Take a quick look at the business world today, whether brick-and-mortar stores or online, and you will quickly see a wide divergence in the amount of energy being poured into sustainable business initiatives.
The business world is under pressure today to stay ahead of the ever-increasing number of social issues and trends. While the push toward sustainable technologies and products to save the environment is not new, it has never been more significant than it is today.
Many companies are coming up with innovative solutions to help build a green future. They are taking this route to gain customer support as well as to reduce harm to the environment.
The Global Green Economy Index first launched in 2010. It measures the green economy performance of 130 countries and looks at how the experts make their assessments. The GGEI is now the index most widely used by civil societies, policymakers, international organizations and the private sector to benchmark performance.
With nine of the world's top 10 greenest countries being in Europe, the innovations include energy-saving and eco-friendly logistics. Below are some examples of these initiatives, from which developing businesses could take a few lessons.
Renewable power sources
U.S. solar-powered corporations
The Solar Energy Industries Association (SEIA) has been keeping track of the top corporations using solar power in the United States for several years. These are its results by company based on megawatts (MW) installed:
- Target Corporation: 147.5 MW
- Walmart: 145 MW
- Prologis: 107.9 MW
- Apple: 93.9 MW
- Costco Wholesale: 50.7 MW
- Kohl's: 50.2 MW
- IKEA: 44.MW
- Macy's: 38.9 MW
- General Growth Properties: 30.2 MW
- Hartz Mountain Industries: 22.7 MW
Since 2012, according to SEIA, the top U.S. companies have increased their solar usage by 240%, and demand for socially responsible financial planning has also increased.
Solar power for Australians with disabilities
While Europe is taking the lead on reducing fossil fuel dependency, Australia is among the world's top innovators when it comes to renewable energy enterprises. Natural Solar Initiatives provides affordable solar-powered housing for Australians living with a disability. The initiative will incorporate battery and solar storage into Specialist Disability Accommodation (SDA). It has been undertaken to help eligible participants in the National Disability Insurance Scheme (NDIS).
The battery and solar integration will be built into new properties to lower the cost of electricity. Disabled Australian residents covered by NDIS will have lower household costs when living in SDA.
Floating solar plants
In Japan, the Kumamoto Technology Center is pursuing the adoption of 100% renewable electricity for all its sites by the year 2040. Japan has the world's largest floating solar plants and the capacity of half of all existing floating solar plants. Other countries building floating solar are South Korea, China, Singapore and Thailand.
Electronic transportation
There is an international effort to reduce greenhouse gas emissions. Europe was the leader in 2015, with more than 425,000 electric passenger vehicles registered.
These are some other initiatives:
- California has submitted the Clean Cars 2040 Act, an initiative to ban the sale of gas and diesel-powered vehicles starting in 2040.
- The Netherlands' goal is to ban conventionally fueled vehicles by the year 2050.
- Holland's sustainable transportation government initiatives are implemented through public and private partnerships. Millions of goods and people are moved daily through systems designed to have less of an adverse impact on the environment.
Smart building initiative
The Edge is Deloitte's Amsterdam headquarters, which Bloomberg calls "the smartest building in the world." Using advanced technology and innovative practices, the Edge has 28,000 sensors to monitor everything, including light, temperature, moisture and movement.
The building uses LED panels and produces more energy than it consumes. It saves power in unoccupied spaces and even lets employees use their smartphones to make coffee.
Eco-friendly consciousness as a marketing tactic
For the past few decades, consumers have been increasingly concerned about the environment and our impact on it.
Sustainability has become a priority. Food waste, plastic in the oceans, global warming and air pollution are some of the significant concerns of an environmentally conscious population.
Millions of people have joined Lifestyles of Health and Sustainability (LOHAS). They are committed to only purchasing products designed to reduce the harm to the environment, even if the costs are higher.
Companies that want to attract consumers interested in social responsibility are evolving their marketing strategies to what is known as green marketing and looking for innovative ways to make green products.
What is green marketing?
Green marketing means selling products or services by highlighting the benefits to the environment. Consumers refer to brands that incorporate green marketing with terms such as "sustainable," "eco-friendly," "organic" and "recyclable."
Just because companies say they're eco-friendly doesn't necessarily mean they are. The following are guidelines you and your customers can use to determine if your brand is practicing authentic green marketing.
Your products and services ...
- Do not use toxic or ozone-depleting materials.
- Are designed so they can be reused over a long term.
- Are packaged with recycled, biodegradable and eco-friendly materials.
- Follow environmentally friendly manufacturing guidelines.
- Are produced from recycled materials.
Companies with innovative green marketing initiatives
If your brand is ethically and genuinely using green marketing, it needs to be at the core of your company culture and transparently showcased via your company's processes, operations, and sourcing.
Patagonia Footprint Chronicles
Patagonia is an outdoor clothing retail company that has transparently prioritized its green marketing mission. In 2011, it announced its Footprint Chronicles. This initiative shows consumers every step of Patagonia's manufacturing processes digitally, allowing them to make informed decisions about the products they purchase.
One of the ways Patagonia works to minimize its carbon footprint is by offering incentives to staff members who take public transportation or carpool to work. The company also practices transparency, as it doesn't hide the fact that it can't be eco-friendly with all of its products and does rely on fossil fuels in some of its processes and product deliverables.
IKEA's People & Planet Positive
With its People & Planet Positive sustainable strategy, Swedish furniture brand IKEA's core belief is that consumers shouldn't have to choose between environmentally friendly products and affordable, stylish ones. IKEA encourages its customers online to lead a lifestyle that is not harmful to the environment. These are some of its environmentally conscious company practices:
- Using solar panels in 90% of its buildings in the United States
- Sourcing all the cotton used in its products from sustainable sources
- Working toward 100% renewable energy and wood sources by 2020
- Switching all its lighting to energy-efficient LEDs
- Making new commitments to spending $1 billion for climate actions
IKEA is a prime example of a company that not only says it supports environmentalism but demonstrates its dedication by embracing it in everything it does as a business.
Environmentally friendly Hershey
Hershey's famous chocolate brand has evolved to include green marketing as its key ingredient. The company also owns an amusement park and hotel in Hershey, Pennsylvania. It has made being environmentally friendly a top corporate priority. These are some of its initiatives:
- Reducing greenhouse gases by 50% by the year 2025
- Repurposing its products for charity
- Sharing on its blog news about innovations that will have a positive impact on the community (e.g., edible product packaging)
Is green marketing economically viable for small business?
There is no doubt that the green marketplace is profitable. Most people and business owners agree that "green is good." Companies that practice green marketing are committed to corporate social responsibility and sustainable development. By doing so, they are trying to show their own strong belief in protecting the environment. Green marketing also makes their products or services more attractive to consumers who have the same concerns.
But the question remains, from an economic standpoint, is it profitable for small business? There may be a barrier to implementing such practices when it comes to short- and long-term costs.
Are consumers willing to pay more for green?
According to a 2014 Nielsen Global Corporate Social Responsibility Survey, it appears they are.
The survey polled 30,000 consumers from 60 countries, showing these results:
- 52% of consumers check the product package to see if it's sustainable.
- 55% will pay more money for products or services from brands that are committed to positive environmental and social impact.
- 52% had made at least one purchase within the last six months from at least one eco-friendly company.
The survey noted that consumers in Latin America, the Asia-Pacific region, the Middle East and Africa showed a higher preference for green products than consumers in Europe and North America.
Although going green has many environmental benefits, it can also mean extra costs that may be difficult for small businesses to absorb.
For example, switching to solar power requires the installation of solar panels. They carry a hefty upfront cost that may take years to recoup in reduced energy costs. Also, the cost of switching energy suppliers and purchasing wind-power electricity can cost more than a small business can afford.
It's all a matter of supply costs and demand. If consumers are willing to spend more money on green products, companies will continue to provide them. If they aren't, small companies will not.
Demand differs by country also. As an example, in the 1990s and 2000s, New Zealand entrepreneurs saw their country as a natural place to grow the organic food market. However, because consumers weren't buying the organics, the farmers weren't interested in growing them, and the supermarkets weren't stocking them. Even though the organic food market was thriving in countries like Denmark and the U.S. at that time, it represented only 1% of the grocery store market in New Zealand.
New Zealand's attempt at going green is a prime example of the challenges small businesses can face when trying to go green and be profitable.
Can going green increase production costs?
In many cases, switching to green materials requires small businesses to raise their prices to cover the higher production costs. For example, a furniture manufacturer that chooses to switch to sustainably harvested wood will have to pay more for lumber. This increase in cost is often passed down to the customers and also cuts into profit margins.
Authenticity – not making false claims about being environmentally friendly – should be a priority for eco-friendly small businesses. Making inaccurate claims will harm your brand's credibility.
Do the benefits of going green outweigh the disadvantages?
Small businesses can go green on a smaller scale, one step at a time. For example, they can switch to recycled products or start recycling trash if they don't already.
Companies taking small steps to help the environment have a cumulative effect. Even little changes can eventually lead to significant savings for small businesses.
Here are a few suggestions on how to get started:
- Print less and rely more on digital documents and files.
- Turn off computers when not in use instead of leaving them on standby.
- Take advantage of the tax breaks offered to companies that go digital.
- Promote your green marketing initiatives to improve your brand's reputation and attract like-minded consumers.
Showing their concern for social responsibility and the health of the environment can help small businesses increase their bottom lines, even if there is a short-term loss. In the long run, as consumers seek more sustainable products and food, they will be loyal to the companies that provide them.