5 More Ways That Going Green Can Cost The Bottom Line
In last week’s blog, I looked at five ways that going green can cost the bottom line and how to address these. This is in response to conversations I’ve had with businesses around environmental sustainability and going green.
It is also to address some articles and blogs that I’ve seen that, I believe, do not tell the entire story and that focus on potential costs but do not discuss how these costs can be addressed.
Last week’s blog looked at the cost of taking action, keeping existing customers, internal education around going green, marketing going green efforts, and adding recycling. Below are five additional potential costs that a business can incur when looking at implementing environmentally sustainable business practices.
These are more pertinent to businesses that are slightly more advanced on the path to going green, and have taken some basic steps.
1. Cost of new equipment: If your business is looking to add new products, or to implement new processes that will mean greener products or reduced waste, this can clearly cost money. For example, if you are looking to reduce packaging for your product, you may need to consider upgrading your machinery. Or if you are looking at reducing paper use and you are currently keeping your books and billing manually, you may need to invest in new software. Investing in new equipment clearly costs money, but this can be offset by the savings in reduced inputs to the business. Here is one example of a coffee shop that installed a new machine and was able to subsidize the cost and save $100,000 annually in packaging costs. So, when looking at the cost of new equipment, be sure to take into account the time saved and the materials saved as a result of having that new equipment - this will give you a better idea of the potential benefits of purchasing that equipment (and this is good business practice regardless of whether you are doing it for going green or another project).
2. Cost of retraining: Assuming new equipment or software is purchased and installed, there is also a related cost of retraining staff so that they are up to speed. While additional training will take staff away from their usual work, training can be done in such a way as to minimize impact on daily operations. For example, it can be scheduled during weekly all-staff meetings, if appropriate, or it can be part of the yearly training time that staff is allotted, if that is the case. It is also important to bear in mind that in training your staff, you are adding to your business' capabilities and are helping them gain new skills. This is something that many have stated as important when working for an organization - the opportunity to learn and grow. So, while you can look at it as a cost, you will also want to bear in mind the benefits.
3. Cost of solar: If your business is looking at installing solar panels on the roof in order to mitigate or offset increasing energy costs, there can be costs associated with this. That being said, if solar is possible for your business, I would urge you to consider it. A commercial business can reduce its energy bill by 75 percent by going solar, according to Energy Sage. Not to mention that there are ways of doing this that can significantly reduce the costs to the business.One way is to look at potential incentives available through your local utility or at the state or local level. Check out the Database of State Incentives for Renewables and Efficiency to find out potential rebates in your area. Alternatively, you may not need to spend any money up front, by looking at a solar loan, solar lease or Power Purchase Agreement.
4. Cost of keeping investors: While some small businesses looking to attract investors or to keep existing ones may be concerned that taking steps to be more environmentally sustainable may deter investment dollars, the opposite is the case. Investors are looking at the profitability of companies that are green versus ones that are not, and are increasingly looking to invest in more environmentally sustainable companies. This is the case for a variety of reasons and it depends on the company, but these fall into three major buckets: 1) the fact that the impacts of climate change are now a material business risk; 2) companies that negatively impact the environment are called out much more quickly; and 3) sustainability has been shown to be a major driver for business competitiveness.
5. Cost of certification: If you a farmer looking to obtain USDA Organic certification for your produce, or even a office-based business looking to get a green certification, there are costs associated with this. These include not only the costs of certification, but also the potential costs of documentation, new permits, etc… In some instances, there are organizations that offset a portion of these costs, such as the National Organic Certification Cost-Share Program, which can reimburse up to 75% of the USDA Organic certification costs. In addition, if you are an office-based business, you may want to forgo certification and instead, opt for communicating the green steps you have taken – this is the especially the case since there aren’t many nationally recognized and legitimate certifications for smaller businesses that are not in the food industry – with the exception, of course, of B corp. Obtaining certification as a B corp will require advance planning, and is typically further down the path. If your business is at that stage, congratulations, because it means you have taken significant steps to be green and are also reaping the rewards, so obtaining the certification should feature into your ROI calculation.
As I mentioned in the prior blog about this topic, there will certainly be costs associated with going green, as there are costs with any actions a business undertakes. That being said, investing in going green now will pay dividends in the short and long term for your business.
If you’re thinking about getting started with going green, I’ve put together a
FREE The Beginner’s Guide to Creatively Grow Sales by Going Green, which lists over 50 low-cost projects and resources to get started.