Budding romance or green myth?

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.

Vojtěch Kotecký

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.

Petr Nahodil

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.”

100% recycling

František Maška
Photo: Vojtěch Vlk

The owner of the firm František Maška-Construction Materials Production in Svémyslice u Prahy pursued a fourteen-year family tradition producing tennis-court clay. Like most entrepreneurs, he started on a small scale with a few employees, but with time became the largest producer of the material in this country. The firm currently supplies around 45% of the Czech market, and about 75% of Prague’s.
While the clay surfacing material can be made from bricks, thermoblocks, and other materials, František Maška chose an ecological route – he makes it from old roofing tiles. Why? “Customer satisfaction is paramount to us, and they demand high quality. Clay made from roofing tiles is incomparably better than that made from other materials.” By finding a new use for old tiles the firm recycles an old product that thus needn’t be dumped. “It’s more or less 100% recycling,” Maška says, adding that their method is more labor-intensive and time-consuming than if other materials were used. “Used roofing tiles are hard to find, and prior to processing they must be thoroughly cleaned and sorted. This requires a lot of employees, so the final profit is lower.”
Although the firm is so environmentally-friendly it even uses recycled polyethelene bags for storing and transporting the clay, it doesn’t enjoy any more advantages than those not so kind to nature. “Our environment is terribly polluted by smog and waste. If we’re planning on staying on this planet in the future, it would be reasonable to do something about it,” Maška observes. “Sadly, it’s all about money, of which there’s never enough.” Now, with EU accession having brought new possibilities for receiving various grants, he hopes his company will have rights to some support. “If we get a subsidy or tax relief, it’ll be great, but I understand that the government can’t get involved in everything and lead entrepreneurs by the hand,” he says realistically. He’s not afraid of the future, as sales of his product are ensured; according to internal company research, 94% of its customers will remain loyal. Covering a new tennis court requires about seven to ten tons of clay, and annual maintenance after winter seasons calls for another two to three tons. Furthermore, he’s planning on exports to Russia, Poland, and Austria.

Monika Mudranincová

Green copycats

Milan Sedlák
Photo: Andrea Horká

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.
” We knew from the beginning that it had a great future,” says Sedlák, who stresses that the benefits of the business are widespread. “Cus-tomers are pleased with the refills because they save considerable money, we’re satisfied because it is profitable, and society as a whole benefits since our work is environmentally friendly. Specialized publications state that the production of one toner cartridge requires about a half-liter of oil. That’s certainly interesting from an ecological point of view,” says Sedlák.
If only a handful of companies were operating when Ecoprint was founded, the increasing choice today – Sedlák says there are between 30 and 50 to choose from – is an indication of the growing popularity of the business. Never-theless, Sedlák warns against going for deep discounts when choosing an ink cartridge recycler. “Some of these firms that sell refilled cartridges for suspiciously low prices often use low-quality materials. They don’t test their toners, don’t develop their own products, or they “produce” them in their garages.” This quickly shows up in the quality of the print and lifespan of the cartridge. “As they say, you pay twice for something that’s too cheap, and in cases like this the customer pays dearly,” says Sedlák.
It’s interesting to note that companies manufacturing original cartridges have begun to do so in a way that makes them more difficult to recondition or refill, and then they place ads in trade magazines encouraging use of originals. This aspect, says Sedlák, lags behind the US, in terms of a greater common environmental aim. “In the US they are competitors, but they work together.”
Ecoprint has just received its ISO 9001:2001 certification, which ensures proper attention was paid to the materials, technological processes, and testing. With the sales curve leveling, and the borders cleared, the firm is getting the stage set to export. It made an investment into new equipment at the beginning of this year which allows 600 ink-jet cartridges a month to be recycled, and another investment planned for the end of this year will yield a similar number for laser cartridges.

David Friday

From bottles to fibers

Jaroslav Lavička
Photo: Jan Vágner

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.
The company operates under the IMDS system, which means that it complies with a quality standard specific to the car industry, although it is not considering applying for the Eco-Label certification. Silon began to adopt a recycling approach when “there was a demand for processing its own waste material, above all polyester,” says Lavička. “The requirement to ensure this was economically effective led to the idea of processing PET bottles,” he adds. Silon was also able to capitalize on background and know-how in this respect.
This recycling approach has been a key issue for the firm’s clients. According to Lavička, the company “guarantees many clients that the products are environmental, and without the certification, cooperation with many customers today is almost unthinkable.” Lavička adds that “although Silon is making products from secondary raw material, the quality is just the same, and the added advantage is that the products are environmentally-friendly.”
Given that the firm has identified a new way of recycling, what problems and opportunities does it see in producing in an environmentally responsible way? One advantage is that the processing of secondary raw materials or waste matter is cheaper than primary raw materials,” although he mentions that “a disadvantage is the greater variety of raw materials, and this means the process is technically more demanding.”
Silon’s efforts have been recognized: it was a runner up in the Healthy and Safe Environment competition run by the Business Leaders Forum in 1998, and in 2002 the firm’s Kompakt Project was nominated for a European Environment Award.

David Creighton

Ecolabel – a badge of honor

Petr Saifríd
Photo: Vojtěch Vlk

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.
In fact, the label “Environmentally-friendly product” is the only official – guaranteed by the state – labeling for environmental products,” says Petr Saifríd of the Czech Environmental Institute, an executive agency of the Ministry of Environment. Set up in 1994 by the Ministry of Environment, the scheme is a voluntary program that runs parallel with the environmental labeling scheme run by the European Union. The Czech Eco-labeling scheme is administered by the Agency for Environmentally Friendly Products of the Czech Ecological Institute.
” Basically it is a certification system in which the Ministry of Environment grants the company the right to use the Eco-label on the basis that the product clearly complies with set down criteria,” says Saifríd. “There are 32 product criteria, ranging from mirrors to water-soluble glues and putties.” The award applies for three years, when it can be renewed, with many firms continuing with the scheme.
Since it was set up the program has grown, and Saifríd considers the Eco-labeling program to be an overall success, although some categories are more successful than others. “At the beginning there were four or six product categories and more were added. In 1994 the first four or five products were awarded the standard”, Saifríd points out. “Now there are 300 products, with 70 firms taking part in the program.” Even companies which might not immediately be identified with ecological awareness have recognised that being environmental does have benefits. “Paint producers are the common holders of the certification,” says Saifríd. On the other hand, “there are no recycling firms participating in the scheme at the moment,” he adds.
The use of labels masquerading as an indicator of environmental-friendliness shows that companies at least realize the importance of the claim, even though they have not gone through the same controls that apply for certification under the Eco-labeling scheme. However, according to Petr Saifríd, “the applicant only pays a one-off fee of CZK 20,000. Costs for evaluating the product in accreditation do not exceed CZK 30-50,000. In comparison with the price of one-off advertisement in the press, these are in no way high”. And by meeting the requirements of the program, the manufacturer of the product can be seen as truly embracing proper standards.
There is still a lack of information, or sometimes a surplus of information that is misleading. The labeling scheme for environmental products is confusing, with only one official and many copycat label programs. “We need laws that would force producers to improve methods of informing consumers on product origin, and the government should actively promote ecological labeling to increase the awareness,” argues Vojtěch Kotecký, programs manager from the environmental group Hnutí Duha.

David Creighton

State support

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.”
Another way of promoting greater environ-mental awareness is the EMS (Environmental Management Systems) certification, under the ISO 14001 Series. EMS is a continuous system of planning, implementation, review, and improvement of the processes that a company carries out to achieve its business goals. The scheme is voluntary, and so far around 800 firms are participating. These are mainly manufacturers, but the service sector is also represented. By adopting ISO 14001 a company can improve its position on the market, as its products will then be in greater demand from consumers who require some evidence of environmentally friendly standards.

David Creighton






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