By Hannah Fitzpatrick
What Is “Green Business”?
A sustainable business, or “green business” operates on the principles of environmental sustainability in its operations. It strives to use renewable resources, and tries to minimize the negative environmental impact of its activities.[i] In simpler terms, these organizations aim to use business practices that do not develop any sort of economic, social, or environmental threat for current and future generations.
Though numerous companies claim to be ecologically friendly, a business can only be certified as a sustainable business through the following criteria:
- It incorporates principles of sustainability into each of its business decisions.
- It supplies environmentally friendly products or services that replaces demand for “non-green” products and/or services.
- It is greener than traditional competition.
- It has made an enduring commitment to environmental principles in its business operations.[ii]
Green Business: Not A New Idea
Green business standards vary, however, and can become more specific depending on the type of product being sold. For instance, the non-profit environmental standard company Green Seal issues 33 standards covering over 400 product and service categories, ranging from household products and other cleaning products to restaurants and other food services.[iii]
Though the idea of sustainable businesses may seem to have recently emerged in contemporary society, this is not the case. According to Harvard Business School business historian and professor Geoffrey Jones’ 2017 book Profits and Sustainability: A History of Green Entrepreneurship, the origins of green business can be traced back to start-ups in organic food and wind and solar energy during the early to mid-1900s.[iv]
This included efforts such as:
- Natural Resources Conservation Services ® Initially known as the Soil Conservation Service, this agency was created by the U.S. Department of Agriculture in 1932 in order to oversee various research and conservation projects across the country.[v]
- The Smith-Putnam wind turbine, the world’s first megawatt-size wind turbine, was constructed on Grandpa’s Knob in Castleton, Vermont, and provided power to a local utility network.[vi] This turbine was also the largest wind turbine ever built up until 1979, when Boone, North Carolina’s Mod-1 Turbine claimed that title.[vii]
- In 1956, solar cells, which were discovered by Calvin Fuller, Gerald Pearson, and Daryl Chapin just a few years prior, were available for commercial use. However, these solar cells were quite expensive ($300 for a 1 watt cell), so they were mainly used in smaller items, like toys and radios.[viii]
Even major corporations, such as Ford Motor Company, played a key role in the rise of sustainable industries. For instance, founder Henry Ford experimented with plant-based fuels during the days of the Model T. The company also used forms of “upcycling” by shipping the Model A truck in crates that then became the vehicle floorboards at the factory destination. Furthermore, the original auto body was made of a stronger-than-steel hemp composite.[ix]
Evolution of Green Business
Over time, the idea of sustainable business has become increasingly popular. But how exactly did it become so mainstream?
The answer is quite simple. Through public awareness and understanding of the negative effects that corporations can have on the environment, and those same people advocating for change.
According to KPMG International’s 2014 study A New Vision of Value: Connecting Corporate and Societal Value Creation, public awareness of this issue has been growing due to the increasing number of studies that quantify corporate “negative externalities”, like pollution, carbon emissions, and ecosystem damage.[x] These include a number of studies conducted by KPMG themselves that show just how damaging the effects of business operations can be not only on the environment, but on their profits.
Another KPMG study found that that the cost of environmental damage caused by 11 key industry sectors in 2010 was equivalent to 41 percent of their pre-tax profits and that some sectors, such as food producers, would have no profits left if they had to pay the full cost of their negative environmental externalities and took no mitigating actions.[xi]
This figure is, unfortunately, not surprising. According to the United Nations Environmental Programme, since 1992, humankind has caused more extensive and rapid changes to ecosystems in the last 20 years than at any other time in history, due to an ever-growing demand for resources. The damage includes loss of biodiversity, acidification of oceans, less productive cropland, desertification, tropical deforestation, and declines in wetlands, mangrove forests, sea-ice habitats, salt marshes, coral reefs and more.[xii]
New Models for Green Business
The digital age has enabled this information to disseminate quickly and widely among the general public, while giving these businesses an opportunity to change their business model and incorporate sustainability as a major focus in their overall goals. A quick summary of the more prevalent green business models follows.
The Nexus Approach
Used by the World Economic forum and even the German federal government[xiii], this model examines the interrelatedness and interdependencies of environmental resources. Instead of just looking at individual components, the functioning, productivity, and management of a complex system is taken into consideration. By taking this approach, it can result in improvement in improved water, energy, and food security worldwide.[xiv]
Life Cycle Approach[xv]
Also known as “life cycle analysis,” “life cycle assessment,” or “life cycle management”—this model addresses the entire life cycle of a product, process, or activity, including research and development, extracting and processing raw materials, manufacturing, transportation and distribution, use, re-use, and maintenance, recycling, and final disposal. This form of sustainable development, which began as a tool for informing hazardous wastes management in the late 1970s and 1980s, is usually managed by a set of guidelines that outline four basic steps of how the approach should be taken:
By taking this approach, a new way of environmentally sound management of chemicals can be developed, which can eventually lead to a decrease in contamination of the ocean, freshwater sources, and soil.
Case Studies: Green Business
Sustainable businesses are on the rise – thanks to the power of the voices of people like us. Major brand-name companies are taking the step into becoming more eco-friendly as well as economically friendly through a variety of means. Here are two of the numerous examples of how these businesses are moving toward becoming truly eco-friendly.
Since the founding of this popular outdoor clothing company by Yvon Chouinard in 1973, Patagonia has marketed themselves as a “green” brand, and has made efforts to make the production, shipment, and sale of their products more eco-friendly. For example, since 2007, Patagonia has created interactive maps that show their consumers exactly where their products came from and how the resources require to make them are obtained and used.[xvi] They also list on their website their most recent measure of their carbon footprint, renewable energy use, and natural and recycled materials used in their products.[xvii]
After looking into the inner workings of this company, it is clear that they are using the life-cycle approach when it comes to their products. Their “Worn Wear” initiative allows consumers to buy used clothing donated by other customers, and they also keep track of the different materials in their products, where they are getting these materials, and how they are being used.[xviii] Because of this, Patagonia has become quite profitable: in 2016, the company had over $800 million in sales – twice as much than in 2010. [xix]
This German athletic-wear company’s current sustainability strategy includes factors such as a yearly report of their environmental impact under the ownership of the French luxury group Kering, using sustainable alternatives of key materials in their products (ex: cotton, polyester, leather), and producing zero discharge of hazardous chemicals in their supply chain.[xx] Also present in Puma’s sustainability strategy is the use of an Environmental Profit & Loss Account, which puts a direct monetary value on both nature's "services" used by the business – such as fresh water, clean air, healthy biodiversity and productive land – and on the negative impacts the company had on the environment. This allows the company to make clear of the magnitude of the costs to managers and stakeholders, pinpoint where in the supply chain these costs were being incurred and what action was needed to be taken in order to address them.[xxi]
When looking into the details of Puma’s sustainability strategy, it is clear that this company is using the nexus approach to become eco-friendly. Their Environmental Profit & Loss Account incorporates numerous aspects of environmental issues in their analysis, such as air pollution, greenhouse gas emissions, and water consumption, by evaluating its effects on their consumers and the environment itself, and how those effects impact the company’s supply chain. Conducting this account proves not only to be effective in lowering their environmental costs, but also in increasing overall sales. From 2013 to 2016 PUMA’s environmental costs have decreased 7.5% in relation to their sales, and their overall sales increased 10.2% in the same period.[xxii]
Approaches to evolving environmental protection
Existing civil and political rights can be used to give individuals, groups and nongovernmental organizations (NGOs) access to environmental information, judicial remedies and political processes. This allows for the facilitation of participation in environmental decision-making and the compelling of governments to meet minimum standards of protection for life, private life and property from environmental harm.
We can also treat a decent, healthy or sound environment as an economic or social right. The main argument for this approach is that it would privilege environmental quality as a value, giving it comparable status to other economic and social rights, such as development, and priority over non rights-based objectives.
A third approach treats environmental quality as a collective or solidarity right, giving communities rather than individuals a right to determine how their environment and natural resources should be protected and managed.[xxiii]
What is Earth Law, and How Does It Support Green Businesses?
Earth Law holds that nature has inherent rights and legally should have the same protection as people and organizations. At Earth Law Center, we recognize nature’s right to exist, thrive and evolve: enabling nature to defend these rights in court (just like corporations can) and protecting nature the way corporate law protects business.
But how exactly do we protect these businesses?
- By advocating for and protecting the rights of current ecosystems, we are also promoting end to end manufacturing – a sustainable alternative to current manufacturing methods
- Advocating and fighting for the rights of domesticated animals encourages removal of animal suffering from supply chain
- Prioritizing the health of ocean ecosystems connects and strengthens the goal of zero waste for large scale manufacturers
Your Choice Matters: What You Can Do To Get Involved Today
Current business models are changing to address the environmental challenges of the day. Green business leaders across the world are showing the way to do it. However, the real change comes from you. By supporting sustainable businesses, we are one step closer to creating a more eco-friendly and habitable world. In this case, your choice truly does matter.
To help us in our efforts to support sustainable businesses, or in general, consider the following options here:
-Sign up to volunteer at ELC here (https://www.earthlawcenter.org/volunteer/)
-Stay informed by signing up for ELC’s newsletter (https://www.earthlawcenter.org/newsletter-sign-up-page/)
-Connect with ELC on social media
[iv] Geoffrey Jones (2017). Profits and Sustainability. A History of Green Entrepreneurship. Oxford University Press.
[xii] United Nations Environment Programme, Keeping Track of Our Changing Environment: From Rio to Rio + 20
(1992–2012) (Nairobi: UNEP, 2011).
[xxiii] Boyle, Alan; Fordham Environmental Law Journal; Summer 2007; Vol.18, Issue 3, p.471-51