In recent years, the notion of a “green economy” has gathered steam. The conversation accelerated when the economy worsened and unemployment rose and suddenly, a green economy was seen by many as a pathway out of the current economic situation.
Studies in 2008 found that 2 million jobs in two years could be created from adopting green practices, and 4.2 million green jobs by 2038. Similarly, in a survey of more than 100 primarily fortune 500 companies, 47 percent said that they were increasing their investment in green product development this year.
The same survey found, however, that 46 percent of companies’ environmental, health and safety budgets will remain the same in 2009 as they were in 2008, despite the economy. These statistics highlight the challenge today’s companies face when trying to make changes to become more socially responsible on a tight budget.
Your business — and the millions of other small businesses in America — can make an enormous impact on the environment through sustainable initiatives. But how do you accomplish your desire to “do good” without sacrificing the bottom line? And what tools are available to help you in your journey?
Fortunately, there are ways of gaining access to investment capital. One out of every nine dollars under professional management in the U.S. is involved in socially responsible investing, adding up to more than $2 trillion. That number represents a huge pool of money being invested in companies that are working to become more sustainable, as reported by Merchant Circle — an online community dedicated to connecting local businesses and their customers. This goes to show that capital investors are looking for companies showing green platforms in which to invest.
On the flip side, many companies have found cost savings by looking into conservation strategies and finding there was much fat to be cut. For example, through energy conservation and the use of renewable energy, IBM claims it has saved more than $100 million since 1998, while simultaneously avoiding more than 1.28 million tons of CO2 emissions. And Wal-mart estimates it will save $7 million annually on electricity by replacing incandescent light bulbs in its stores’ ceiling fan displays with super efficient compact fluorescent light bulbs.
Companies that have adopted alternative fuel and energy solutions are able to lower their exposure to oil price volatility while increasing energy efficiency, according to ChiefExecutive.net’s “It’s Not Easy Being Green.”
Learning by the examples set by companies both big and small, while also following simple steps aimed at reducing your company’s environmental impact, can set you on a path to saving money and saving the planet.
There are several ways that being green positively affects your bottom line.
Creating Interest and Loyalty
Employing greener practices in your place of business creates interest and loyalty from a variety of sources, like your consumers, investors, and your own employees. The National Restaurant Association (NRA) also supports this theory: “(There is) growing interest by consumers in wanting to frequent restaurants or feeling more positive about frequenting restaurants that are instituting green practices,” said Sue Hensley, senior vice president of communications for the NRA. “I don’t see consumers’ interest waning in that area.”
Showcasing Your Sustainable Efforts
You may be surprised to find your customers and associates have been waiting on you to capitalize on their enthusiasm, creativity and loyalty. According to Merchant Circle, this is one marketing opportunity that small businesses can easily take advantage of. Adding/improving upon more socially responsible service offerings also increases public image and stakeholder engagement. A company with a positive reputation often has the competitive edge.
Offsetting Climbing Energy Costs
A restaurant’s profit is typically only 3-9 percent of its total revenue. The money saved on operating costs adds directly to the bottom line, so saving 20 percent on energy operating costs through no-cost, low-cost and investment energy improvements can increase your profit as much as one-third. Check out a full list of best management practices for your business sector here.
Tips to Get You Started
The key for a business owner is to still provide goods and services at a profit, while sustaining the environment. Here is a list of some of the key elements to start thinking about when first taking on sustainable practices for your small business:
• Set goals — Identify your purpose, whether your goal is to cut costs or to be environmentally responsible, or both.
• Watch the bottom line —Implementing sustainable practices that provide no return on investment are not practical or wise.
• Start small — Look at reducing energy, even if it’s as simple as unplugging charges while not in use. Switch to CFL or LED lighting—you don’t need to wait to phase these in; your overall energy reduction justifies the immediate switch—and then progress to purchasing energy-saving appliances. Realign procedures to maximize energy efficiency.
• Look upstream — Find sustainable suppliers and sourcing. Know the environmental impact all your sources have on your business.
• Look downstream —Examine your waste stream. Look for ways to reduce, reuse and recycle.
• Build green — Implement green building practices. There is even an option to seek a Leadership in Energy and Environmental Design (LEED) certification.
• Invest in people — Investing in the community and your own employees is an essential component to sustainability.
• Learn more – Join and support sustainable organizations and attend their education events.
• Get certified—Invest in a Life Cycle Assessment or seek an audit from a third-party certifier, if applicable.
• Tell others—Share your story with customers so they know not only where your products originate, but also why they should buy your product over others, especially if it costs more. For more, read “True Restaurant Sustainability: More Success, Better Future,” published by NetWorld Alliance.
• Avoid “Green Washing” —Part of being profitable while being green for small businesses is gaining a loyal customer base and creating interest. It is easy for consumers today to be skeptical of all of the “green” talk that is going on. Click here for a few steps from Entrepreneur’s StartUps, June 2009 edition, that you can take to help ensure consumers know your company is sincere.
Catherine Corley is Vice President of Strategy for Sam’s Club, which published the white paper, “How to Be Green and Stay Lean: How Being Sustainable Can Save Your Business Money.”