Green to Gold

Use environmental sustainability as your competitive advantage.

Christmas time usually brings visions of carols, candy canes and sugarplums. But as Christmas approached in 2001, Sony executives instead had visions of toxic cadmium dancing in their heads. The Netherlands had impounded more than a million PlayStations destined for Santa’s sleigh. A cable on the machines, it turned out, contained too much of the element cadmium, in contravention of Dutch environmental regulations. Sony fixed the problem, but it wasn’t cheap. $130 million later, Sony found the source of the tainted cables after inspecting 6,000 factories.

This crisis led to a new – and better – supply chain system. From a small bit of cadmium in some PlayStation parts, Sony learned a valuable lesson: Smart management of environmental issues is about more than hedging against downside risk. Other companies, including GE, Wal-Mart and Goldman Sachs have learned the same lesson. As Wal-Mart CEO Lee Scott sees it, environmental initiatives “will make us a more competitive and innovative company.” Environmental responsibility needn’t be a fetter wrapped around your ankle. Instead, make it your comparative advantage...