GREEN BUSINESS:VOCAL DISAGREEMENTS about the science of climate change may still rage, but one thing is beyond argument - the environmental impact of companies, their products and services matters more than ever.

The moral argument for thinking green has been joined by a new driver: placing business on a firm green footing can significantly affect your bottom line.

In recent years this has mattered most at the consumer end of the operation, but increasingly consumers and legislators are asking, and in some cases demanding, that companies demonstrate that a product or service is green from design to delivery.

The most obvious example of this is in food, where the growth in "fair trade" produce is now meeting consumer concerns about the air miles involved in buying items produced so far from the point of consumption. Supermarkets now spend large sums advertising locally grown produce.

This change is not limited to the consumer markets. Investors are increasingly aware of the risks of bad press around environmental or social "irresponsibility" and the damaging affect it can have on share prices.

This is leading to demands that companies should incorporate social responsibility, including the environment, within their business strategy.

Indeed, some have achieved a stock price premium or, at least, reduced the impact of recent stock market volatility by taking an environmental lead in their sector.

There is another reason business executives should have green supply chain operations strategies, albeit a more pragmatic one. Energy and commodity prices are at, or near, all-time highs - driven by market volatility, uncertainty about long-term supply and the onward march of the oil price.

A recent BearingPoint global survey examined the impact of the environmental agenda on the supply chain operations, and looked at what companies are doing, why they are doing it and, if not, why not.

The survey questioned 601 executives from companies ranging from major global corporations to firms

with a sub €100 million turnover in a cross section of market sectors and on a global basis.

Despite the vast majority (80 per cent) of respondents claiming to factor environmental concerns into strategic decisions, real action on the supply chain operations was dramatically lower at 42 per cent.

Only nine per cent of respondents cited investment costs as the reason for not acting, with by far the largest number, 36 per cent, claiming it was lack of information on regulations and best practice which left them with a limited view of what to do.

Even accounting for a little cynicism about these numbers, the scale of the gap between costs and information is alarming.

Those who accuse businesses of only acting on green issues at gunpoint will feel justified by some of the other findings of the survey.

When questioned about their investment in reducing the environmental impact of their supply chains, the survey found either minimal investment - almost 50 per cent say they invest less than 10 per cent of the total budget set aside for operations - or have no visibile investment (38 per cent).

Where investment was made, practitioners saw the key benefits in terms of enhancing their brand image (70 per cent of responses), improving customer relations (62 per cent), providing a competitive advantage (57 per cent), or achieving cost reduction (52 per cent in transport and logistics).

As many as 81 per cent have taken action in transport /logistics, the most  common initiative (41 per cent) being to reduce the number of journeys, as well as changing modes of transport (31 per cent).

The answer to "going green" is unlikely to be revolution, but rather evolution if you start now. That being said, introducing an effective environmental focus to supply chain operations is a major change and not one to be lightly undertaken.

As a guiding principle, companies should look at measuring their carbon footprint across all operations then look at ways of reducing it.

Companies should also aim at adopting a "Design for the Environment" approach to both product and services, particularly bearing in mind that legislation is likely to grow in this area, as is the consumer's awareness of recycling and disposal issues.

Bad product design can have a huge impact on a company's carbon footprint.

Poor material choice or manufacturing processes can result in costly sourcing and supply or high disposal and recycling costs.

Environmental regulations - the biggest motivator for companies to act, will continue to emerge and develop and companies will need to stay up-todate or face heavy penalties and equally damaging publicity.

"Going green" is a discovery journey but it lacks global standards for measuring any carbon footprint. Companies must first decide whether to lead or follow in delivering green products and services.

The decision to act is about much more than corporate responsibility. It is about what companies need to do across their supply chain operations to remain competitive in today's global market.

The question for executives is whether to do them now, on their own terms, or wait to be forced to do so later, either by legislation or, just as likely, a need to catch up with the competition.

• Laurence Dupras is director of supply chain services at BearingPoint Europe