How Businesses that Go Green Can Also Be in The Black

As businesses around the globe look to find ways to evolve and become more environmentally sustainable, there are many misconceptions that exist around the financial implications of doing so.

An oft-held belief has been that taking concrete steps toward mitigating and minimizing one’s environmental footprint will be prohibitively expensive. This belief in turn provides a justification for businesses and industries to take a more cautious and slower approach overall.

The problem with such a mis-held belief is that delaying action on reducing our carbon and overall environmental footprint creates a greater risk that we will cross over a climatic tipping-point with potentially catastrophic consequences as a result. The costs of moving our economy from its current non-sustainable approach to one that is both prosperous and sustainable are real, and for some sectors that cost can be significant.

But when businesses view these costs as an investment instead of an expense, and take a longer view on evaluating the net benefits of doing so, the justification for taking action becomes clearer. In fact, by using a longer timeline, businesses can see how not only can these costs be easier to manage, they in fact can make a company more profitable and successful over time.

Three Compelling Reasons to Green Your Business

Depending on the nature of a business or the industry it operates in, the opportunities for environmental footprint reduction can vary. But no matter what business it is, there are typically three compelling reasons to make a commitment to sustainable change;

1. Cost savings 

2. Brand reputation 

3. Desirable Workplace 

1. Going Green Can Reduce Operating Costs

A golden rule of successful businesses is to make your money work smarter and not harder. But this rule also applies to investing in environmentally-friendly business practices.

Energy costs are a constant among all business types and sectors. From lighting to machinery to electronics, data and more, energy costs typically represent one of the larger expenditures for any business. The good news is that through reducing energy consumption, businesses have one of the biggest opportunities for cost savings, while also being good stewards of the environment at the same time.

A reliable guide for businesses on how to reduce energy costs for the past few decades has been the Energy Star program.

Launched in 1992 in the U.S. as a government-led initiative, the program is designed to evaluate and identify energy efficient options across a wide swath of products.

The government of Canada introduced its own Energy Star program in 2014 and provides Canadians with the same benchmarks and information as is found in the U.S.

Switch Lightbulbs to Save Money

A common and easy to understand example comes from lighting.

Traditional incandescent bulbs are remarkably inefficient given that for every watt drawn, over 95% of that energy is wasted as heat.

An Energy Star rated lightbulb, such as LED bulbs reduces energy use by about 90% and the bulb will last between 15-25 times longer.

Advantages of Energy Star Rated Lightbulbs: 

According to Natural Resources Canada, switching to an Energy Star rated bulb will prevent up to 354 kg of carbon emissions being released over its lifetime.

And what’s good for the environment is also good for the pocketbook. By switching incandescent bulbs to more efficient options like LED, the increased efficiency and longevity can add up to big savings over time. How much exactly depends on a host of factors but the following generalized example will likely open some eyes.

An equivalent LED bulb to a 60W incandescent bulb consumes about 8 to 9 watts. Over a typical month if each bulb were used about 8 hours per day, an incandescent 60W bulb would use 14.4 kWh of energy. By comparison an equivalent LED bulb would consume 2.04 kWh. To convert this into costs, one would multiply this amount by the average cost for energy where they live. In Ontario for example, the current averaged cost for electricity is $0.125 per kWh.

Using this figure lighting one single 60W incandescent bulb would cost about $1.80 per month, whereas one single LED equivalent bulb would cost $0.26.

Natural Resources Canada has determined that the average home in Canada has at least 25 lightbulbs in use. Using that figure, it would cost a homeowner about $45 per month to light a home with incandescent bulbs compared to just $2.04 per month for equivalent LEDs. Annually these totals for incandescent bulbs and LED bulbs would be $540 and $78 respectively – or a savings of $462.

Given that businesses typically use far more bulbs than an average home, the potential savings is clearly even greater.

Beyond lighting, the Energy Star program has recommendations across a wide band of business and consumer products. You can find tips for homes, buildings, industry, manufacturing and importing, retailers and for products such as appliances, electronics, HVAC systems, data centres and much more. All recommendations are designed to not only minimize environmental footprints, but to save money overall.

Consider a Hybrid or Electric Vehicle to Cut Costs

For businesses that require the owning and operating of fleet vehicles, switching to electrified or hybrid-electric options can also offer both environmental and cost benefits. While full battery electric vehicles still carry a higher price tag than regular gas-powered vehicles at this time, the ongoing cost of operating savings can provide a healthy offset. In fact, a growing case is being made at how electric cars are now the new economy cars. Studies have shown that savings achieved by charging vehicles as opposed to fuelling them can be as high as 80%. For businesses that use cars for deliveries or for employees to carry about their work, this can easily amount to savings of thousands of dollars per vehicle per year.

Advantages of Hybrid and Electric Vehicles: 

  • Electric vehicles require far less maintenance compared to gas-powered cars.
  • Insurance companies are often willing to provide premium discounts on EVs as well.
  • Many new EV models are offering driving ranges of up to 500 KMs on a single charge and typically carry warranties identical to or even longer than gas powered vehicles.

Enhancing Your Brand

Ask anyone involved in brand marketing or public relations and they will tell you that it can cost huge sums of money to build up a reputation, and only a few avoidable mistakes to tear it down. Increasing public opinion has shown that citizens want businesses to adopt more sustainable practices.

A 2018 survey conducted by Futurra, of 1,000 adults in the U.S. and U.K. showed that 88% of them wanted businesses to help them to be more sustainable consumers, and they were willing to become loyal to companies and brands that do this.

And just as consumers, especially millennials are showing their preference and loyalty to brands that adopt sustainable practices, they have also been quick to publicly admonish those who don’t. The fast-fashion industry for example, has recently been put under the sustainable microscope for their propensity to produce cheap products with limited lifespans.

Here in Canada, a growing number of fashion brands have taken on the challenge of incorporating sustainability into their operations and consumers have been responding positively in return through purchases and general brand perception. Brands such as Encircled, Frank and Oak and Espe have made sustainability a major plank of their business and are receiving positive feedback, increased sales and improved branding opportunities as a result.

Going Green as a Recruitment Tool

Employee retention and loyalty are critical tools for successful businesses. By reducing turnover and keeping employee satisfaction high, a company can save money through the reduced need to continually recruit, hire and train new staff. And just as sustainable practices can create loyalty among consumers, increasingly it can help with employee recruitment and retention as well.

The results of a 2019 survey of 1,000 American millennials who worked for large companies was published on Fast Company and it showed that…

  • More than 70% of respondents were more likely to choose to work at a company with a strong environmental agenda.
  • About 10% also noted they would be willing to take a $5,000 to $10,000 pay cut to work for an environmentally responsible company.
  • Nearly 40% said that they’ve chosen a job in the past because the company performed better on sustainability than the alternative.
  • 30% of respondents even admitted to leaving a job because of poor environmental practices by their employer.

By comparison, when asked the same question about whether they have chosen a job based on environmental factors of the prospective employer, less than a quarter of Gen-Xers and only 17% of baby boomers said yes.

These numbers are noteworthy given that within the next 5 years millennials will make up close to three quarters of the entire workforce. Millennials have changed many aspects of how our modern economies are run and the prioritizing of environmental issues has clearly impacted their career decisions as well.

In Canada, Mediacorp who is responsible for compiling the annual Canada’s Top 100 Employers List has in recent years begun publishing a list of Canada’s Greenest Employers. The 2019 list was the 12th annual list compiled and being included on this list has grown in significance and prestige over the years given its potential for positive branding and recruitment of employees.

Going Green to Be Green

In less than a generation, environmental issues have become one of the most relevant and important considerations for both businesses, consumers and employees. Companies that wish to remain cost competitive, relevant and desirable to their employees now need to consider both the financial benefits as well as the potential risks of how they choose to deal with the environmental crisis at hand.

The new reality for most businesses and industries is no longer whether they can afford to adopt to more sustainable practices, but rather whether they can afford not to.

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Eric Novak

Author

Eric Novak is a freelance journalist, writer, videographer, speaker and part-time college professor. His scope of work covers environmental, automotive, financial and parenting topics. Eric has written for a number of notable newspapers, magazines and websites across Canada and has dozens of television appearances to his credit as a subject expert. As a speaker he has given a TEDx talk and has spoken to tens of thousands of people on the issue of sustainability and also how it has been communicated. His YouTube channel focuses on reviews of automobiles, travel destinations and product reviews. He is also the creator and principle contributor to envirodad.com

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