If Green Isn’t the New Black, What Is?

July 7, 2014

Mike Guggenheimer, President & CEO of RSC Bio Solutions

I can’t claim to be on the bleeding edge of all trends, but I do get the sense that our team at RSC Bio Solutions is on the front lines when it comes to sustainable biotechnology in industrial markets. So, if green isn’t the new black, as suggested in my last post, what is? What we are seeing at RSC is an increasing focus on risk management. Of course, risk management as a discipline is by no means new. At the same time, large industrial companies, many of whom have well-established sustainability initiatives, are paying increasing attention to new technology that mitigates risk associated with their traditional alternatives. I see four primary reasons behind this trend and an array of risks these companies are considering.

First, I see the Sarbanes-Oxley Act of 2002 being a tipping point towards increased attention on corporate responsibility. While Sarbox, as some call it, is focused on financial reporting at the board level, it has created an underlying culture shift towards risk avoidance. This often impacts middle managers in big companies who struggle to find the authority to make major changes or who concentrate heavily on maintaining the status quo in order to avoid making mistakes or creating new risks. When technology does come along that can eliminate risk, it can be seen under a new light.

The second driver we see is an overall increasing number of regulations around hazardous chemicals or ones that have a detrimental impact on the environment or ground level ozone. Not all companies treat new regulations with the same level of proactivity, but the leaders are working hard to stay ahead of regulations not just strictly comply. They are looking to avoid fines, remediation costs, and the reputational risk that follows an exposure of some magnitude.

The third driver is social media and the powerful voice consumers now have. You might wonder how social media and consumers could be a big driver for giant, global industrial businesses. Not too long ago, a fleet operator might have feared being on the cover of the local paper—a hazardous spill might have enraged hundreds or thousands in the local community. In today’s world, an incident that does harm locally can be heard far and wide by millions thanks to all of the avenues people now have to voice a complaint and the power social media has to amplify their voices. Incidents and accidents are bound to happen—even with the safest and most proactive companies—but more are working hard to manage the message and show that they are doing the best they can for environmental and community stakeholders.

The last big driver we see is that large companies are getting better at calculating long term value. While quarterly reporting is still an issue that can force short-term thinking, we are seeing many public companies get better at analyzing payback periods that extend beyond the current quarter. Industrial biotechnology can often show a positive ROI and an attractive payback period resulting from avoiding costs of clean-up or remediation, attracting new clients, increasing the life of equipment, reducing operating temperatures, and increasing uptime. And, more sophisticated players apply total cost of ownership approaches and communicate the value internally and externally.

Of course, there are other things behind this trend towards risk management, but these are what I see as the key ones from our standpoint. I would love to hear your thoughts, too . . . comment to me on twitter @mguggenheimer or via LinkedIn (https://www.linkedin.com/company/rsc-bio-solutions).

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