Sustainability in Business: How Startups Can Build Green Initiatives

Even the smallest of actions your business takes — from using non-reusable cups to leaving your computer on overnight — determine its sustainability.

Big businesses often grab most of the publicity for their sustainability efforts. After all, 8 in 10 leading companies publish sustainability reports, have more resources than smaller businesses, and likely contribute more to climate change.

But how do small businesses view sustainability today? What steps are entrepreneurs taking to create more sustainable enterprises?

In The Hustle’s survey of 181 entrepreneurs, only 23.2% reported sustainability as a top priority — with 18.2% admitting to doing nothing.

But small businesses stand to benefit from implementing sustainability initiatives, economically and environmentally. For example, by reducing your energy consumption, you can save money while improving the environment. There are many ways to implement sustainability — from reducing water waste to investing in renewable energy — without sacrificing profitability. 

What Is Sustainability in Business?

The United Nations defines sustainability as being able to meet current needs without compromising the needs of future generations. In business, sustainability means conducting operations in a non-destructive way for the environment and planet.

“Sustainability for business means factoring in environmental and social considerations into all aspects of your business,” explains Gregg Demers, head of environmental services firm ClimatePartner USA.

Instead of honing in on short-term profitability, Demers characterizes sustainable organizations as taking a “long-term view of what’s best for the business and its stakeholders.”

For example, a company that uses renewable energy to fuel operations engages in sustainability. On the other hand, one that pollutes the air and dumps waste in rivers does not have a sustainable business model — even if, economically, it works for the company.

Why Is Sustainability Important In Business?

In business, sustainability helps create long-term value for the company, the environment, and society.

Economically, businesses with sustainability initiatives tend to outperform nonsustainable rivals. Companies who reduce their resource costs, such as raw materials, can improve operating profit by up to 60%. Consumers also report being willing to pay 5% more on green products.

Demers says sustainability can help businesses reach several goals, including:

• Matching customer preferences
• Responding to competitive pressures in the market
• Differentiating products
• Addressing investor expectations
• Creating long-term viability

Socially, sustainable companies play a role in combating world issues, even beyond climate change. Sustainability impacts income inequality, human rights issues, fair working conditions, racial injustice, gender inequality, and other critical challenges.

Benefits of Sustainability in Business

Reduced waste expenses: Instead of purchasing plastic cups, for example, you could opt for reusable ones your workers can wash before using — thereby reducing time and money spent on waste management.

Decreased energy costs: Reduce your energy consumption by turning off electronics after use, or even adding solar panels to the top of your office, which reduces your utility bills.

Increased compliance with regulations: There are an increasing number of regulations regarding sustainability. For example, in March 2020, New York banned plastic bags — forcing thousands of stores to carry paper bags or ask consumers to bring their own.

Increased investment opportunities: Governments and nonprofit organizations offer tax breaks and grants for businesses with sustainable practices. For example, the Business Energy Investment Tax Credit (ITC) provides companies that purchase renewable energy equipment with a tax credit. Other opportunities, such as the Environmental Protection Agency’s (EPA) Small Business Innovation Research (SBIR) Program, help environmental tech businesses build their ideas.

Improved public reputation: Almost 8 in 10 consumers consider sustainability when making a purchase. Reap reputational benefits by publicizing your sustainability efforts. For example, you could dedicate a month of the year to discussing your firm’s initiatives and why sustainability matters to your organization.

Increased competitiveness: As consumers grow increasingly concerned with how their decisions impact the planet, sustainable firms are gaining a greater competitive advantage, especially as the popularity of green products rises.

Receive climate certifications: Online retailers offer exclusive privileges to small businesses with climate certifications. For example, Amazon’s Climate Pledge Friendly and Wayfair’s Shop Sustainably initiative provides sustainable businesses with a platform to sell directly to climate-conscious customers. Certifications such as the ISO 14001 and B Corp can put a stamp on your sustainability efforts.

Improved relations with businesses: “Many small businesses sell their products and services to larger ones who have made sustainability commitments,” explains Tensie Whelan, director of NYU’s Stern Center for Sustainable Business. By building a more sustainable company, you can attract more partnerships from big corporations.

Sustainability in Small Business

Every small business has different capabilities when it comes to sustainability. For example, a business that serves customers in person cannot feasibly offer remote work. Meanwhile, a company with an entirely remote workforce cannot mandate recycling.

“Sustainability starts by establishing a mindset in the organization that encourages innovative thinking,” says Demers.

For example, you could host a brainstorming workshop with your colleagues to evaluate how your products or services impact the environment, then drum up new ideas to make your business more sustainable.

Consider implementing these proven green-friendly initiatives:

Recycle: Encourage recycling of plastic and paper by placing specific bins throughout your office. If you work from home, consider separating your recyclables from your non-recyclables.

Offer remote work: Remote workers reduce their carbon footprint by minimizing their commutes. Survey your employees and see if any could work from home during certain days of the week.

Partner with green-friendly businesses: Check in with the suppliers you work with on their sustainability, and if any fail to meet your expectations, consider looking for greener alternatives. For example, a supplier that uses renewable energy makes your supply chain more sustainable.

Use sustainable packaging: Dropping plastic into the recycling bin might elicit a satisfying feeling — but only 5% of recycled plastic actually gets recycled. Instead, use sustainable packaging, such as compostable materials that decompose naturally.

Go paperless: Eliminate waste by encouraging employees to go paperless. Instead of printing out pamphlets or notes for meetings, send them electronically via email.

Donate to environmental groups: If you feel unsure about making sweeping changes to your workplace, you can always donate to environmental groups. Set aside a portion of profits to donate to a specific charity.

Or you can give an organization a one-time donation on behalf of your business. Some popular groups include the Environmental Defense Fund and the Natural Resources Defense Council.

Purchase secondhand furniture: Not every office needs to have fancy retro egg chairs. Sometimes, secondhand furniture can work just as well. Reduce your waste by purchasing used items on websites such as Facebook Marketplace or OfferUp.

Use renewable energy: Try installing solar panels or wind turbines on your business property to minimize the effect of your electricity use on the environment.

Offset carbon emissions: Every business produces carbon dioxide, which causes global temperatures to rise. To compensate for these emissions, purchase carbon offsets via organizations such as Terrapass.

Offer public transit benefits: More than 7 in 10 workers commute using their cars, which produce a myriad of greenhouse gasses. You can encourage employees to take public transit by offering benefits, such as stipends for fare or a public bike membership.

Create an environmental resource group: Employee resource groups (ERGs) help engage employees on their identity, family status, and social causes. You can create an environmental ERG to encourage sustainable activities for your employees, such as hosting a webinar on how to compost or grow vegetables.

Examples of Sustainability in Business

When asked which companies come to mind when thinking about sustainability, 30% of the entrepreneurs The Hustle surveyed mentioned Patagonia — a retailer of outdoor clothing praised for its long-term commitment to sustainability.

Patagonia pays a self-imposed “Earth Tax,” where the company donates 1% of all proceeds to environmental nonprofits. It has also committed to using 100% renewable and recycled materials. Patagonia even has an online store exclusively for its used clothing and gear.

Most recently, Patagonia’s founder, Yvon Chouinard, transferred ownership of the company to two entities tasked with donating every dollar not reinvested to environmental groups.

Small businesses often lack the resources that a company like Patagonia has, so Demers advises taking more incremental steps to reaching sustainable goals.

For example, one survey respondent owns five escape rooms, and they purchase props from thrift stores to create these experiences. Another caters events using only plant-based food, while another owner simply skips trade shows to cut back on travel waste.

Though small, these actions add up.

Sustainability in Business Strategy

In an ideal world, businesses incorporate sustainability directly into their business strategy. However, many startups grow without prioritizing sustainability. For instance, a business might use cheaper, more harmful materials for packaging to save money.

However, “if you embed sustainability into your products and services upfront, it will be much less costly than reengineering them later,” says Whelan.

For example, you could embed circularity, which involves designing products that can be reused or repaired, into your business strategy.

Whelan recommends business owners start by assessing environmental and social issues in their industries, pulling insights from climate standards set by organizations such as the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI).

Through research, these nonprofits connect sustainable initiatives to enterprise value across multiple industries. Their insights can tune business owners into the most pressing sustainability issues facing their market.

Once you have a solid understanding on your industry’s environmental challenges, consider asking the following questions when building a sustainable business strategy:

• What hurdles does my industry face? What can my business do to become resilient?
• What are my competitors doing? Can my business do that?
• Does my product or service require a lot of energy? Is there a way I can reduce it?
• Are my suppliers sustainable? Are there alternatives that use more sustainable practices?
• Does my business produce a lot of pollution? What steps can I take to reduce it?

Answering these questions can help you brainstorm innovative and even simple steps to creating sustainability initiatives.

For any future endeavors, such as product launches or geographic expansions, position sustainability as a core part of your strategy. Your business will reap the many benefits of sustainability, including the ability to say your organization strives to save the planet.

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