Written by: David Creighton, Anita Lišková
Saving costs or saving the planet? One line of thought holds that capitalism and environmentalism don’t mix, yet more and more Czech companies are “going green”. How will recent EU entry affect local eco-friendly development?
“SUSTAINABILITY”, “environmentally-friendly”, and “ecological”. Everyone is familiar with these buzzwords, which started flying around with increasing frequency all over the world about a decade ago. Opinion polls in the Czech Republic in 1990 revealed that 83% of people asked replied that living in a healthy environment was “very important”. In business, this global concern for the planet led to opportunities for setting up environmentally-oriented companies, such as recycling firms or organic farms, and a realization that commerce and ecological protection were not mutually exclusive. “In 1989 there were none (environmental businesses), now there are over 700 certified companies,” says František Dobeš of the Business Leaders Forum, referring to the state certfication system.
Fourteen years later similar polls show that the relationship to the environment and ecology is definitely not that straightforward. A study on “satisfaction with the environment” conducted by the Public Opinion Research Center (CVVM) of the Czech Academy of Sciences in March this year indicated that only 25% of respondents preferred environmentally friendly products of whom only 4% under all circumstances. “People say they are willing to pay a higher price for ecological products, but in fact they behave differently, preferring lower prices,” says Petr Saifríd of the Czech Environmental Institute. The view of many companies is similarly controversial. The common reasons for adopting environmental principles is that it enhances the status of the firm and is used as part of their marketing strategy. “An advantage of having an Eco-label is that it definitely improves the image of the firm,” says Saifríd, when describing reasons why firms choose to apply for it.
Photo: Jan Vágner
Is it easy being green?
What does it actually mean to be “green”? Petr Nahodil, director of the Department of Voluntary Tools under the Ministry of Environment, says that there is no definition of an environmental business, but in fact, all businesses can be environmentally-friendly to a greater or lesser degree. It does not just mean a firm which produces environmental products, but rather a firm which has an overall approach which is environmental. For example, the production methods can be “green”, such as efforts to cut emissions of greenhouse gases, or a more effective use of resources. “There are industrial companies which behave in an environmentally-friendly way, which means that they have established a system of environmental protection according to international standard ISO 14001,” explains Dobeš.
In practice, the implementation of these principles varies from company to company, as does the reasons for putting them into action. And there are still disparities between Czech and Western European markets. “Compared to 1989, any green sector has grown, naturally. But when looking at Western Europe, I can hardly des-cribe the Czech situation as ‘rapid growth’,” says Vojtěch Kotecký, programs manager from the environmental group Hnutí Duha. “When you look at organic food, green electricity or recycling, the Czech Republic lags far behind countries like Germany, the UK, Scandinavia and others.” Zdeněk Soudný, account manager at Ogilvy PR agency offers one possible reason for this: “Czech companies are not under such environmental pressure as in Western countries, so they don’t need to present themselves as environmental, unless it’s really desirable.”
Some larger firms also view environmental ideas as only of peripheral significance. Petr Nahodil cites the example of Czech steel companies who have been accused of dumping by the EU. Now they are trying to comply with regulations that would make them acceptable on EU markets. “I personally think that if there was no stick these companies would not do anything, because it’s a big investment,” he observes. However, large multinationals are used to communicating their environmental goals, as they have adopted green policies many years ago.
“Environmental protection on a global scale is one of the six basic strategic priorities of our company,” says Jakub Puchalský, corporate communications manager for Unilever. Each year, his company’s production facilities has prepared a program of activities leading to improvements in energy consumption, waste and water protection, and it has been successful. “Recycling of wastes is commonplace. Since the mid-nineties we’ve been able to reduce greenhouse gas emission from 15 tons to today’s approximately half-ton, and total waste from 4000 tons to less than 2,000 tons last year, ” Puchalský adds. Unilever’s stance is that a successful and responsible modern multinational should address the principles of social and civic concerns and make efforts to show how it is fulfilling them.
Photo: Vojtěch Vlk
What customers want
But while environmental legislation is now in line with the EU, so far it seems that emphasizing ecological principles or questions of environmental friendliness are currently of only marginal interest. “Czech customers do not perceive ecology as such an important problem that would lead companies to actively communicate in this field,” Soudný points out. Other PR and advertising agencies agree that ecology issues are not automatically used as a part of marketing strategies in the Czech Republic. “Czech consumers haven’t demanded this information yet and firms stress it only when they have European backgrounds, because it’s corporate policy. Czech firms will have to adapt very soon,” says Emilie Pražáková, account director of PR firm AMI Commun-ication.
At the “Green Week” conferences, held at the beginning of this year under the aegis of the EU in Brussels, statistics indicated that in the UK 11% of purchasers are consumers who take into account ecological and ethical principles, and between 2001 and 2002 the share of sales of environmentally-friendly goods in Europe increased by over 50%. There are no comparable figures for the Czech Republic, but if we take the food sector as an example, there has been a huge expansion in the market, although it is still small. “At our hypermarkets we currently sell 26 organic grocery products,” says Jérôme Poussin, communication and customer marketing manager of Carrefour. “This is a marginal phenomenon that accounts for less than 0.1% of sales. However, we expect increases in the future,” he adds.
This is echoed by Jana Matoušková, corporate affairs coordinator for Tesco Stores CR. “These goods account for about 1% of our inventory,” she says, acknowledging that the sector is still growing, hand in hand with bio products. “But in this range customers are put off by the high prices as opposed to ordinary products, so the organic product share of total sales is still very low,” Matouš-ková adds.
Cost is definitely a key factor. Consumers may claim they would be interested in buying environmentally-friendly products, but when it comes to paying more, they often change their minds. It’s a practical decision of simple economics. According to Petr Nahodil, “environmentally-friendly business here is connected with the overall economic production capacity of this country. If people are at a certain socio-economic level then they can be concerned with environmental issues. For example, a person in Germany has much more interest in eco-friendly companies.”
Yet environmental policies need not be merely side issues, but rather components that should be central to the way a firm operates. And as our cases show there are firms who profit from being ecological. Above all, green principles can be sound business, as Kotecký of Hnutí Duha, points out: “Green technologies improve efficiency, reduce energy and material costs, and help the bottom line.”
For Milan Sedlák, society’s seemingly endless use of printers, copiers, and fax machines – on the surface an environmental scourge – has a bright side in the field of recycling. With this in mind, he founded Ecoprint in Brno six years ago; today, working out of two more offices in Prague and Ostrava, the company is a leader in the toner cartridge recycling business in this country, with a CZK 29 million turnover.
From bottles to fibers
An opportunity to turn thousands of discarded plastic bottles into something which will end up in automobiles is an idea that was turned into reality by South Bohemian manufacturer Silon. The company recycles PET bottles into material for use in the automobile and hygiene industries.
Now an important recycling firm on the Czech market, Silon mainly manufactures polyesters and compounds. “The company is an important producer in Europe and has a monopoly position in the Czech Republic,” says the Production Manager, Jaroslav Lavička. “Exports to the European Union accounted for 62% of total production in 2003, and of this 28% went to Germany,” he adds.
Ecolabel – a badge of honor
Symbols with the words such as “RESY” appear on products in the Czech Republic, making them seem environmentally friendly. While consumers may be tempted to put them in their shopping basket and help protect the environment, such labels do not really have any meaning – RESY for example is valid only in Germany.
The state makes some efforts to motivate firms in order to show them how it pays to be environmentally-friendly. Apart from the Eco-labeling program there is also the Integrated Production Policy (IPP), which aims to ensure that the production, use and disposal of products has as little impact on the environment as possible. “The Integrated Production Policy is an all-round view of environmental behavior of the company, because it is one of the parameters of organization and management,” says Petr Nahodil, director of the Department of Voluntary Tools under the Ministry of Environment. “The improvement of this process always leads to higher effectiveness even though it is important here to incorporate costs linked with environmental behavior.”