By adopting a cleaner, greener, and leaner business model, you will begin to appreciate what green businesses worldwide have already noticed: green business has a distinct competitive advantage over most of its traditional “brown” competitors. By reducing or eliminating the environmental compliance costs of a business, green business owners are finding that they are more flexible in how they can operate. Because their businesses are operated in a more efficient and streamlined manner, their overall costs are often much less than their dirtier competitors. This efficiency in operations can have benefits beyond the bottom line. More efficient and cleaner operations will most likely find their insurance premiums falling rather than rising as the health and safety benefits of the new operations methods begin to take effect.
If raising outside capital is important to your business, the cleaner and greener a business is, the better the access to capital will become. Banks and investors find clean, green, and well-run companies much more appealing than companies that are continually struggling to comply with government regulations, dealing with rising energy, water, and materials costs, and shouldering the high costs and dangers of handling and disposing of hazardous substances. Because you will be ahead of the curve in insuring that your operations are run in a clean and safe manner and that your products are safe and nontoxic, you will be well-poised to avoid any surprises as new environmental, health, and safety regulations are enacted. Likewise, a cleaner, greener business is less likely to be confronted by legal surprises, such as lawsuits stemming from product toxicity, violations of state or federal regulations, and other expensive legal difficulties. As an environmentally sensitive business, you will be able to differentiate yourself—in vibrant and cutting-edge fashion—from any of your stodgy status-quo competitors.
The greening of your business can also provide a competitive advantage as you may seek to expand your business. Increasingly, large corporations are examining their entire supply chains to insure that all of their suppliers are certified as environmentally sound businesses. We’ll examine certification programs later in this blog. There is also a growing tendency for financial analysts to upgrade the investment quality of a firm based on its perceived environmental performance and sustainability. Increasingly stringent environmental regulations are also taking hold in some regions—from tougher air quality regulations in California to comprehensive take-back packaging rules across Europe—and, as a green business, you will be poised to enter these markets more quickly and with less retooling than other businesses with less advanced leadership.
Finally, climate change is poised to dramatically affect all businesses across the world—creating, at once, the largest change in business and the largest new market (for carbon) in a century. Governments around the world are gearing up for major initiatives to confront climate change. Europe already has a market in place for trading carbon emissions, and the Chicago-based Climate Exchange is set to trade greenhouse gas emissions on a large scale with a commodities-like market exchange, with hundreds of companies already registered to trade. Sooner rather than later, carbon emissions emanating from business will begin to be inventoried and then regulated as a pollutant. A recent U.S. Supreme Court case confirmed that the U.S. EPA has such regulatory authority. Carbon taxes are another distinct possibility as the world struggles to find ways to wean itself from fossil fuels. Whether via carbon trading or taxes, a market price for carbon will be created that will have major effects all across the business world. Large corporations are already taking steps to adjust to this eventuality. By beginning the process of examining your carbon emissions and seeking ways to lessen them now, you will be years ahead of competitors that ignore this reality. All of these advantages to greening your business will provide your new lean and clean business with distinct competitive advantages over competitors.
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