Sustainability and green entrepreneurship

I was intrigued by Kate Jillings’ post in Young Entrepreneur about Sustainability.  She defines business sustainability as:

For the business world, sustainability is about how your business operates whilst having a positive social and environmental impact.

How can you start up and run a business in a sustainable way?  She writes:

The concept of ‘doing good and doing well’ sounds great but, as many entrepreneurs know, is not always easy. When starting out, most new business owners are most concerned about making sales and keeping their heads above water. The cheapest office supplies and manufacturing processes might not be the most environmentally friendly. Many small companies survive with low-cost business operations and low-paid interns – not necessarily socially optimal.

the journey home
Hä‘ena Ahupua`a, Princeville, Hawaii
the journey home
by paul (dex), on Flickr

Nonetheless, her company takes many steps towards sustainability:

On a more positive note, our little company does lots of other things that could be classified as ‘sustainable.’ For example, we don’t print anything and we store all our documents in the virtual ‘cloud’, which I’m told uses less energy than running our own server or a physical shared drive. We avoid travel, especially long-haul flights, instead opting for skype calls and gmail chat.

I think that you can classify sustainability into two categories: the easy stuff and the tough stuff.

The easy stuff involves running your business in a way that is productive and efficient.  Do more with less.  Fewer assets generally lead to lower expenses.  This focus on productivity should both reduce the environmental impact of your work, and, at the same time, reduce your costs.  Instead of buying, setting up, and running computer servers, use the cloud.  Instead of travelling to meetings, use Skype.  These no-brainers will make your business more profitable and help the environment.  Win-win.

Greetings from my village Majuwa :)
Nepal
Greetings from my village Majuwa
🙂 by ` TheDreamSky, on Flickr

Many so-called “green businesses” fall into this category.  Consider Whole Foods Market and almost everything this supermarket chain sells.  Because many of the retailer’s products are organic, and sustainably produced, etc., customers are willing to pay a premium for them.  Win-win.  Grow it organic, label it organic, and charge extra for it.  Your sales and profits will grow.

Win-win’s work for your personal finances, too.  For example, insulating your house will reduce your utility bills.

The tough stuff involves making business decisions that will benefit others, but will most certainly increase your business’s costs and possibly even reduce its profits.  For example, pay your employees well.  It is arguable that better-paid employees are more productive.  It is also arguable that better-paid employees are less productive.  I’m not familiar with the research.  Nonetheless, paying your employees more money, and providing better benefits will cost your business more, and might actually reduce your profits.

waipio
Hawaii
waipio by paul (dex), on Flickr

Confused?  At the risk of getting kicked out of the AICPA, let me explain that there is more to business than profits.  If you limit your business goals to achieving profits for yourself, then the tough part of sustainability will never make sense.  If you want to squeeze as much money as you can out of your business, and don’t care about anyone or anything else, then go ahead, pay your employees as little as possible and you might as well dump your trash in the nearest river or lake that you can find.  (I hope my accountant friends are still talking to me.)

If you broaden your vision so that you run your business not only to maximize profits, but also to benefit everyone around you – your employees, your customers, your community, and even people you’ve never met – then the so-called tough stuff will fall into place.  You will want to pay your employees a little more and you won’t mind putting waste in its proper place.

This leadership style adds a spiritual dimension to your business, and will make it immensely more satisfying.

Happy new year.

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

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