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There’s mounting evidence that when businesses adopt environmentally friendly practices it helps the bottom line. As a result, everyone from small business owners to leaders of publicly-traded corporations are embracing the idea that sustainability – once considered an expensive extra – is now a bonafide business opportunity.
“If something is good for the planet and good for society, that in and of itself says that it’s good for business,” says Tommy Linstroth, who founded and leads Green Badger, a Savannah, Georgia-based software company that offers clients cloud-based solutions that help businesses navigate their way to LEED building certification. “No matter what industry you’re looking at, you can always find ways to implement sustainability,” he says.
Business leaders who invest in and promote sustainability often use the term “stakeholder capitalism” to explain their reasoning. Achieving profits remains the main goal, but pleasing stakeholders — employees, customers, investors, vendors, and the community in which the business operates — is vital to business success.
“Companies have discovered that they’re not only responsible for their shareholders, they’re also responsible for their stakeholders,” says Melissa Rappaport Schifman, the author of “Building a Sustainable Home: Green Design Choices for Your Health, Wealth, and Soul,” and founder of Green Intention LLC, a consulting firm that advises small businesses and nonprofit organizations on how to adopt sustainability measures that make financial sense.
She has firsthand experience in this. In 2020, she and her husband Jim Schifman launched a pet product company, Project Hive, which donates a percentage of profits toward planting wildflowers that help protect the planet’s dwindling bee population. Project Hive strives to be a carbon-neutral business, meaning that they do what they can to limit emissions, including local sourcing and limited freight. In addition, its dog toys are built to be durable, its vegetarian dog treats contain no genetically modified organisms (GMOs), and its packaging is minimal and recyclable.
The competitive advantage
While Project Hive was built on principles of sustainability by a sustainability expert, the process may look different, yet no less beneficial, for long-standing businesses that are learning to adapt. Studies show that consumers are more likely to pay for products and services from companies that are able to demonstrate their commitment to the environment.
“It really matters to a big segment of the population and that segment is growing fast,” Rappaport Schifman says. “If people have the choice between two companies, they’re going to choose the one that supports a more sustainable future.”
Thanks to the internet, consumers are better educated about company practices and whether they’re operating in an environmentally friendly way.
“Anyone can look you up and see exactly what you’re doing,” she says. “There’s no escaping that real accountability.”
As evidenced by the Great Resignation, companies have seen that employees care about the way their employers do business, and they’re not afraid to leave for somewhere else if they don’t agree with it. That includes how their business practices impact the planet. Today’s employees are more likely to choose to work for a company with an evident commitment to sustainability.
“A company’s biggest cost is its workforce,” Linstroth says. “If you’re running a business, you want to attract the best workers and then retain them, which means keeping them happy and feeling good about where they work. You want your employees to have faith in you, and you want them to know you share their values about what’s important.”
Real cost reduction
Across many industries, sustainable practices directly lower operating costs. For example, Tide found they could help the environment and their bottom line when they slashed the amount of water in their laundry detergent products by half. They saved money on both packaging and freight and were able to ramp up their ESG scores.
The farming industry can and does bolster its sustainability profile – and save money – by lowering its use of water, fertilizer, and pesticides. Apparel companies like Patagonia have made headlines and gained customers by switching to recyclable materials and donating to environmental organizations.
While it may be more difficult for small businesses with limited resources to invest in environmentally friendly practices, Linstorth says that even minor changes make differences that matter.
“Replacing a gas-powered fleet that’s working just fine with an electric one isn’t going to happen overnight,” he says. “But there are low-cost options such as LED lighting retrofits and behavioral changes like having employees shut their computers down each day, instead of using all that electricity to keep them running overnight, that can happen tomorrow and costs nothing.”
He also points out that companies currently unable to invest in optimum greening measures, such as installing solar panels or switching to an electric fleet, can put a solid plan in place so they’ll achieve those goals over time.
By planning with environmentally conscious efforts in mind and incorporating steps to go green, businesses can retain employees, attract consumers, and make the world a better place.
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