Can green strategies actually help companies become more competitive? It’s a puzzle forward thinkers are trying to solve.

Published December 2007, FORTUNE Magazine features the Council’s Energy Security, Innovation & Sustainability Initiative.

For years, the cost of energy was something we’d fret over at the pump, not in the boardroom. Sure, the price of oil would fluctuate, and with every geopolitical flare-up we’d worry about our supply. Yet energy was still relatively cheap in the U.S., and business continued as usual.

There was little thought toward boosting energy efficiency, reducing emissions, or developing (and using) alternative sources of power. It was a long, prosperous, fossil-fuel-burning run—while it lasted.

Make no mistake: Energy use is no longer a nobrainer.

One has only to look at the chemical industry—highly reliant on natural gas—to see that phenomena play out. Of the more than 80 new, large-scale chemical plants on the boards, none is planned for the United States. Dow Chemical has stated that its annual energy costs would be cut almost in half, from $12 billion to $7 billion, if it moved its U.S. plants to Germany, and moving to the Middle East would cut those costs to just $1.5 billion.

What’s becoming clear, too, is that energy isn’t only a driver for business, it’s also a driver for competitiveness. Every company that heads offshore doesn’t just move its production lines; it moves skills. “That has a huge impact on their ability to compete,” says Deborah Wince-Smith, president of the Council on Competitiveness, an organization based in Washington, D.C., that is bringing together leaders from industry, academia, and government to better understand, and address, the competitiveness issues arising from today’s energy and environmental challenges. “Are they going to find the talent they need? That’s not a given. And there’s a huge impact, too, on our competitiveness here at home. If companies go offshore, will we be developing the talent we need to innovate now, and even more importantly, down the road?”

Meanwhile, companies that stay put can find their competitiveness impacted, too. Higher energy costs don’t just raise prices—making products less attractive— they eat resources that could have been put toward other investments, such as research and development.

In the end, it may not only be companies and consumers that will pay; it could be the leadership the U.S. has enjoyed in a host of industries. Already, we’re seeing other nations becoming important forces in markets the U.S. has traditionally dominated. China, which produced just 5% of the world’s steel in 1995, is expected to make more than 30% by 2015. ...

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RULE NO. 1. Integrate a sustainability strategy throughout your business.

RULE NO. 2. Collaborate across industries, and also with the public sector.

RULE NO. 3. Be sure to green your company’s supply chain.

RULE NO. 4. Develop technologies that support sustainability efforts.

RULE NO. 5. Make environmental stewardship easy for all your stakeholders.

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About The Council on Competitiveness:

The Council on Competitiveness is the only group of corporate CEOs, university presidents and labor leaders committed to the future prosperity of all Americans and enhanced U.S. competitiveness in the global economy through the creation of high-value economic activity in the United States.

A nonpartisan, nongovernmental organization in Washington, D.C., the Council shapes the debate on competitiveness by bringing together business, labor, academic and government leaders to evaluate economic challenges and opportunities. Conferences, seminars and special events are used to disseminate the Council’s findings and recommendations to experts, policy makers, government officials, media and the general public.

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