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The 5% Greener Concept

May 10, 2010 | By: GBB | No Comments on The 5% Greener Concept

Basic mathematics explains compound interest as interest on interest. The interest you earn on investing your principal amount is re-invested and added to the principal earning you more interest. We have all heard of ‘start early, save more’. For example, at an interest rate of 5%, $1000 invested per year for 40 years will yield $126,840 on a total investment of $40,000. In contrast, you would have to invest $100,000 in year 35 to get a yield of $127,628 in year 40 at the same rate of interest.

There is another rule demonstrating the power of compounding. The visionary Intel co-founder, Gordon Moore, predicted in 1965 that the number of transistors on a chip would double every 24 months. This has come to be known as Moore’s Law and the computer industry has actually achieved it for nearly 40 years now. Computers have progressively become more powerful and cheaper over time.

Money and computing power are good things to increase. How about global warming?

Global warming refers to the increase in the average temperature of the Earth’s surface. The greenhouse gases form a layer in the atmosphere around earth and help retain the sun’s warmth inside the atmosphere. This is good for us as it contributes to our life on earth. However, too much of it results in global warming. The worst part of this is that it is ‘human-induced’ warming. We are producing more greenhouse gases each day and the faster we produce the more we contribute to global warming.

Global warming is the negative aspect of compounding. To counter it, we need to compound our positive investment in green energy practices.

The concept is simple – it is better for 95% of businesses to be 5% greener each than for 5% of business to be 95% greener. Firstly, it is simpler for each of us to be 5% greener than for any one person or business to be 95% greener. It is practically impossible to be 100% eco-friendly or even be very close to it.

Secondly, the cumulative effect of a lot of people and businesses becoming greener will contribute greatly to reducing the damage to our environment. There are many simple actions that businesses can do to be greener. We can reduce consumption of natural resources – water, paper, electricity, gas, etc. Do we really need that much? We can increase usage of existing consumption – reuse and recycle plastic, glass, metals, energy. Our abundant resources have led to wasteful habits. We can protect existing natural resources – conservation of forests and water resources, reduce pollution. Man has not thought of conservation until we were faced with the consequences of not conserving our natural resources.

The power of America lies in the entrepreneurial spirit of small businesses and the biggest impact on the environment can come only from the majority of businesses adopting green practices. That is why education of the masses is the key to sustainable ecological development. This has already started with schools preaching greener habits to students who imbibe it and carry it with them when they become adults. If each one of us could develop even one eco-friendly habit per year, the world would be much more habitable and sustainable in just 10 years. Therein lies the power of compounding.


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