Business sustainability in the age of cleantech

I recently attended The Cleantech Forum XIV, the premier cleantech investment platform for the cleantech investment sector. What struck me most was a reoccurring theme that I’ll refer to as “business sustainability.” Certainly environmental sustainability is pretty well tied to the cleantech movement, but this isn’t what I mean.

Chuck Swoboda, chairman and CEO of Cree, explained this notion best. Cree is an LED lighting company with a 2.19B market cap who has been in the “environmental space” for over a decade now. However, Chuck explained that you will never find CO2 emissions reductions or environmental impact concerns in their business strategy. The reason is that, while important, those aren’t viable business strategies. After a decade of operations, they’ve found that they can’t monetize CO2 reductions and societal benefits. Cree’s emphasis will always be on cost/benefit to the customer and not on marketing environmental change.

Cree, Inc. is a market-leading innovator and manufacturer of semiconductors that enhance the value of LED solid-state lighting, power and communications products by significantly increasing their energy performance.

For a business to be sustainable, it must deliver value to its customers in an upfront and obvious fashion. Without this, mass market adoption is highly unlikely. That isn’t to say that social responsibility isn’t important, and certainly markets are opening up for it (carbon trading, etc). But as stated in the final panel of the forum, “in a business environment of heavy regulation, subsidization and government procurement, complexities go up exponentially with each variable that is out of your control.”

If your core business has an immediate and obvious benefit to your customers, your value proposition is clear and attractive to investors. While polar bears and other heart-string tugging reasons might be reason enough to change the behaviors of some, that won’t be enough to sustain a business. The less you rely on social and lifestyle changes of a fickle general public, trends, technology and socially conscious early adopters, the more sustainable your business will be.