Profitable Green Strategies for Small Enterprises

Presented to SBDC NxLevel Class, San Rafael, 11/30/2010

By: Chris Yalonis, Managing Partner, Sustainametrics, 415-309-0331

Content Introduction

The business case for SME sustainability

The new model of triple bottom line

The ROI of going green

Entrepreneurs leverage the sustainability wave

Best sustainable practices Cost savings Eco-label/certifications Avoid green-washing Product design and lifecycle management

References

About Sustainametrics Sustainability intelligence and consulting firm

helping SME’s, colleges and government entities green their operations and products/services.

Systems approach that leverages interconnections between economic, social, environmental performance

Our Core Competencies Sustainability plan development Green Certification Green Branding Materials, Water and Waste Management Energy and Greenhouse Gas Management

A Mega-Trend

(c) 2008 Foundation for a

Sustainable C

omm

unity

In business news everywhere…

Green and Sustainable(c) 2008 F

oundation for a S

ustainable Com

munity

New MetricsSustainability and the Triple Bottom Line

(c) 2008 Foundation for a Sustainable Community

Energy, Water Materials, Emissions and Waste, Operational and Design Efficiencies, New Project, Service Opportunities, Life Systems Impact

Revenue growthProductivityProfit marginReturn on InvestmentCost of capitalRisk ManagementValuation of enterpriseAppeal to investors

Community and Social impactHealth and safetyFair compensationEquality opportunity education Recognition

What is a Sustainable Enterprise?

Sustainable enterprise employs profitable strategies that approach social and environmental challenges as business opportunities and minimize negative social and environmental impacts.

Sustainable enterprises measure success in terms of “triple bottom line” value

The Entrepreneurial Spirit

See a need to fill

Self-starter, independent

Desire to grow financially

Thrive with change

Make connections few others see

Driven to persevere

Aware of strengths & weaknesses

Green Rush

$Trillion energy market

Public/Private Partnerships

Vision for People, Planet, Profits

Awareness of Systems

Attributes of Entrepreneurs . . . And Sustainability

Cover collage from Deloitte & Touche “Tax Wednesday” seminar, March 26, 2008

Conscious Consumers: Capture or Lose

• Healthy, local food movement• Increasingly “Freak Weather”:

Katrina, Russian fires, Pakistan floods, glacial disappearance

• Rising energy prices-peak everything

• 70-80% of consumers say they are switching to “green” companies, 20% actually did in 2009

• US LOHAS sector $420B by 2010 $845B by 2015

• 40% of MBA grads rated CSR as a an “extremely” or “very” important company reputation measure when job hunting (Hill & Knowlton Jan 08)

• 92% of students and entry-level hires seek an environmentally friendly company (MonsterTRAK.com survey, Nov 07)

• 83% of employees in G7 countries say company’s positive CSR reputation increases their loyalty and motivation (GlobeScan 2006)

The Race for Talent

IntangiblesNonfinancials

Reputation

TangiblesFinancials

29%

71%

Arthur D. Little, The Business Case for Corporate Citizenship

Company Value “Iceberg”: 2009

Sustainability indices equal or outperform the market: DJSI, Jantzi, FTSE4GOOD

SRI Funds Growing US SRI assets grew 258% from 1995 to $2.3T in 2005

DJSI Jantzi Social Index

Sustainability Investing is Not a Sacrifice

Sustainability Leaders A survey of Newsweek’s greenest companies

HP

•Strong GhG & toxic materials reduction program•First major IT company to report emissions associated with supply chain•Also very strong CSR efforts.

High Tech

•Ambitious emissions and waste reduction goals•Pursuing green lodging designation for all properties•Installing solar panels in parks•Extensive CSR efforts

Tourism

GE

•Leader in wind turbines, carbon fiber engines, CFLs, & high efficiency appliances•Lean manufacturing•Aggressive GhG reduction goals.•Supply chain impact

Manufacturing

Sustainability Strategies: Sources of Competitive Advantage

Marketing & Sales

• Increased sales • New product opportunities• Access to new markets• Improved customer loyalty, brand recognition

Operations• Reduced operating costs (energy, waste, raw materials)• Improved operational efficiencies• Resource productivity• Reduced liabilities

Finance &Accounting

• Increased access to capital• Improved investor relations

HR

• Improved productivity & morale• Lower turnover, absenteeism, accidents

Communication

• Improved corporate reputation• License to operate• Reduced political/ regulatory costs

•Organizational learning•New business models

& services•Strategic competitive

advantages

Corporate Strategy

Economic Best Practices Economic

Planning Develop and update Business Plan, succession plan and marketing plan Integrate sustainable principles into plan

Performance Invest in Capital Grow Profits Positive Cash Flow, manage debt

Practices Invest in Employee Professional Development Use Standard Accounting Principles

Environmental Best PracticesThe 4 W’s of Green Cost Savings Watts (Energy)

Review Gas and Electric Bill for the purpose of reducing consumption Adopt written goals about reducing energy consumption

Water Review monthly bills for the purpose of conservation Install new or retro fit appliances

Waste Measure production Purchase/sell products with reduced packaging Reuse items and recycle as much as you can

Wheels (Transportation) Incentives/Reduce barriers for use of alternate modes of transportation Explore telecommuting/online meetings/teleconferencing

Social Best Practices Social Responsibility

Family Friendly Policies Paid or unpaid leave for birth/adoption of a child Paid or unpaid leave for care of a dependant Provide a group health plan for employee participation

Civic Participation/Corporate Responsibility Make cash or in-kind contributions to local non-profits Match Employee contributions to local organizations Internship opportunities for local youth

Volunteerism Give employees time off to volunteer in schools or with agencies 100% of senior management serve on the board of a local non-profit.

(c) 2008 Foundation for a

Sustainable C

omm

unity

Local Showcases

Fairfax Fairfax Green™, by Fairfax Lumber & Hardware, is a program to provide green building products and information to our customers.

Environmentally friendly printing and graphic communications company dedicated to helping individuals and organizations promote themselves in more sustainable ways.

* using state-of-the-art recycled papers...* printing by a certified environmentally responsible company...* and shipped directly to you with zero climate impact

Green Branding

• Green Branding is critical to leverage environmental efforts into increased revenues

Great Branding Is transparent, engages deeply with customers, is meaningful and authentic…

People will forget what you say, but they never forget the way you make them feel

… becomes iconic

Green Certification

Green Certification adds credibility to your brand and validates environmental efforts.

Sustainability plan and program set-up for Green Seal

Green-washing Pitfalls

Hidden trade-offs: i.e.: Organic fruit from Peru

No proof: Need 3rd party verification

Over-generalized terminology: “green”, “eco-”, “natural”, “earth-friendly” sounds suspicious

Fibbing: Jumping the gun on your certification

Lesser of two evils: ie: lemon-scented ammonia

Lifecycle Management

Clorox Greenworks

Through market research, product formula tests, uncovered untapped latent market for fume free cleaning products

• Sustainability is smart business

• Important stakeholders’ expectations are rising

• New market forces & risks are in play

• Relevant to existing business priorities

• Can protect & enhance company value

• Measure ROI, savings

• Many willing, helpful partners

• Opportunity for leadership, avoid green-washing

Takeaways…

References Inspiration

Blessed Unrest by Paul Hawken Green to Gold, Andrew Winston

How to green your business The Truth about Green Business by Gil Friend The Green Business Guide by Glenn Bachman

Keep current www.greenbiz.com www.sustainablelifemedia.com

Green product guides www,goodguide.com

How will you become as big as your dreams?

Green Biz Plan Competition Criterion