Editor’s Note: Our guest columnist, Nellie Lide, says the evidence is in. “Green business” is a significant force and is here to stay. — Anita Campbell, Editor
By Nellie Lide
Green. Sustainability. Philanthropic. Environmental. Clean. Natural. Healthy. Organic. Conscious Capitalism. Ethical Consumerism.
All these words define the movement of both consumers and companies to become socially responsible for their actions and their products or services. The very heart of a business is changing — making a profit and striving for a healthier planet with healthier people are now bundled together.
Inc. magazine reported: “… something seems different about our current green awakening. This time, the action is being driven as much by markets as morality. High oil prices, global warming, the sense that chemicals cause real harm and the earth’s resources are indeed finite — these are not so much charitable causes to embrace as they are problems that entrepreneurs can solve.”
So how can I say with certainty that we are on the brink of what Fast Company called Business 3.0? Here are five major indicators demonstrating the phenomenal growth in “green” business and why it appears to be a long term trend and not just a fad.
1. Customers are increasingly aware of environmental issues.
- The 2007 Cone Consumer Environmental Survey found “one-third of Americans (32%) report heightened interest in the environment compared to a year ago. In addition, they are overwhelmingly looking to companies to act: 93% of Americans believe companies have a responsibility to help preserve the environment.”
- The 2007 ImagePower Green Brands Survey indicated a “shift in the U.S.’s collective consciousness — green is no longer an issue marginalized to fanatical environmentalists; nearly all Americans display green attitudes and behaviors versus a year ago.”
- A national survey by GfK Custom Research North America showed that “… individual Americans view U.S. citizens and corporations as behind the rest of the world when it comes to taking action to protect the environment ….” Kathy Sheehan, Senior vice-President for Gfk Roper Consulting said, “This reflects the overall ‘consumer awakening’ trend we are seeing today, in which action is historically preceded by acknowledgement of an issue resulting in a need for change.”
- About half of employed adults (52%) think their company should do more to be environmentally friendly. (Adecco Survey, April 10, 2007)
2. Customers are increasingly drawn to businesses, products and services that are green, organic, natural, clean, sustainable — you get the idea.
- According to a recent Priceline.com survey, “… an overwhelming majority (72%) of travelers want rental car companies to offer economical, environmentally friendly hybrid vehicles powered by both gasoline and electricity.”
- The Organic Trade Association says that organic retail sales in the United States have grown between 20% and 24% each year since 1990. According to survey results, sales of organic foods grew by 22.1 percent in 2006 to reach $16.9 billion.
- Green building is forecast to grow from a $7.4 billion market last year to $38 billion in 2010, according to the National Association of Home Builders. (Business Week Small Biz, Summer 2006)
- According to research from ACNielsen’s LabelTrends, “[In 2006] … products with antioxidants, fiber, no preservatives and organic claims all grew by 10% or more versus last year.”
- “Water [considered a healthy drink], together with other nonfizzy drinks, accounted for 90 percent of the growth of the entire beverage industry between 2002 and 2005. By the end of the decade, they are expected to outsell soda.” The New York Times, May 27, 2007.
- “General Electric Co. Chairman and Chief Executive Jeffrey Immelt said his ‘green’ ecomagination unit is on track to ‘blow away’ its 2010 sales target of $20 billion as demand for environmental products and services surges.” (Reuters, May 25, 2007)
3. Local Governments are forcing green issues all over the United States:
- Plastic Bags — For the first time, non-biodegradable plastic bags are banned in large grocery stores by a local ordinance in San Francisco. (San Francisco Chronicle, March 28, 2007)
- Trans Fat — In 2007, New York became the first municipality to officially ban trans fats. Philadelphia and Montgomery County, Maryland have also banned trans fat. (Washington Post, May 16, 2007)
- The Incandescent Light Bulb — From Ban the Bulb blog : “South Carolina is attempting to follow the lead of Australia and the European Union by enforcing the use of compact fluorescent light bulbs … Other U.S. states are also considering similar legislation.”
- The Bottle in Bottled Water — This year, Americans will drink more than 30 billion single-serving bottles of water (see New York Times article referenced above). According to The Container Recycling Institute: California, Connecticut, Delaware, Hawaii, Iowa, Maine, Massachusetts, Michigan, New York, Oregon, and Vermont all have existing bottle deposit laws. And many additional states (Arkansas, Illinois, Maryland, North Carolina, South Carolina, Tennessee, West Virginia) are considering similar laws.
4. Personal and Professional Investors are Going Green
One sure way to know that clean or sustainable or environmental or just plain green businesses are here to stay is to see where both professional and personal investors are putting their money.
- One venture capitalist told Entrepreneur magazine: “We look at all kinds of energy and environmental technologies David Kirkpatrick, managing director at SJF Ventures in Durham, North Carolina. But it’s different than the ’70s and ’80s boom in environmental cleanup technologies: Today, these are proactive technologies, not reactive.”
- Venture capitalists invested $1.2 billion in green businesses in 2006. That’s twice as much as they invested in 2005 …. (Venture Capitalist John Doerr, Speech, Stanford Graduate School of Business, April 5, 2007)
- Venture capital firms invested $958 million in renewable energy companies in the first half of 2006 alone.
- Sharp growth in the number of VC firms specializing in seeding green businesses or adding a green component to their funds: Global Environment Fund, Kleiner Perkins Caufield & Byers, and Draper Fisher Jurvetson, just to name a few.
Socially Responsible Investments
- Socially responsible investing options have exploded the last few years: Nearly $2.3 trillion was held in socially responsible accounts used by individuals and institutions at the end of 2005, up from $639 billion in 1995 and outpacing growth in total assets invested.
- Socially Responsible Investment Firms have multiplied too – Al Gore’s Generation Investment Management (with some 110 green mutual funds and more), Social Investment Forum, Social Funds, Calvert, Domini Social Investments, Pax World Funds, Citizens Funds, CalPERS, Ceres, Interfaith Center on Corporate Responsibility, Sierra Club Mutual Funds
- Even some mainstream financial institutions have factored in environmental, social and governance (ESG) issues into their investment processes — UBS, Goldman Sachs, Citigroup, Smith Barney, JP Morgan Chase (Value, February/March 2006)
5. The Green Business Infrastructure is Growing
Education, entrepreneurial communities and conferences have all been affected by our environmental awakening.
Consider the increasing interest in getting Green MBAs:
- Student interest in sustainability issues is skyrocketing: “Five years ago, [The Aspen Institute Business and Society Program] site received a few hundred visits a month from prospective MBA students researching social-emphasis courses at various schools. Now there are 15,000 to 20,000 visits a month.”
- New College of California — offers a Socially Responsible and Ecologically Sustainable MBA Program
- Dominican University of California — has a Green MBA program
- Presidio School of Management, Presidio World College, San Francisco — has an MBA program in Sustainable Management
- Green Mountain College, Vermont — “… charged into the world of online education with two innovative master’s programs, both catering to the needs of working professionals. One is an MBA in sustainable business. The other is a Master of Science in Environmental Studies ….” (Seattle Post-Intelligencer)
Also consider the growth of entrepreneur communities that focus on Green Issues and Social Responsibility:
- Center for Small Business and the Environment
- Entrepreneurs for Sustainability
- Small Business Majority
- New Voice of Business
And then there is the growth of green conferences:
- Co-op America’s Green Business Conference — from website: “Roll up your sleeves and get ready to bite into the green business revolution at this hands-on conference. Learn from your peers in this value-packed three-day event as you discuss the many ways to build your business and a prosperous sustainable economy ….”
- National Association of Home Builders, National Green Building Conference – Greening the American Dream
- Green Power Conferences – from website: “Green Power Conferences was established in 2003 by a team of professional, environmentally aware event experts. We have since welcomed over 4000 delegates from 76 countries, built a global database of 110,000+ contacts and gained an unparalleled reputation in the industry.”
- EPA’s one stop shop for planning a green conference — This is a bit different from a conference about green business. This site can help you plan any kind of meeting while minimizing negative impacts on the environment.
With these five trend indicators, it seems clear that the movement in the 21st century toward green business is a profound one that looks here to stay.