Monday, January 12, 2009

Business benefits of going green in India

Organizations across the globe have taken up the initiative of going green to save operational costs and also save the environment. Major developed countries across the globe took up the green initiative and formed Kyoto Protocol to keep the emission of greenhouse gases below the level of 1990’s. Developing countries like India and China are just required to measure and track the emission of greenhouse gases. Companies in developing countries can make money by reducing emission of greenhouse gases and trade carbon credits in the international commodities market.

Business benefit has driven Indian companies to go green

Indian companies and MNC’s can make millions by taking on the green bandwagon. Going green seems like the best option for companies to reduce their operating costs. Rising inflation, rising salary costs and fluctuating currency rates have had a huge impact on the bottom line of various companies. Companies take up green initiatives for their workforce, physical and IT infrastructure not only to save their operating costs but also make money by trading carbon credits. ONGC has already made million by trading in carbon credits and expects to make $625 million over the next 10 years. Gujarat Fluorochemicals and SRF’s revenue from carbon trading more than their core business activities. Companies such as Reliance Industries, BPCL, HLL, Maruti Udyog, Hero Honda, Dabur, M&M and ITC have taken the initiative of going green for their products with the help of clean technologies and earned the reputation of being some of the greenest companies in India. Major MNC’s like IBM, Dell, HP, Cisco and Sun Microsystems have already replicated their global green initiatives like green IT infrastructure, flexi-time, flexible work schedules and telecommute in India and saved millions of dollars. There is a huge potential for these MNC’s and Indian IT companies to go green for their workforce and infrastructure and save 25% to 30% of their operating cost on employees. On an average flexi time and telecommute saves about 20% to 25% of operating costs on each employee. India has also seen emergence of green infrastructure or green building in the last couple of years. India is now the 4th hottest market for green buildings in the world. In 2003 there were 6000 sq m of green building space, by the end of 2008 there will be 304,000 sq m, a 5000% increase. The projected growth potential for green building in India is estimated to be at $180 millions by the end of 2008 and is project to grow to $400 million by 2010.
These green buildings can save about 30% to 35% of energy costs and also help companies earn carbon credit points based on a certain parameters set by the Indian Green Building Council. Though the initial cost of these building would be 5% to 10% higher than a normal building but in long term it could save over 50% of the operating costs for companies.

Intangible benefits of going green
There are various intangible benefits a company can get from various green initiatives. These would also have an impact on the bottom line of the companies and indirectly save operating costs. The initiative of going green for workforce for instance can reduce attrition, reduce employee health expenditure, reduce stress, improve work life balance of employees and hence improve employee productivity which would results indirect cost savings for the company.


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