Green. Sustainability. Philanthropic. Environmental. Clean. Natural. Healthy. Organic. Conscious Capitalism. Ethical Consumerism. All these words define the movement of both consumers and companies to become socially responsible for their actions and their products or services. The very heart of a business is changing – making a profit and striving for a healthier planet with healthier people are now bundled together.
Inc. magazine reported:
“…something seems different about our current green awakening. This time, the action is being driven as much by markets as morality. High oil prices, global warming, the sense that chemicals cause real harm and the earth's resources are indeed finite--these are not so much charitable causes to embrace as they are problems that entrepreneurs can solve.”
So how can I say with certainty that we’re on the brink of what Fast Company called Business 3.0? Here are some trends to help small business owners decide how to incorporate “greenness” into their work.
1. Customers are increasingly aware of environmental issues.
- The 2007 Cone Consumer Environmental Survey found “one-third of Americans (32%) report heightened interest in the environment compared to a year ago. In addition, they are overwhelmingly looking to companies to act: 93% of Americans believe companies have a responsibility to help preserve the environment. … Most Americans report they are also making efforts in their personal lives to intentionally reduce their impact on the environment, including: Conserving energy- 93%, Recycling- 89%, Conserving water- 86%, Telling family/friends about environmental issues- 70%.”
- The 2007 ImagePower® Green Brands Survey indicated a “shift in the U.S.'s collective consciousness -- green is no longer an issue marginalized to fanatical environmentalists; nearly all Americans display green attitudes and behaviors versus a year ago…When asked what their perceptions were of green brands, respondents said they are often seen as better quality, though at a higher cost. This perception of green equating premium is one that makes good business sense for anyone considering entering the space. The good news for Whole Foods, Toyota and Sub-Zero (ranked among the greenest of the green) is that even non-users are more likely to use green brands and consider them the next time they make a purchase.”
- A national survey by GfK Custom Research North America showed that “…individual Americans view U.S. citizens and corporations as behind the rest of the world when it comes to taking action to protect the environment…” Kathy Sheehan, Senior vice-President for Gfk Roper Consulting said, "This reflects the overall 'consumer awakening' trend we are seeing today, in which action is historically preceded by acknowledgement of an issue resulting in a need for change"
- About half of employed adults (52%) think their company should do more to be environmentally friendly. (Adecco Survey, 4/10/07)
2. Customers are increasingly drawn to businesses/products/services that are green, organic, natural, clean, sustainable – you get the idea.
“The fact is that in today's society all business functions must understand social and environmental impacts and work towards reducing or improving them.
Diana Verde Nieto, “Marketing and CSR”, psfk, 11/27/06
- According to a recent Priceline.com survey, “…an overwhelming majority (72%) of travelers want rental car companies to offer economical, environmentally friendly hybrid vehicles powered by both gasoline and electricity. A similar majority (71%) of the 764 priceline.com customers who answered the survey said they would rent a hybrid and almost half (48%) said they would be willing to pay a premium for their "green" rental.
- “If a thrifty 99-cent four-pack of store-brand bars represents one end of the spectrum, the Zum Bar represents the other: it sells itself on far more than a banal promise of getting you clean. The Lemongrass variety, for example, aims to please the eye (yellow with swirls of green), nose (''bright, fresh, tangy and herby'') and skin (especially oily skin, in this case). And like all the Zum varieties, it pledges ingredient correctness: no synthetics, just natural stuff like goat's milk, glycerin and vegetable oils. There are apparently plenty of buyers who demand all this from a soap and will pay more than $5 a bar to get it: Indigo Wild, which makes Zum, now distributes its soaps and other aromatherapy products in 2,000 stores, including Whole Foods. Ten years ago, the founder, Emily Voth, was selling at a Kansas City farmer's market; now she has a 25,000-square-foot facility and dozens of employees.” (The New York Times Sunday Magazine, 12/3/06)
- The Organic Trade Association says that organic retail sales in the United States have grown between 20% and 24% each year since 1990. U.S. organic food sales totaled nearly $17 billion in 2006, representing approximately 3 percent of all retail sales of food and beverages…Organic foods’ share of total food sales is up from 1.9 percent in 2003 and approximately 2.5 percent in 2005. According to survey results, sales of organic foods grew by 22.1 percent in 2006 to reach $16.9 billion. Sales in 2005 were $13.831 billion.
- Green building is forecast to grow from a $7.4 billion market last year to $38 billion in 2010, according to the National Association of Home Builders. (Business Week Small Biz, Summer 2006)
- According to research from ACNielsen's LabelTrends™, [In 2006] products with antioxidants, fiber, no preservatives and organic claims all grew by 10% or more versus last year. Other characteristics with solid growth in the 5% and 10% range include lactose-free, gluten-free, whole grain, natural, and omega content.
- MediaPost reported that the $20 million organic chocolate category grew 57% last year, compared to a decline of 0.1% for convention chocolates.
- Water [considered a healthy drink], together with other nonfizzy drinks, accounted for 90 percent of the growth of the entire beverage industry between 2002 and 2005. By the end of the decade, they are expected to outsell soda. (The New York Times, 5/27/07)
- General Electric Co. Chairman and Chief Executive Jeffrey Immelt said his "green" ecomagination unit is on track to "blow away" its 2010 sales target of $20 billion as demand for environmental products and services surges. After two years in operation, ecomagination has a backlog of orders worth $50 billion for products like wind turbines, aircraft engines and energy conservation technology. Last year, it had sales of $12 billion. (Reuters, 5/25/07)
- Organic-cotton production in the U.S. increased by 8%—and was up 7% in China, 25% in India, and 40% in Turkey—between 2004 and 2005, according to an April, 2006, Organic Exchange report that lists the top four producers. But demand for organic-cotton fibers by clothing makers increased 93% in the same period. (Business Week, 9/27/06)
- Hybrid car sales soared to more than 200,000 in 2005, up from roughly 9,000 in 2002. (hybridcars.com)
• U.S. sales of organic sheets and towels rose 38% to $20 million in 2005, while sales of organic mattresses and pillows increased 32% to $2 million. (Financial Times, 9/3/06)
- Membership in the environmentally-base Sierra Club us up by roughly 33% in four years to almost 800,000 according to Newsweek.
- In the 1980’s some 50,000 manual lawnmowers were sold in the U.S. In 2002, that number had increased to 250,000, and last year that number was up to 350,000. (Estimates from American Lawn Mower Co., Associated Press, 5/28/07)
3. Local Governments are forcing green issues all over the country:
- Plastic Bags - For the first time, non-biodegradable plastic bags are banned in large grocery stores by a local ordinance in San Francisco. (San Francisco Chronicle, 3/28/07)
- Trans Fat - In 2007, New York became the first municipality to officially ban trans fats. (MediaPost’s Marketing Daily, 1/3/07) Philadelphia and Montgomery County, Maryland have also banned trans fat. The only state to enact legislation is New Jersey, whose bill requires school cafeterias to reduce the purchase and consumption of foods containing trans fats. (Washington Post, 5/16/07)
- The Incandescent Light Bulb – from Ban the Bulb blog : “South Carolina is attempting to follow the lead of Australia and the European Union by enforcing the use of compact fluorescent light bulbs…Other U.S. states are also considering similar legislation. In New Jersey, there's a bill to replace all the bulbs in government buildings, and similar proposals have been introduced in California, Connecticut, North Carolina and Rhode Island.”
- The Bottle in Bottled Water – This year, Americans will drink more than 30 billion single-serving bottles of water (The New York Times Sunday Magazine, 5/27/07). According to The Container Recycling Institute - California, Connecticut, Delaware, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont all have existing bottle deposit laws. But some of these states (Connecticut, Massachusetts, New York) did not anticipate the phenomenal growth of bottled water and are now attempting to update their legislation. And many additional states (Arkansas, Illinois, Maryland, North Carolina, South Carolina, Tennessee, West Virginia) are considering similar laws.
4. Personal and Professional Investors are Going Green
One sure way to know that clean or sustainable or environmental or just plain green businesses are here to stay is to see where both professional and personal investors are putting their money.
Venture Capital
One venture capitalist told Entrepreneur magazine:
“We look at all kinds of energy and environmental technologies…But it's different than the '70s and '80s boom in environmental cleanup technologies: Today, these are proactive technologies, not reactive.”
Venture Capitalist David Kirkpatrick, Managing Director, SJF Ventures, Durham, NC
- Venture capitalists invested $1.2 billion in green businesses in 2006. That’s twice as much as they invested in 2005… (Venture Capitalist John Doerr, Speech, Stanford Graduate School of Business, 4/5/07)
- Venture capital firms invested $958 million in renewable energy companies in the first half of 2006 alone. (Inc., 11/06)
- Sharp growth in the number of VC firms specializing in seeding green businesses or adding a green component to their funds: Global Environment Fund, SJF Ventures, Rockport Capital Partners, SAIL Venture Partners, Cleantech Venture Network, Nth Power, Kleiner Perkins Caufield & Byers, 3i, Draper Fisher Jurvetson
Socially Responsible Investments
“There is a dramatic increase in the number of investment managers looking at their investments in a different way than they have previously,”
Mark Tulay, Director, Institutional Shareholder Services, Rockville, MD
- Socially responsible investing options have exploded the last few years: Nearly $2.3 trillion was held in socially responsible accounts used by individuals and institutions at the end of 2005, up from $639 billion in 1995 and outpacing growth in total assets invested. (The Washington Post, 5/13/07)
- Socially Responsible Investment Firms have multiplied too – Al Gore’s Generation Investment Management (with some 110 green mutual funds and more), Social Investment Forum, Social Funds, Calvert, Domini Social Investments, Pax World Funds, Citizens Funds, CalPERS, Ceres, Interfaith Center on Corporate Responsibility, Sierra Club Mutual Funds
- Even some mainstream financial institutions have factored in environmental, social and governance (ESG) issues into their investment processes – UBS, Goldman Sachs, Citigroup, Smith Barney, JP Morgan Chase (Value., "Mainstreaming Socially Responsible Investment,"Feb/Mar 2006)
5. The Green Business Infrastructure is Growing
Education, Entrepreneurial Communities and Conferences have all been affected by our environmental awakening.
“MBA courses on topics such as social entrepreneurship have exploded in the past few years”
Rich Leimsider, Senior Associate, Aspen Institute Business and Society Program
Green MBAs:
- Student interest in sustainability issues is skyrocketing… five years ago, [The Aspen Institute Business and Society Program] site received a few hundred visits a month from prospective MBA students researching social-emphasis courses at various schools. Now there are 15,000 to 20,000 visits a month. (Seattle Post-Intelligencer, 3/5/07)
- New College of California – offers a Socially Responsible and Ecologically Sustainable MBA Program
- Dominican University of California – has a Green MBA program
- The Bainbridge Graduate Institute, Washington State – from website: BGI's pioneering MBA and Certificate programs prepare diverse leaders to build enterprises that are economically successful, socially responsible and environmentally sustainable.
- Presidio School of Management, Presidio World College, San Francisco - has an MBA program in Sustainable Management
- Green Mountain College, Vermont - “…charged into the world of online education with two innovative master's programs, both catering to the needs of working professionals. One is an MBA in sustainable business. The other is a Master of Science in Environmental Studies…” (Seattle Post-Intelligencer, 3/5/07)
- Case Western Reserve, Northwestern, Stanford, the University of Michigan and George Washington University all have concentrations in sustainable enterprise. Yale School of Management has offered a joint degree -- an M.B.A. and Master of Environmental Management -- in conjunction with the Yale School of Forestry and Environmental Studies for more than 25 years.” (The New York Times, 1/8/06)
- "The Stanford Graduate School of Business, ranked No. 1 in the 2005 Aspen report, introduced a joint degree program for MBA students in environment and resources in April. Another initiative teams the business and engineering school for a course in which students use concepts from both disciplines to solve problems. This year, one project involved developing a safe, cheap and easy-to-power LED light for people who don't have electricity, an alternative to dangerous and relatively expensive kerosene lamps." (Associated Press, 9/23/07)
Entrepreneur Communities that focus on Green Issues and Social Responsibility:
Green Conferences:
- Co-op America’s Green Business Conference – from website: “Roll up your sleeves and get ready to bite into the green business revolution at this hands-on conference. Learn from your peers in this value-packed three-day event as you discuss the many ways to build your business and a prosperous sustainable economy ...”
- National Association of Home Builders, National Green Building Conference - 'Greening the American Dream'
- Green Power Conferences – from website: “Green Power Conferences was established in 2003 by a team of professional, environmentally aware event experts. We have since welcomed over 4000 delegates from 76 countries, built a global database of 110,000+ contacts and gained an unparalleled reputation in the industry.”
- The Green Power Network’s (Dept. of Energy) National Renewable Energy Marketing Conference – “The purpose of the National Renewable Energy Marketing Conference is to review the status of green power marketing in electricity markets and to explore strategies to increase the development of renewable energy resources through customer choice. Conference organizers include the U.S. Department of Energy, U.S. Environmental Protection Agency, and Center for Resource Solutions.”
- EPA’s one stop shop for planning a green conference – This is a bit different from a conference about green business - this site can help you plan any kind of meeting while minimizing negative impacts on the environment.
Resources/Further Reading
Joel Makower on “Ten Reasons why the Greening of Business will be an issue for years to come”
Greenbiz.com - From energy-saving basics to in-depth analysis on green business in exporting and manufacturing, this Web site aims to bring environmentally-friendly practices to main-stream small businesses.
National Association of Home Builders - Green Building
U.S. EPA site - Energy Star/Small Business – free support for small facility energy saving
National Small Business Association – Going Green tips
A shorter version of this post first appeared in August on Anita Campbell's Small Business Trends Blog
Next week: Part 2 - Green Business Opportunities