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The Carbon Border Adjustment Mechanism (CBAM)
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What is Considered a Green Business?
Starting a business in the age of social media may seem easy enough, but the reality is that it couldn’t be more challenging – especially when it comes to trying to effectively start and succeed in opening a green business.
In fact, around 45% of businesses fail within the first five years – and only a quarter of businesses remain relevant after fifteen years.
Cultivating and maintaining a business is challenging enough when it comes to juggling suppliers, employees, and marketing campaigns – but keeping a green business up to speed is a whole other world.
In this article, we’ll explain what a green business is, examples, challenges, and how your company could become a green business itself.
What is a green business?
A green business, also known as a sustainable business, refers to companies that make an effort to operate in a sustainable manner that does not cause measurable harm to the environment.
💡 In addition to reducing their environmental impact, a green business will try to benefit their local community and economy – ultimately creating a positive impact on the global economy with their newfound green business decisions.
Therefore, a green business will need to consider the current impact of their actions on the environment and adjust them accordingly to reduce their emissions and overall environmental impact.
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Many companies will take some small first steps to become a green business, such as by:
- Analyzing their current carbon footprint
- Taking note of their current suppliers actions
- Look to cut back on plastic waste
- Reduce water usage
- Switch to the use of renewable energy sources
👉 Ultimately, a green business will make a genuine effort to equally balance their goals in terms of profitability with making a difference to help the environment.
Why is a green business valuable?
A green business is indispensable in today’s age as at some point, all businesses will eventually have to transition their companies to be considered as a green business – meaning that green businesses today serve as leaders in their respective industries.
💡 Modern businesses that still make use of fossil fuels and other unsustainable resources will eventually become obsolete and need to transition to the use of sustainable materials anyways.
A green business can not only help themselves by ensuring that their products and services remain relevant in the midst of climate change, but they can inspire other companies to take action as a result of their own success in green business.
Here are some other reasons why starting and maintaining a green business is important:
- Improve Communication – Whether it’s with your suppliers or stakeholders, having a green business means needing to practice greater communication and transparency with all entities involved with your business. This is a valuable tool that can make expanding your business and complying with future protocols in the future easier.
- Reduce Operational Costs – Cutting back on finite resources such as water and power can help businesses reduce their operation costs and allow greater financial investments in other green endeavors such as green financing or other renewable energy sources.
- Appeal to Younger Generations – Studies show that Gen Z is willing to pay up to 10% more for products that can be deemed as sustainable, meaning that working towards becoming a green business can help to attract future generations of consumers and ensure business longevity.
- Increased Business Efficiency – Running a green business doesn’t only help the environment, but it can help your business to function more efficiently and in turn, result in cost savings to invest in other sustainable initiatives.
- Government Aid – Any business considered a green business may be eligible to receive special government incentives such as tax breaks or grants, such as those depicted in the Inflation Reduction Act of 2022.
- Comply with Environmental Regulations Easier – As the transition towards a clean energy economy and a greener global future ensues, new regulations will continue to pop up – many of which companies around the world will scramble to comply with at the last minute. Luckily, a green business will often already adhere to these expectations and be able to avoid subsequent legal fines or late compliance.
- Maintain Relevance – A green business will have the ability to make ample effort to ensure that their products and services don’t become obsolete in the midst of the global push for greater sustainability. For instance, cosmetic companies that test on animals may fade to background over companies that ensure vegan and cruelty free products.
👉 Overall, green businesses are important as it allows companies to boost their brand image, gain a competitive advantage, and inspire other businesses to take action and mitigate their own negative environmental impact created by their business.
What are some examples of a green business?
There are several examples of green businesses today, such as Patagonia, Tesla, and Seventh Generation.
Even if companies struggle to be perfect in terms of reducing emissions or mitigating their environmental impact, a company considered a green business will always be trying their best to improve upon their current circumstances.
Here are some examples of green businesses broken down:
Patagonia
This outdoor apparel company has been exceptionally committed to sustainability and environmental activism.
This is because Patagonia encourages customers to repair their current garments before throwing them out in addition to donating 1% of their annual sales to various environmental causes such as the Hodfast Collective to help create customized military gifts.
Tesla
Tesla is a well-known car company that is making a genuine effort to decarbonize the average road trip and pave the way for more sustainable transportation, especially for countries in the United States where transportation emissions account for almost a third of all GHG emissions.
In addition to offering sleek and futuristic looking cars, Tesla prides itself on providing electric cars that are powered via various renewable energy sources – with the company citing solar panels as a major resource of energy.
💡Overall, Tesla is considered a green business as it’s making an effort to offer both visually appealing and environmentally functional vehicles for everyday use.
Seventh Generation
Seventh Generation works hard to offer eco-friendly household and personal care products by using plant-based and biodegradable ingredients.
In addition to this, Seventh Generation utilizes sustainable packaging from their own recycled materials.
The company has made a commitment to using 100% renewable energy by 2025 alongside zero-waste packaging further demonstrating leadership to show other companies how decarbonizing their business is possible.
👉 Remember, a company considered a green business doesn’t need to be “perfect” – but rather always striving to hit new environmental goals while also seeking new ways to benefit their local community.
What are the challenges of becoming a green business?
There are several reasons why it can be challenging to become considered a green business, seeing as many westernized countries still value consumerism and
Here are just a few reasons why it could be challenging to develop and maintain a green business:
- Commitment to Carbon Accounting – Effectively transitioning to a green business model will require companies to accurately measure, monitor, and manage their environmental impact – all of which can be challenging to do alone. This means that maintaining a green business will often require the help of a third party carbon accounting company like Greenly, and will require an initial investment before proving successful long-term.
- Consumerism Culture – Several industries still encourage customers to consume more than necessary. Think about it: massive industries such as the newfound boost in vinyl records and iPhones wouldn’t have the high profit margins they currently do without excess consumerism.
- Resistance to Change – Many companies, especially ones that have proven successful with their original “non-green” business models may be reluctant to implement new procedures and protocols out of fear that the company will lose its momentum.
- Potential Greenwashing Accusations – Even when companies are truly putting their best “green” foot forward, it’s possible that the company attempting to shift to a green business model will fall subject to greenwashing accusations – and in turn, damage their business reputation and profit margins.
To compare and contrast the pros and cons of starting or shifting to a green business, refer to the table below:
| Benefits of Becoming a Green Business | Challenges of Becoming a Green Business |
|---|---|
| Reduced operational costs through energy efficiency and waste reduction. | High initial costs for implementing green technologies and sustainable practices. |
| Improved brand image and reputation with eco-conscious consumers. | Convincing consumers to pay a premium for sustainable products. |
| Access to new markets that prioritize environmental responsibility. | Complex supply chain management to ensure all partners are eco-friendly. |
| Compliance with future regulations and policies that may favor green businesses. | Lack of standardized sustainability certifications, leading to confusion. |
| Increased customer loyalty from those who value sustainability. | Potential internal resistance to changing long-established business practices. |
| Eligibility for government incentives or subsidies for eco-friendly practices. | Difficulty in accurately measuring and tracking environmental impact. |
| Reduced risk by staying ahead of environmental regulations and trends. | Risk of greenwashing accusations if sustainability claims are misleading. |
👉 It can prove taxing both financially and time-wise to eventually be considered as a green business, but the potential benefits and future longevity of your company are worth the effort.
How can your company become a green business?
There are several ways that your company can become a green business, such as by clearly communicating your environmental goals, actively looking to reduce waste, and transitioning to the use of clean energy.
It’s important to note that choosing to purchase carbon credits once or to offer a limited time promotion to customers that trade in old goods for new products should not be considered a green business.
💡 Becoming a green business insinuates consistent determination to make the environment and surrounding community a better place.
Remember, to be considered a green business – your company will have to take effective and continuous action to reduce its environmental impact.
Here are some tips to help your company be considered as a green business:
- Acquire the Necessary Credentials – An ISO Certification, B Corp, LEED, or applying to the SBTi can help demonstrate your environmental commitment to others and also help to avoid greenwashing.
- Employ Energy Efficiency – Implement more energy efficient tactics such as the use of LED light bulbs in the office can help to reduce operational costs and your company’s environmental impact.
- Decarbonize Your Supply Chain – At Greenly, we can help you to better manage the various discrepancies in your supply chain by improving communication and learning which suppliers are contributing to your overall carbon footprint the most.
- Encourage Employees to Use Public Transportation – A massive part of your company’s emissions may result from scope 3 emissions, which include employee travel. Offering your employees a stipend for a monthly bike subscription service or the city bus or metro could help to reduce miscellaneous emissions.
- Partnerships with Eco-Friendly Organizations – When it comes to fighting against climate change, two heads is better than one – as developing partnerships with other organizations considered as a green business can help to improve your own company’s credibility.
Overall, working to develop a truly sustainable organization and to be considered a green business will require consistent effort on behalf of your company – but there’s no better time to start than now, as the world continues to take one step closer to all businesses needing to be sustainable in order to thrive long-term.
What About Greenly?
If reading this article about what is considered a green business has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Trying to switch your company over to the values of a green business can be overwhelming, but don’t worry – Greenly is here to help. Click here to schedule a demo to see how Greenly can help you find ways to improve energy efficiency and decrease the dependency on fossil fuels in your own company.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
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