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Staff reporter
For years, Korea has trailed leading countries like Norway, Finland and Japan when it comes to green technology and innovation. But this is expected to change with the Korean government’s green growth strategy that gives Korean companies an impetus to go green.
Korean companies need to pursue green management by coming up with innovative eco-friendly technologies, according to a report by Samsung Economic Research Institute (SERI).
In the report ``Green management through technology innovation,’’ SERI researcher Oh Dong-hyun emphasized the importance of green business management for Korean companies.
Korea may be ranked as one of the OECD countries with the highest levels of productivity, but it lags behind other OECD countries when it comes to green productivity, which takes into account carbon and sulfur oxide emissions and other greenhouse gases’ effects on the economy.
``Green productivity is composed of catching up with breakthrough green technology and the innovativeness of green technology. When looking at the latter, it has been found that the green technological gap between Korea and leading green countries has not narrowed,’’ SERI’s Oh said.
Norway ranks first in terms of green productivity, followed by Sweden and Finland. Japan ranks fifth and Germany ranks seventh, while Korea is ranked 22. Compared with Japan, SERI noted that Korea is at least 10 years behind in terms of green technological levels.
Green technology in these countries has been developing at a rapid pace since the mid-1990s, but Korea has been slow to hop on the green technology bandwagon.
However, this will soon change, as Korean companies are facing increasing pressure to comply with green standards, become energy efficient and more environmentally friendly.
Companies might think that green management is a lot of work, but it can serve to enhance its image and its business competitiveness and result in better profits.
``This will ultimately enhance the competitiveness of businesses based on consumer trust because corporate investment in the environment aims for sustainable growth of a company and the development of society with a focus on long-term benefits rather than short-term profits,’’ SERI’s Oh said.
Consumers are not supportive of companies that are seen as un-eco-friendly. Recently, British oil giant BP has recently been feeling the ire of American consumers over the giant oil spill in the Gulf of Mexico, with some customers in the U.S. boycotting BP products. Exxon Mobile’s refusal to implement the Kyoto Protocol in the early 2000s resulted in a boycott by European consumers.
Green management
At the core of green management is innovation in the 3Rs: reduce, replace and recycle. SERI said this can help companies create a green image, maximize profits, increase sales revenues and lower costs.
Reducing the amount of materials and packaging, as well as the weight and size of products, through creative designs is seen as very important. One example is Samsung Electronics’ ultra-light LED TVs, which reduced the weight of TVs, cut shipment costs and used less electricity.
Businesses can also cut the amount of packaging waste through innovative materials and designs. Swedish company Tetra Pak created the tetrahedron-shaped packaging for beverages in the 1950s, and continues to be used today.
Replacing conventional materials with more eco-friendly and green materials would also attract customers who are becoming more eco-conscious, contribute to a safer work environment and raise corporate productivity. SERI cited a 2008 survey showing that 47 percent of U.S. customers would buy green products even if they were more expensive.
Conventional energy facilities can also be swapped for more effective alternatives, while old buildings and houses can be remodeled to enable efficiency and reduced energy use. The Korean government is already eyeing a 30 percent reduction in energy use in houses by 2012, compared to 2009; 60 percent by 2017 and zero by 2025.
Companies are also incorporating materials that can be easily recycled and implementing recycling systems. Apple uses 25-28 percent aluminum materials in the high-end MacBook Pro. Fuji Xerox instituted an across-the-board recycling system, including reusing parts of old copiers and printers.
Another way to increase recycling of resources is to establish a system of selling refurbished products. Some computer companies, Dell, HP and Apple, have online shops selling refurbished computers, notebooks and other electronic goods.
SERI’s Oh said Korean companies should realize that technology is the key to success of a green management system.
``Efforts to advance them will enhance competitiveness, which will form a virtuous cycle of profit creation, innovation of green technology, and improvement of corporate competitiveness. Above all, CEOs should continue to support the innovation since green technology requires long-term investment. They should patiently pursue it so that early investment is not wasted,’’ he said.
Korea should also estimate its Green Productivity Index from an economic perspective, which would allow the identification of companies’ green technological advances and set new direction for innovations.
``The index is expected to give fresh information on innovation to those who are interested, because recently employed methods to assess results of green management, including green accounting, do not contain information on the technology. This will also improve investment efficiencies,’’ Oh said.
The government is already leading the way with its green growth strategy, encouraging companies to create new technology.
It seems companies are responding well to the green challenge posed by the government. A recent report showed Korean companies are planning to invest 22.4 trillion won ($18 billion) in eco-friendly and green technologies over the next three years. This is nearly a 50 percent increase from the 15.1 trillion won investments spent by the same companies in the last three years. The investments would be made on clean energy, hybrid cars and next-generation electric devices.
However, the government should provide more incentives, especially for small and medium enterprises (SMEs). The SERI report noted that green SMEs received 35.3 percent of government funding for research and development between 2006 and 2008.
``The (Government) must bolster its support for R&D of SMEs, which have low awareness of green management and lack green technologies... Moreover, development of R&D projects in partnership of the industry, academia and institutes is necessary to accelerate the innovation,’’ SERI said.
