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Entrepreneur Insight

How Small Businesses Can Become More Sustainable and Boost Revenues

May 13, 2019
Female business owner drawing recycled symbol on the glass, thinking about how to make her business more sustainable
Apart from benefitting the bottom line, sustainability is also beneficial to a business’s longevity, and customer and employee loyalty. (Photo credit):

Sustainability goes beyond saving the planet—it also makes good business sense.

Adopting sustainable business practices is quickly becoming a necessity for companies. Aside from the benefits to the environment, businesses that incorporate sustainability can also improve customer and employee loyalty, business management, and are more likely to survive long-term, says Carolina Miranda, sustainability consultant and founder of Cultivating Capital.

A Nielsen report showed that the millennial generation is the most concerned about environmental practices, with 85 percent of those consumers believing it “extremely” or “very” important for companies to adopt sustainability initiatives. However, a significant portion of Baby Boomers (72 percent) and the Silent Generation (65 percent) also agree that businesses should play a larger role in protecting the environment. Those strongly held beliefs are leading to actual purchase decisions: the CGS 2019 Retail and Sustainability Survey revealed that two-thirds of respondents consider sustainability when making purchases and are also willing to pay more for sustainable products.

“A lot of consumers now want to buy from businesses that align with their values, and they’re actually turning away from companies that don’t align with their values,” says Miranda. “People are voting with their dollars, so to speak.”

The same is true for employees. Miranda points out that employees want to work at a company that is “doing good” and that they can “feel good about.” “That is going to help increase productivity and reduce turnover,” she says. “Especially in this job market, where unemployment is so low, employees have more options—given two options, they’re going to work for the place they feel better about.”

Miranda adds that, along with benefitting the bottom line, sustainability is also beneficial to a business’s longevity. “There are very real resource constraints that businesses are going to run into,” Miranda explains. “For example, water scarcity is a huge issue when it comes to climate change. If you’re working in a business that relies on a lot of water, as water sources become more limited, that is going to directly affect your ability to produce your product and get it out to market.”

Basic steps to greater sustainability

Incorporating environmentally friendly practices doesn’t have to be an expensive or time-consuming practice. In fact, there is a myriad of methods that small businesses in any industry can adopt to become more sustainable.

“What every small business can do is look at their key areas of social and environmental impact, find out what are the best practices for those areas and ask how they can adopt those,” advises Miranda.

A hand unplugging an orange cord from a white outlet
(Photo credit):
Certified B Corporations were 63 percent more likely than other businesses to have survived the 2008 recession.

Energy usage is a good place to start. “There are basically three different sources of energy that almost any type of business is going to use,” she says. “One of them is lighting, the other is HVAC (heating, ventilation and air conditioning), and the third comes from plug load.”

Lighting is very straightforward—businesses can just switch to LED bulbs to conserve energy, she says. For HVAC, she recommends regular maintenance of the system to make sure that it is running as efficiently as possible and to evaluate the occupancy usage to make sure it’s only running when people are there. She also advises that people unplug any unnecessary appliances or machines when they are not being used. “People think that, ‘oh, I’ve turned off my computer,’ but it’s still drawing power when it’s plugged in,” she says. “The same goes for everything that’s plugged in the office, whether we’re talking about the coffee machine or the printer.”

Although these solutions are simple, they can potentially save a business thousands of dollars. “I worked with a business that was able to save about $10,000 a year because they realized that the heating and AC was kicking in on the weekends when nobody was even in the office, but nobody had bothered to check that,” she shares.

Miranda suggests that businesses consider offering telecommuting opportunities to their employees, if possible. Employee commute is a huge part of a business’s carbon footprint, she says, and simply offering opportunities for them to work from home could drastically cut down on that, while also improving employee happiness.

Businesses should also look into what types of food they’re providing their employees. Although it’s unlikely a small business has a cafeteria, Miranda says it’s worth making sure that they offer vegan or vegetarian options for any catered meals. “Agriculture and meat are huge sources of greenhouse gas emissions,” she states. “One of the things that everybody can do to reduce their own carbon footprint is to eat less meat.”

Take a closer look at your supply chain

The next step to sustainability is to evaluate suppliers and supply chain. Miranda recommends sourcing products locally whenever possible. “That’s not just for products, but even service-based firms,” she explains. Not only does using local suppliers cut down on carbon emissions by reducing transit distance, it also helps support other small businesses. “Local is always good because it helps build the local economy, and that’s going to benefit a small business because they tend to be very place-oriented,” she adds.

Another step small businesses can take is revising how they screen their suppliers. “This could be as simple as having a supplier questionnaire that asks about a supplier’s practices,” Miranda says. “It could include things like, what is the supplier doing to conserve energy at their facility? Are they tracking their energy usage and taking steps to reduce it?” Miranda adds that this survey can also include questions about the supplier’s social practices, such as by asking what they are doing to ensure fair labor practices in the making of their products.

Asking these questions helps raise awareness that customers are interested in and want more sustainable business practices. Even if a supplier reveals that their practices aren’t the most environmentally or socially friendly, Miranda says that doesn’t mean a business has to punish them. Instead, she encourages businesses to work together with their suppliers to become more sustainable.

For example, Miranda says she knows several small businesses that have worked together with their suppliers to eliminate the use of disposable delivery pallets. “They worked with their supplier to say, ‘Hey, can we test out reusable pallets? You deliver your product on reusable pallets, and we will save them—when you come by to deliver more, we will return these reusable pallets to you,’” she shares. Miranda admits there were some issues, such as finding storage for those reusable pallets, but that it ultimately turned into a win-win for both the businesses and the suppliers.

“The business was able to feel good about the reusable pallets,” she says. “It cost the supplier a bit more to get the reusable pallets, but then they’re able to use them and have a much longer life span.”

Sustainable businesses are better managed

Businesses that are committed to sustainability are helping the environment and boosting their own revenues, but they are also better managed and more likely to survive through economic trials. Certified B Corps, which are businesses tthat are committed to social and economic responsibility and are verified by the third-party B Lab, were 63 percent more likely than other businesses to have survived the 2008 recession.

Miranda attributes these businesses’ better management to the rigorous B Corp certification process. “There’s very little waste, and they’re trying to be conscientious about their use of natural resources,” she explains. “They have strong relationships with their suppliers, with members of their community and with their customers.”

For small businesses, becoming a certified B Corp could be a good path toward overall sustainability. Any business, whether a sole proprietorship or the largest publicly traded company, can become a certified B Corp, Miranda says. Once a business is certified, it can also open many more growth and partnership opportunities.

“It’s the most reputable certification,” she states. “When you see the B Corp certification, it basically says that this business has gone through a rigorous, independent vetting process. Beyond that, there is a lot of opportunity to do business with other B Corps—it can open up other possibilities, too.”

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