadvantage of Latin American Nations" on Oct. 26. The International Environment and Resource Policy Program sponsored the event. Companies that have not been proactive on environmental issues--which entails spending on the environment now in order to move up the learning curve--will eventually be at a disadvantage, according to Wells. "There has not been the same learning process [in Latin American companies] because there hasn't been the same investment in intellectual capital," he said. Legal requirements for environmental protection in Latin America are often complex and difficult to enforce. Poor infrastructure and lack of internal demand for environmental services has deterred the awakening of environmental awareness in Latin American businesses to date, but this is slowly changing, Wells said. With the creation of the right demand conditions, Latin American businesses will be pushed to adopt higher environmental standards, Wells predicted. One demand-fostering mechanism is the "supply chain," in which companies adopt environmental standards and require that their suppliers meet them to acquire or retain customers. Wells is working on related projects in Mexico and Peru, which he said he hopes will result in the proliferation of U.S. and European levels of environmental protection within these countries. Wells' environmental disadvantage theory resulted from his experience as an environmental consultant working to implement environmental management systems in Latin American companies. Wells acknowledged that his theory stems from anecdotal evidence rather than statistics. However, as German visiting scholar at the Tufts Institute for the Environment Harald Heinrichs noted, "you have to be optimistic if you want to sell the environment to a business leader." Businesses that are current "environmental leaders" may be more optimistic about the role of the environment in the future than those that are not, according to an environmental benchmarking survey of large (mostly U.S.) businesses conducted by the Lexington Group. For example, environmental leaders--as identified by their peers--saw the same environmental issues as both business opportunities and threats. Attempting to answer the question "what contributes to environmental success?" the survey investigated whether the environment was considered in strategic planning, if the company was conducting measurements of its environmental programs, and to what extent the environment was considered in the company's work processes. Wells noted that "very few companies are seeing the environment as a strategic issue," but that leaders see the environment as a source of value added. Comments? Write us at letter@fletcherledger.com |
