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Primer on Sustainability in Small Businesses

March 13, 2015 Add Comment Edit

There are a number of things that small businesses can do to be more environmentally sustainable. This both lowers costs and enhances the reputation of your enterprise. A growing number of companies are reducing the environmental impact of their businesses, so engaging sustainability is also about remaining competitive. Increasing consumer interest in sustainability makes it ever more important for small businesses to be able to meet burgeoning demand now and in the future.

Initiatives can include very simple things like turning down the thermostat, turning off lights, paperless billing, double double-sided printing and recycling. They can also include more substantial efforts like retrofitting lighting systems with LEDs, installing solar panels and product redesigns that reduce energy and resource requirements.

Here are a list of sixteen relatively easy and affordable things that small businesses can do to be more environmentally sustainable:

Assessment and benchmarking

Whether you are a 2-person company or have a staff of 50, the first step is to identify areas that most need improvement. To do this perform a self-assessment, with a focus on energy, efficiency, resources and waste. When conducting your assessment look at every detail including printing, shipping and even office lunches. As part of your sustainability assessment establish benchmarks. Having a base from which to measure success will help you to measure the impact of your initiatives. To create this benchmark, go through your daily activities from start to finish. Go through your day and write down everything that you do. Generate a list and identify areas that generate maximum impact.

Planning

Integrate your assessment into a cogent sustainability plan that focuses on areas of improvement. Use your plan to integrate the changes you can make in your company to maintain and increase your environmental sustainability. This plan should outline your company’s environmental philosophies as well as your mission statement.

Energy usage

Increase awareness of energy usage. Help make employees aware of energy usage and make them more conscientious about saving energy. Develop programs that raise employees’ consciousness of behaviors that contribute to high energy usage and that reward them for lowering costs by turning off lights and equipment when they are not in use, particularly overnight and on weekends. Additionally, keep thermostats on low settings in the winter and turn down the air conditioning in the summer. Keep doors and windows closed to prevent heat or air conditioning loss when heating or cooling.

Research local energy efficiency programs

Some states and municipalities have have energy-efficiency programs that offer discounts and assistance to businesses trying to make the switch to energy-efficient appliances or other energy saving improvements. These could include programmable thermostats, furnace replacements, boiler optimization controls and others. In addition, such programs caninclude a free energy assessment to offer you advice about which specific steps will be most effective for your business.

Lighting

Take advantage of natural light as much as possible. Replace incandescent lights with LEDs. These lights last far longer than traditional light-bulbs and also use significantly less energy. Although there is additional upfront costs, the investment pays for itself within a few years.

Maintenance

Routine maintenance can save energy. For example, clean all filters in the heating or air conditioning systems regularly, as well as in any exhaust fans. Check periodically on any automatic settings in lighting systems or the thermostat to ensure that they are at the most energy-efficient levels. Remove any unneeded light bulbs or replace them with more energy-efficient models where possible.

Water Consumption

Install low-flow plumbing fixtures. One very simple and inexpensive change is to change the aerators on your faucets. By putting in new low-flow aerators that reducing the flow of water from the faucets in your bathroom sinks and any other areas in the office that use water, you can reduce your bill every month and also stop waste. Buying new aerators is relatively inexpensive – just make sure to get the right fit from your local hardware store. Look for the EPA’s WaterSense Label when selecting a faucet, urinal or toilet. These labels show that the fixtures are “water-efficient,” meaning that they use a significantly lower flow of water than comparable models. This could save businesses the cost of thousands of gallons of water a year.

Fix Leaks

Another way of potentially saving money is to look for leaks in your faucets, pipes, or hot water heaters. Water leaks can cost you money every month and also mean wasting water that isn’t really needed. Many leaks can be fixed yourself with some rudimentary supplies.

Go paperless

Reduce the amount of paper you use in your office to the bear minimum. If an item can be saved on the hard drive of your computer, it doesn’t need to be printed. Process bills electronically and so online banking.

Employee buy-in

Encourage employee engagement by disseminating information, soliciting feedback and running contests for adherence. One of the best ways to get your staff to go green is by having the leadership model by example. When hiring, engage committed staff by looking for employees that are committed to a green philosophy. When working with your staff hold monthly meeting with staff to discuss their goals and get feedback.

Leadership

Once you have identified the environmental cause that your business will support, be a leader in that movement. Create initiatives that will build awareness as well as potential solutions. Donate your time and support your employees in doing the same. If you are able to, share your profits with environmentally-related causes. Actively lead by example.

Highlight achievements

Make sure you actively communicate your green efforts and accomplishments both internally and externally. There are a number of private companies that will assess and accredit truly sustainable companies.

Avoid greenwash

The environmentally friendly attributes of your efforts must be authentic. Whatever you do avoid being dishonest. When a customer's trust is betrayed it is hard to recapture. Lead by example and practice what you preach.

Support and collaborate

There are large numbers businesses that share your philosphy. Seek them out, partner with them, ask their advice and support their endeavors. No need to reinvent the wheel. You can achieve much more when working with a company whose experiences you can use. .

Inspire

Inspire existing and potential clients to be more environmentally sustainable. This is also a good way to introduce the benefits of working with your company. Stay positive and keep improving your business model.

Ongoing learning

Being sustainable is an ongoing process of improvement. Make sure you are up to date on your options by continually increasing your awareness of sustainability trends. Keep on top of the latest developments and best practices in corporate sustainability. When you find out something new, share your research with your customers. Doing so will not only build a trusting relationship between you both, but will provide you with the ongoing incentive to be on top of the latest developments.

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Why Small Businesses are Engaging Sustainability

March 10, 2015 Add Comment Edit

The size of the market opportunities is driving small businesses to engage environmental sustainability, as are concerns about survival and long term success. In addition to improving profits, reducing costs and mitigating against risk, engaging sustainability affords opportunities for collaboration and innovation.

While big corporate sustainability initiatives steal headlines, the small business community is also going green. For example, operational efficiency practices are increasingly commonplace even in small companies.

The rationale for engaging sustainability is largely about meeting and anticipating consumer demand. This translates to more customers, increased sales, higher revenues and even price premiums. Sustainability contributes to the crafting of a unique selling proposition, it helps to differentiate a company from the competition, and it offers a competitive advantage. Sustainability provides a host of reputational benefits. The latter contributes to word of mouth marketing, greater trust, improved loyalty, and enhanced employee recruitment and retention.

Small businesses also need to conform to the sustainability policies of companies in their supply chains and doing so increases the prospects for successful tenders.

Economic and environmental importance

The small business sector is the driving force behind most economies and their engagement of environmental sustainability is vital to their own viability and the prospects of addressing environmental degradation and global emissions reduction. Small businesses have a major impact on our economy and the environment. So their adoption of sustainability is crucial both economically and environmentally.

According to the US Small Business Administration, small and medium-sized (SMBs) businesses collectively account for 49 percent of US employment. There are almost 28 million small businesses in the US, and businesses with 5 or fewer employees represent 88 percent of businesses in the US. In the UK, more than 99 percent of the 4.9 million registered businesses SMEs.

Growth

As reported in Entrepreneur, a 2012 Office Depot poll indicates that 61 percent of small businesses were in the process of "going greener" and 70 percent of US small businesses plan to go green within the next two years. A similar picture emerges in the UK. According to Lloyds’ 2013 survey of SMEs in the UK, a quarter of businesses viewed sustainability as their top priority in 2014, while 52 percent recognized the cost benefits of implementing sustainable business practices.

There is evidence that small businesses are adopting increasingly sustainable practices. According to a report titled, "The Big Green Opportunity for Small Business in the U.S.," green market segments in the US are growing fast. In fact, growth rates of green segments are outpacing conventional segments in every industry where data was collected.

"The growth in green segment market share across the economy is unprecedented and systematic it’s clear that we’re hitting the tipping points where sustainable products and services have moved from fringe alternatives to industry norms," the report said.

Although there is growing interest in sustainability, small businesses are still not engaging at the same rate as large corporations. When it comes to sustainability, there are many reasons why small businesses are not as proactive as their corporate cousins. However, this belies the fact that they are ideally suited to sustainability.

Consumer demand

The growth in sustainability among small businesses is being driven by consumer demand. An Accenture study titled, Long-Term Growth, Short-Term Differentiation and Profits from Sustainable Products and Services, indicates that consumer demand is the salient driving force behind the transition to sustainability. Consumers want greener products and services and this is a growing trend that shows no sign of slipping.

A 2013 survey stated that 30 percent of consumers expect to increase the amount of goods and services they buy from socially responsible companies.

According to Cone Communications research conducted in 2013, 71 percent of Americans consider the environment when they shop. This is up from 66 percent in 2008.

The Big Green Opportunity report indicated that small businesses are seeing growing demand for green products and services and greater competition for green-oriented customers.

Higher revenues and competitive advantage

Sustainability generates a return on investment and offers a competitive advantage. There is now a growing body of evidence that proves the bottom line benefits and competitive advantages of being environmentally sustainable. “Going green attracts customers which results in a higher revenue,” says Colin Moore. Moore has implemented an energy efficiency policy for New York Client Solutions and he actively encourages small businesses to engage environmental sustainability.

According to The Big Green Opportunity report, small businesses are engaging sustainability for more than just ethical reasons. The national survey of more than 1,300 business owners suggests there is a compelling business case for going green. The survey indicated that green offerings tend to be profitable, often more profitable, than less environmentally beneficial offerings.

The survey showed that small businesses on the front lines of these green opportunities are capturing significant market share and benefiting from operational advantages. The survey results showed that 79 percent of survey respondents strongly agreed that offering green products and services gave their business a competitive advantage. The report indicated that 70 percent of those surveyed said that others in their industries have succeeded by offering green products or services. Of these,77 percent were successful in growing sales of their own green products and services through the economic slowdown (2008-2010).

A total of 62 percent of the small businesses surveyed offer green products or services because it’s a competitive requirement in their industry. Of these, 80 percent experienced increased sales. The report also revealed that a number of industries now have green minimums that are essential to remaining competitive.

Green products and services allowed 58 percent to expand their offerings and of these, 84 percent saw increased sales. A total of 76 percent of those surveyed strongly agreed that their green products and services are profitable and 89 percent reported that their green products and services are at least as profitable as their non-green offerings. Almost one third (31 percent) reported that their green products and services are more profitable than their non-green offerings.

Price premiums

Customers are willing to pay more for green offerings. The Big Green Opportunity report indicates that premium pricing can be attached to a green product or service. In both survey data and interviews, green business owners reported that, where a high trust relationship develops between a conscious consumer and an authentically green business, those consumers are willing to pay a premium for truly green offerings.

While there may be additional costs associated with green products and services, there is also room for premium pricing. These price premiums equal or exceed any additional costs. The margin for green products or services is the same or better than non-green offerings.

According to an Accenture study, businesses can charge a 19 percent price premium for green products and services. A 2013 report on green consumption indicates that almost half (47 percent) of young consumers are willing to pay more for eco-friendly products.

One of the upsides of premium prices to producers is the social capital generated. In addition to “word-of-mouth” marketing, socially driven businesses can secure capital from values-driven investors and creditors.

The greener the better

"The Big Green Opportunity" report indicates that the greener you are, the more profitable you can be. Leaders of deep green businesses reported greater growth potential, higher revenue growth, and higher sales prices than their less-green peers. Deep green businesses were significantly more likely then their less-green peers to report that their customers are willing to pay more for green products and services.

Deep green businesses were significantly more likely to report a competitive advantage from their green offerings than their lighter green peers. Overall, the results show that the greener the company, the better they tended to perform and the more likely they were to reach new customers.

Leaders of deeper green businesses were able to leverage trust to expand through cross-selling. Their core customers supported faster uptake of new offerings, leading to quicker ROI and profitability.

Deep green businesses in the study were far more likely than their lighter green counterparts to agree that their existing customers continue to support them because of their green attributes.

Deep green businesses were far more likely to report strong revenue growth from their green products and services than their light green counterparts through the recession . Many of the deeper green businesses reported that they were able to build revenues through the recession due to growing consumer demand. Deep green businesses benefited from relatively low customer attrition through the downturn. They were also able to leverage their insight into methods and channels for reaching new green customers to offset turnover and the negative effects of the recession.

Timing action

Although there is clearly value in going green, timing is important and there is a risk of getting too far ahead of demand when selling to mainstream markets. But as explained by Lauren Kelley Koopman, director for PwC’s Sustainable Business Solutions, "Sustainability is next-generation business thinking because it creates value, attracts customers, retains employees and improves capital and funding."

No matter the size of your enterprise, now is the time for environmental sustainability. All of these factors are likely to accelerate the adoption of sustainability by the small business community.

Source: Global Warming is Real

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Why Small Businesses are Well Suited to Sustainability
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What Businesses Can Do to be More Environmentally Sustainable
Business Case for Sustainability: Corporations, Banks and Investors
Best Practices and Case Studies

Why Small Businesses are Well Suited to Sustainability

March 05, 2015 Add Comment Edit

Small businesses and sustainability are a perfect match. Yet their are a number of reasons why they are not adopting sustainability at the same rate as their corporate counterparts. Just like their larger corporate cousins, small businesses should adopt sustainability policies. There are good reasons why it is easier to engage sustainability in a small business as compared to a large corporation.

While they may not have the deep pockets of big corporations, a small business is more nimble and able to change directions more quickly than large enterprises.

In 2011 three international accounting bodies released a comprehensive research report, titled "SMEs Set Their Sights on Sustainability" which includes case studies from the UK, the US, and Canada. This report highlighted the growing emphasis on sustainability from small and medium sized enterprises. It indicated that small and medium sized businesses partner well with sustainability because they are:

• More in-touch with employees: engaging and actively managing employees on an individual level.
• More in-touch with investors: closely working business relationships to meet the expectations of its stakeholders and investors.
• More in-touch with customers: working directly with consumers and business customers to deliver products that meet specific requirements and delivery expectations.
• More in-touch with suppliers: directly communicating with smaller set of business partnerships often directly integrated into the business operations. ,

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Primer on Sustainability in Small Businesses
Why Small Businesses are Engaging Sustainability
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Why Small Businesses are Not Engaging Sustainability

March 05, 2015 Add Comment Edit

Many small businesses fail to realize the value of sustainability and as a consequence they are not adopting sustainability as quickly as large corporations. Despite the convincing business case for sustainability, small businesses have yet to engage in large numbers. Small business owners commonly perceive sustainability to be overly complex and too costly. The result is that small businesses are often absent from discussions about sustainability.

The inaction of the small business community does not appear to be due to disinterest in environmental responsibility. According to a Lloyds’ survey, 61 percent of small and medium business leaders practice sustainability at home, while only 43 percent incorporate eco-friendly practices at the office.

Small businesses are understandably concerned about cost issues. While monetary concerns are a barrier of entry, the real obstacle to their engagement is inadequate awareness about the real value of sustainability. According to a report titled, "The Big Green Opportunity for Small Business in the U.S.," many small business owners lack the market insight to take advantage of green opportunities.

The truth is that small businesses are very well suited to sustainability.

Related
Primer on Sustainability in Small Businesses
Why Small Businesses are Engaging Sustainability
Why Small Businesses are Well Suited to Sustainability
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Business Case for Sustainability: Corporations, Banks and Investors
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What is ESG and Why is it Important

November 08, 2012 Add Comment Edit

According to the Financial Times lexicon, "ESG" (environmental, social and governance) is a generic term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies.

ESG factors include sustainable, ethical and corporate governance issues such as managing a company's carbon footprint and safeguarding systems in place to ensure full accountability.

The investment world has incorporated ESG talk in order to describe the performance of investment and fund portfolios on environmental, social and governance criteria. Fund managers and financial analysts who can interpret and relate ESG factors to a company's future prospects may potentially develop a competitive advantage should others fail to recognize the same risks or opportunities related to those factors.

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Sustainability Offers a Competitive Advantage & Better ROI

September 18, 2012 Add Comment Edit

According to the 2012 Carbon Disclosure Project (CDP) report, sustainability makes companies more competitive and offers investors better returns. This is driving an increasing number of publicly traded companies to embrace sustainability as part of their long-term strategy to combat climate change. The CDP gathers information for investors about the environmental policies of large companies and the environmental risks they face. The CDP has created an index to recognize the world's best companies called the Carbon Performance Leadership Index (CPLI). The companies that make it onto these lists tend to generate superior returns for investors.

"Our focus is less on payback periods and more on targeting environmental investments to be 'value positive," Deirdre Mahlan, Diageo's CFO, said. "It is insufficient, and even irresponsible, to consider only short term payback when making investment decisions."

"An investment in a basket of stocks of CPLI companies following the publication of CDP's global report each year since 2006 and rebalanced on any annual basis to reflect that year's CDLI would have generated total returns of 67.4 percent, more than double the 31.1 percent return of the Global 500," write the CDP report authors. "Moreover, past CPLI companies generated average total returns of 15.9 percent since 2010, more than double the 6.4 percent return of the Global 500."

The Carbon Disclosure Project’s report concludes: “Those companies that have an awareness of long-term climate-change risks and opportunities reflected in their business strategy will gain strategic advantage over their competitors.”

For more information click here.

© 2012, Richard Matthews. All rights reserved.

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Keeping Up with Market Demand for Sustainable Products and Services

June 14, 2012 Add Comment Edit

As reviewed in a 2012 Accenture study, executives report having difficulty keeping up with demand for sustainable products and services. There are three powerful initiatives that companies can embrace to help meet this demand. They involve design innovation, investing in understanding and reviewing supply chain capabilities. These recommendations from Accenture Sustainability Services are intended to ensure that companies are better able to keep up with market demand for sustainable products and services. Here is a more detailed summary of the three recommendations:

1. Remodel innovation and design processes by embedding sustainability early, helping to drive greater resource efficiency in existing operations and create new sustainable products and services. Integrate consumers and other stakeholders throughout the innovation process, using enhanced social media capabilities.

      2.  Invest in capabilities, including analytics, to improve
            understanding of fast changing consumer expectations for sustainable
            products and services, and to identify new business models and
            profitable market opportunities with innovative demand-side partners.

       3.  Review operations and supply chain capabilities through sector-
            wide value chain collaborations that deliver adapted operating
            models, economies of scale and more responsive production and
            servicing.

Even with Premium Pricing Demand for Sustainable Products Outpaces Supply

June 14, 2012 Add Comment Edit

A new survey of executives from Accenture reveals that despite concerns that consumers are reluctant to pay more for sustainable products and services, more than half are charging a price premium for these products. Although less than half (47 percent) of executives polled expressed concerns that consumers will not pay more for sustainable products and services, 60 percent admitted to charging premiums. Almost three quarters (68 percent) claimed they can charge between 5 and 20 percent premiums. 17 percent claim they can charge premiums of between twenty and fifty percent. Yet, despite charging higher prices, over one third (37 percent) of surveyed businesses say they cannot keep up with customer demand for sustainable products and services.

When asked what actions they have taken to respond to rising customer demand, 44 percent of respondents claim to have promoted existing sustainability credentials. 43 percent have launched new products and services and 41 percent have checked their supply chain credentials.

"Companies are trying to meet consumer demand for sustainable products and services, but many cannot keep up," said Berthon. "Businesses will have to look beyond adapted or customized products, short runs and premium pricing. Now is the time to get closer to consumers, embed sustainability early in the innovation and design process and put in place the operational capabilities to meet market demand at scale and profitably."

There is ample demand for businesses to charge a premium for sustainable products and services. Additionally companies that embrace sustainability may be protecting themselves from price disadvantages that could cut into their margins.

In his recently released book of case studies titled "The New Sustainability Advantage," Bob Willard says, "We conservatively assume that companies not practicing good CSR could find themselves with a price-disadvantage that jeopardizes 10% of their revenue" (P. 144).

© 2012, Richard Matthews. All rights reserved.

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Study Finds Sustainability is Vital to Growth

June 14, 2012 Add Comment Edit

According to new research by Accenture, the vast majority of businesses say that sustainability is vital to their future growth. More than three quarters (78%) of the 250 senior executives polled indicated that sustainability is vital to their future growth and almost half (44%) indicated that sustainability is critical. Nearly two thirds (62%) said that their sustainability initiatives were motivated by customer expectations and almost the same number (62%) said they were motivated by the opportunity to drive growth. Less than half (41%) said they were motivated by regulatory compliance and less than one third (29%) indicated they were motivated by the need to reduce energy and material costs.

Despite a clear trend towards sustainability, almost half say that the margins are currently lower on sustainable products and services. Almost twice as many business people said their sustainability investments were motivated by growth rather than efficiencies (41 percent versus 22 percent).

While the vast majority (83 percent) of responding senior decision makers see spending on sustainability as an investment rather than a cost, a majority (56 percent) say it is currently more expensive to be a sustainable business. Just under half of respondents (49 percent) said that margins are currently lower on sustainable products and services.

"The good news is that companies now systematically see sustainability as being vital to their future growth and core to their business," said Bruno Berthon, Managing Director, Sustainability Services at Accenture. "Sustainability has broken free from the realm of regulatory pressure and reputation management, and is now rising into a virtuous circle of commercial opportunity and investment growth. Businesses must now industrialize and scale production in order to drive higher levels of productivity, operational discipline and cost optimization into what can often be immature operating models in high growth sustainable markets."

© 2012, Richard Matthews. All rights reserved.

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Puma Wins the Guardians' Sustainable Business Award

June 13, 2012 1 Comment Edit

The Guardian announced that German athletic brand Puma was the winner of its Sustainable Business Award. This award is given for corporate initiatives that tackle pressing environmental and social challenges. Puma was recognized for its ground-breaking Environmental Profit and Loss Account. The accounting method puts a direct monetary value on ecosystem services used by the business – such as fresh water, clean air, healthy biodiversity and productive land – and on the negative impacts a company has on the environment.

The Guardian says its judges look for projects that are replicable and inspire other businesses to act. Puma’s parent company PPR announced that it is extending the environmental accounting practice to its entire line of luxury and lifestyle brands. Puma also won in the Biodiversity category. Ian Cheshire, CEO of European home improvement retailer Kingfisher, received the readers vote for Sustainable Business Leader of the Year award, and Ray Anderson, founder of modular carpet company Interface, received a posthumous award for Outstanding Achievement.

The other categories and winners are:

Built Environment: Igloo Regeneration
Carbon: Sainsbury’s Supermarkets
Collaboration: SABMiller Communicating
Sustainability: The Co-operative Group
Energy: Sainsbury Supermarkets
Engaging Employees: Brother Industries
Innovation: Interface
Social Impact: Carillion
Supply chain: Marks & Spencer and Veja
Waste and Recycling: Desso Water: SABMiller

For more information on the winning projects and runners up click here.

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Corporate Green Ranking: Top Spots and Most Improved

June 05, 2012 Add Comment Edit

As reviewed in a June 4, 2012 Environmental Leader article, Computer chip maker Intel and home appliance manufacturer Whirlpool have been named as the major US firms with the strongest environmental governance, policies, and infrastructure in a report by sustainability consultants Soyka & Company. Intel maintained their top spot for 2012 in the Benchmarking Analysis of Disclosed U.S. Corporate Environmental Practices. Intel improved their score by five points, or 6.1 percent. Whirlpool moved up from tied for 28th place in last year’s study by virtue of a 25 point, or 41 percent, gain in its score.

Two companies, Avon Products and Medtronic, made dramatic advances, rising from tied for 56th place to 6th, and from tied for 130th to tied for 23rd place, respectively. Each raised its score by more than 25 points and 50 percent during this most recent two year period.

The 970 firms included in the study are mainly drawn from the Russell 1000 list of large US corporations. Their scores are evaluated using the Governance and Environmental Management Strength, or GEMS, rating that evaluates the presence or absence of 50 distinct sustainability indicators. The GEMS scale was developed by Soyka & Company in conjunction with consultants IW Financial.

Eleven companies are ranked in the top 25 for the first time, displacing other firms. Some of those no longer in the top 25 such as Ball Corporation, Hess Corporation, H.J. Heinz, and Texas Instruments have made modest incremental gains in their scores but have been overtaken by others. Others, such as Gap, Inc., Merck, Symantec, Weyerhaeuser, and Xcel Energy have not kept pace, and in fact have experienced modest declines in their scores.

One former member of the top 25, Millipore, is no longer listed in the Russell 1000. The report highlights Virgin Media, McGraw-Hill, Allstate, Owens Corning, and Waste Management for achieving high scores that are more than double that each of their nearest industry peer.

Some 126, or 13 percent of the total, of the largest publicly traded firms in the U.S. still have a total score of zero, meaning that they do not disclose any of the 50 individual pieces of information comprising The GEMS scale.

Intel was ranked fourth in a poll of the US’s best corporate citizens released in April by CR Magazine. Bristol-Myers Squibb topped the list followed by IBM and Microsoft.

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