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Starting an Eco-Friendly Business

Woman working at eco friendly green business

The United Nations' 2021 climate report deemed the current climate situation to be “Code Red." This finding makes it imperative that businesses take sustainability more seriously than ever. While large corporations will make the most significant strides toward alleviating the problems brought by climate change, it's clear that the impact of small businesses can be just as significant.

Business owners are “greening up" their endeavors. Many are turning toward sustainability models as they start new businesses. At the same time, customers are changing their buying habits and looking to sustainable companies for their products. In general, eco-friendly businesses find success by aligning themselves with environmentally friendly principles and making those alignments known to an eco-minded customer base.

This very brief overview will cover how to start a small business with environmentally friendly economic principles. It should give you some ideas of how to create a green business in your neighborhood and invite like-minded people to do business with you.

FindLaw's Starting a Business section provides a wide variety of articles and other resources to help you get started.

We make business formation EASY. Learn about our DIY business formation services here.

Respect the Importance of Environmental Regulations and Incentives

Fledgling industries deemed important to environmental initiatives, such as solar and wind power, can often receive financial aid to drive growth. This aid can be through direct investments by the federal or state government. It can also be from rebates provided directly to customers. This has been the case with rooftop solar power installations.

Businesses in renewable energy and other earth-friendly fields need incentives to thrive. Lawmakers hostile to green enterprises may be less willing to extend rebates and incentives, thus having a chilling effect on the industry. Alternatively, regulations on air quality and carbon emissions may help bring the cost of high-polluting energy sources like coal up to par with renewable energy sources. As a result, regulations like carbon taxes and stricter pollution standards can help earth-friendly businesses compete.

What Makes a Business Green?

A green business combines economic sustainability with social justice principles of family-supporting wages, benefits, and inclusivity.

It's not enough to merely operate a green business. You must also be able to explain what measures you're taking to reduce your carbon footprint. Nowadays, customers want to make informed decisions about the businesses from which they buy. The best way to let everyone know about your green efforts is by documenting them and sharing that information on your company website or through whatever other marketing channels are available.

Reduce Your Carbon Footprint

A carbon footprint is a total amount of greenhouse gasses (gasses that trap heat in the atmosphere) generated, directly or indirectly, by any given activity of a person or enterprise. These gasses are considered a primary driver of human-caused global warming.

Whether a business is "green" or not is measured by what that business's carbon footprint is. Certain activities reduce a carbon footprint while others increase it. A "green business" has a smaller carbon footprint than a similar business that does not adopt sustainability.

The average annual carbon footprint of a US individual is 16 tons. The average for the rest of the planet is four tons. The Environmental Protection Agency (EPA) has a useful carbon footprint calculator to determine a specific business's footprint.

Transact With Other Green Companies

One way to reduce your business's carbon footprint is through a "green procurement policy." This is when a business transacts with other companies that are also engaging in green practices. This can be your suppliers, the people who provide transportation, or even the retail outfits where you will make purchases. Research their sustainability practices and conduct eco-friendly transactions with businesses that have the smallest carbon footprints.

And remember to shop and network locally. This creates community and cuts down on expensive energy costs. Once you've established yourself, you can create or join a local group with other green business owners. You can also form social media groups, advertise, hold social events, and sponsor community events—the list is endless once you start making connections.

How To Write a Green Business Plan

A business plan is used to show potential funders and others that your business idea will work in real life. A green business plan accomplishes this by showing the reader how the business owners intend to make money using green methods and principles. All worthwhile business plans have the same essential components. They are:

  • A cover page
  • An executive summary
  • A mission statement with the business's objectives
  • A company description and overview
  • A list of the company's products and services
  • Market information and a marketing plan
  • An operations plan
  • A list of personnel/management that will be required
  • A financial plan

Your Plan Should Address the Triple Bottom Line

A green business plan should use every section as an opportunity to inform the reader how your new business will distinguish itself in sustainability. This is your chance to show that you aren't just greenwashing or faking it. Here are a few suggestions of how to do that.

It will follow the so-called “Triple Bottom Line" approach:

  • Profit
  • People (social responsibility)
  • The planet

Use real-world examples to prove the viability of your business. One such way would be by pointing out that, in 2020, sustainable US equities outperformed non-sustainable equities by 5%.

Make sure that the reader of the business plan knows that you are inspired by sustainability principles. Be able to explain how this business will contribute to the green economy. If you are manufacturing a product, describe how it's sustainably manufactured. If it is a service, will the mission include education or participation by the community? How will the business impact the local community? And how will internal operations (the office) be as green as possible? Analyze all the stakeholders through a sustainability lens.

In the executive summary, lay out the environmental needs that the business addresses. The mission statement should include sustainability goals, which should be at the core of your mission and integral to operating.

The company description should also contain the business's projected economic and environmental impact on the local community. Start with something like "We are an environmentally conscious company that…." Next, list any green third-party endorsements of the business or certifications of the principles.

Your section on products and services should have a green emphasis, focusing on why the green aspects give your company a competitive advantage. Your marketing section should emphasize your green target market, customer trends, green marketing tools, and potential collaborators.

As for your business's operations, you can write out the plan to make the office green—recycling, energy savings, going paperless, etc. Do the same for the manufacturing facility, personnel environmental training, and transportation. List your suppliers (local and green themselves, when possible).

Be sure to relay how your management team and advisory board will be trained, certified, and committed to green business. Finally, show in the financial plan how going green will positively affect your bottom line.

How To Maintain a Green Office

No matter what business you're getting into, you will need an office of some kind. Regardless of any goods or services they provide, every company that maintains an office has a measurable carbon footprint.

Even if you do not manufacture a green product, if you reduce your company office's carbon footprint, you will still be able to call yourself a green company. Businesses can become greener by imposing these basic sustainable practices:

  • Go paperless. The vast majority of printed materials do not have to be printed anymore. Email, texting, social media, and so on make large print projects virtually obsolete. Go further and get rid of notebooks and note pads. Substitute note-taking apps. Recycle all paper and only use recycled paper. Use multifunction printer/scanner/fax machines. Print two-sided. Use your printer's eco-mode if it has one. Use refillable ink and toner. Use overhead projectors for meeting agendas. Finally, always ask customers if they would like a receipt before you waste the paper to print it.
  • Create recycling centers. Place them around the office and by the printers. Put a bin for recycled plastics in the kitchen. Train the office staff in recycling. Recycle electronics and batteries, too. This reduces your environmental impact and puts recycled materials back into the marketplace.
  • Decorate with live plants. Scatter as many as you can around the office.
  • Use eco-friendly cleaning products. Practice green procurement policies or hire a green cleaning business.
  • Purchase and maintain sustainable office supplies. There are numerous ways to use office supplies in more sustainable practices. Use refillable pens. Use staple-free staplers. Use post-consumer recycled goods when possible. Cut down or eliminate products that have no green alternatives like rubber bands. Recycle your office supplies when possible. Use paper or bamboo straws.
  • Establish sustainability protocols for electronics. Computers have their own set of sustainability protocols. Turn them off at night and leave them on standby during the day to decrease energy consumption. Keep them updated—older computers use more power. Recycle computers when they have outlived their usefulness. Recycling old electronics equipment may be impacted by state law.
  • Turn out the lights. Do this whenever a room is not in use. Use energy-efficient light bulbs, light wall colors, and natural light whenever possible.
  • Moderate the temperature. Maintain a comfortable temp for your employees but be mindful of wasting energy.
  • Go green in the washrooms. Use eco-friendly soaps, recycled paper, low-flow toilets, and faucets. Fix all water problems as soon as possible.

Going Green in the Food Industry

Everybody needs to eat. The food business will always beckon certain people. No matter where your business is on the food chain—growing, delivering, retail grocery, or restaurant—green principles can help save money and positively impact the community and the environment.

Here are two brief examples of “green" food businesses to explore.

Growing Certified Organic Food for Commercial Sale

Organic food is the heart of the green food business. This food has been produced through approved processes, using organic fertilizers and farming practices promoting qualities like recycling and biodiversity.

Certified organic food can be sold at a premium. The United States Department of Agriculture (USDA) provides a portal for all things organic. They designate local agencies as agents to administer the certification process. Here are the USDA's five steps to organic food certification:

  1. Develop an organic system plan. Commit this plan to a document. This is like an organic food producer business plan. It lays out how the producer will conform to organic standards and includes all aspects of farming, food handling, history of the land being used, growing substances (fertilizer, etc.), monitoring processes, and so on.
  2. Implement your system plan. Bring the inspecting agency in as early as possible into the process—starting with reading and approving the system plan. Once approved, begin implementing the plan.
  3. Receive an inspection. Once the system is in place on the ground, it needs to be inspected. An inspector will need to conduct a top-to-bottom, detailed review of the entire system. This inspection will vary depending on which products or services you offer.
  4. Allow time for review. The inspector then sends the inspection results to the certification agent for review and to compare to the system plan.
  5. Receive certification. If you pass, you will receive your organic certification for whatever products pass the test. The process then becomes ongoing as you run the business, with inspections at least once a year.

Running Green Restaurants

If you are opening an organic food store or restaurant, you will be wearing your green bona fides on your sleeve. Your eco-friendly philosophies need to be the headline of your business plan and the very core of what your business presents to the public.

Still, you don't have to be an organic/vegan restaurant to employ and profit from sustainability principles. Almost all restaurants—especially new ones—operate on a very slim margin. Most new restaurants fail in the first three years. But sustainability principles can help with the overhead costs that drive restaurant owners crazy and damage their businesses.

Here are some tips for making any restaurant more sustainable.

  • Revisit your approach to lighting. Switch to energy-saving light bulbs and turn off the lights when you're closed.
  • Save water. Install low-flow faucets and toilets. Only run the dishwasher when it is full.
  • Buy energy-efficient appliances. With various tax breaks and energy savings, they pay for themselves quickly. Look at energy-efficient ventilation.
  • Shorten up your menu. Emphasize the foods that sell. This will save money on wasted food stock and energy costs.
  • Get rid of plastic. Use paper or glass. Explore hemp or bamboo substitutes for those.
  • Train the staff. Educate them in greening the restaurant and reward behaviors that promote sustainability.
  • Buy locally when possible.

Finally, check out the Green Restaurant Association. They have helpful tips, certification information, and a network of members available to help you.

Eco-Friendly Businesses and the Certification Process

There are several governmental agencies and non-governmental groups that certify green businesses in various ways. You may want to become certified as a green or environmentally friendly business, or you may want to look at the certifications of other companies to see who you want to do business with.

In addition to the USDA, here are some other domestic certification programs to look out for depending on your business model:

  • Green Seal: Offers comprehensive green certification services for products, services, and businesses that meet specific standards. Green Seal certifies a wide variety of products, services, and business processes.
  • LEED Certification: The non-governmental US Green Building Council has a multi-level building certification system for energy-efficient and otherwise green buildings, called Leadership in Energy and Environmental Design (LEED).
  • Scientific Certification Systems and Smartwood: Both organizations certify materials and processes that adhere to sustainable forestry standards developed by the Forest Stewardship Council.
  • Green-e: Certification related to the use or generation of renewable energy and carbon-reduction practices.
  • Energy Star: Managed by the US Environmental Protection Agency and the US Department of Energy; certifies products, buildings, and business facilities that meet energy efficiency standards.
  • Green Business Bureau: Certifies green businesses.
  • The Environmental Protection Agency has a program called Safer Choice for safe products that also perform well.
  • The Green C Certification from the American Consumer Council:  A program that promotes environmentally responsible practices.
  • Green America: Awards the Green America Seal to companies that use business as a tool for positive social change and that employ environmentally responsible processes.

Becoming certified shows consumers and business partners that your business and products meet the criteria set out by the certifying body. For example, you can't legally advertise your canned tomatoes in the US as "organic" without certification from the USDA. Keep in mind that different organizations and agencies usually have different standards for the same thing.

Earth-Friendly Business Resources From the SBA

Get Legal Help with Your Eco-Friendly Business

No matter what kind of business you start, you probably will run into situations requiring legal know-how. But earth-friendly enterprises, particularly heavily regulated or subsidized, often need even more legal expertise. Consider meeting with a business and commercial attorney familiar with environmental regulations and green businesses.

Looking to start your own business? Use FindLaw's DIY forms to get a legal business entity set up in minutes.

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