In business, there is a broad consensus on environmental initiatives: while they are good for the Earth and better for consumers, they can hurt business. Making something green or sustainable involves higher costs without a corresponding bump in profits — at least that’s what many think.
However, a growing body of evidence from companies around the world suggests that the relationship between ecology and economy is not as competitive as many assume. When done well, it’s possible to advance both pursuits simultaneously.
Embracing the idea of eco-innovation
The term eco-innovation simply means an economic effort that operates with respect for the environment. This could be a single product or project, or it could be a company whose entire mission is to promote sustainability.
Currently, companies with a focus on eco-innovation are growing at an annual rate of 15% at a time when many competitors remain flat. Many of these companies are the small and medium-sized enterprises making up an astounding 99% of Europe’s economy.
When you consider the benefits of eco-innovation from a business perspective, it’s not hard to see why these companies are growing. Sustainable companies are:
- Tapping into new and emerging markets: the green revolution is developing new markets and expanding old ones, creating a wealth of new opportunities for ambitious enterprises.
- Attracting investors: banks, municipalities and even crowdfunding contributors are all eager to support businesses with a sustainable focus.
- Getting ahead of regulations: staying ahead of environmental regulations helps companies avoid the cost and consequence of a reactive effort if and when those regulations change.
- Increasing profitability: a serious, sustained and collaborative adoption of sustainable practices has the opportunity to eliminate waste, lowering an organization’s costs.
- Promoting innovation: operating sustainably requires careful self-scrutiny and in-house auditing that often reveals opportunities to innovate new products and processes.
To understand how these benefits can work together, consider UK businesses. Owing to generous public funding and a broad coalition of organizations working to advance sustainable practices, the UK ranks 11th worldwide in terms of commitment to eco-innovation. Far from operating on the fringes, companies engaged in eco-innovation are at the beating heart of the British economy.
Ensuring profits remain sustainable too
The case for eco-based businesses has often focused on the marketing and PR advantages to be gained from going green, but there is powerful evidence that eco-innovation leads directly to higher profits.
A recent survey suggested 75% of manufacturers have watched their materials costs grow. Eco-innovation aims to extinguish those higher costs — one of its core goals is to reduce waste and make materials as productive as possible. A German company providing consulting services in this space has been able to save 700 clients an average of €200,000.
With new legislation, it looks like companies will only continue to save. A forthcoming EU initiative aimed at promoting a circular economy (one focused on waste and reuse) is set to introduce sweeping new regulations and incentives. For eco-innovative companies who prepare in advance, this presents huge opportunities to gain a competitive edge and push profits upward.
But it is not necessary to rely on speculation to see that eco-innovation in itself can be profitable. The industry rating buildings as green-certified was non-existent, but has grown to earn a projected $3 billion in less than two decades. The money is there for companies willing to seek it out.
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Bringing eco-innovation to your office
Conditions are such that a business of any size, in any industry, should strongly consider making eco-innovation a priority. The present and future benefits of putting sustainability at the forefront are too big to ignore. Here are three strategies for incorporating eco-innovation into your business in a meaningful way:
1. Set your target
Every business endeavour needs a plan and eco-innovation is no different. Developing sustainability goals helps companies prioritize eco-innovation within their cultures and business agendas. Just as you would with any project, determine what your initiatives’ success will look like and what will indicate whether you’re achieving success.
2. Start from the top
If eco-innovation is going to benefit a company in a significant, long-term way, it needs the company’s top leaders’ support. Your entire upper leadership should be on board with your sustainability goals and understand their roles in supporting and meeting those objectives. Strong leadership provides the inspiration and acceleration that innovative ideas need to gain traction.
3. Vet your vendors
Environmental gains may get wiped out if they are not adopted throughout the supply chain. The most successful examples for eco-innovation, from both a business and environmental perspective, involve communication and collaboration on the part of the greatest number of stakeholders. Ensure your vendors and partners share your own company’s environmental beliefs.
Eco-innovation is not easy, but it is certainly exciting. It is essential for all of today’s businesses to realize that going green is not a stunt: it is a sound business strategy with a positive impact on the bottom line. It won’t be long before eco-innovation is an imperative rather than just an option.