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New York Times
(by Jim Witkin)
2 February 2011
Natural Capitalism Solutions recently began a series of workshops and online tools aimed at small businesses to help them carry out green business practices. Ms. Lovins promises to return their money if the program doesn’t pay for itself in cost savings in the first year. A condensed version of a conversation with Ms. Lovins follows.
Jim Witkin: What do you say to the business owner who tells you the bottom line is a higher priority right now than going green?
Hunter Lovins: The bottom line should be the highest priority for small businesses — or you go out of business. But if you are not eliminating waste and implementing energy-efficiency measures; if you are not engaging your employees in the sustainability efforts that will motivate, excite, and inspire them; if you are not capturing the brand equity of operating as a responsible business; then you are just not doing good business.
JW: Does that convince them?
HL: People tend to look at sustainability as a cost rather than an investment. So we always talk in terms of R.O.I., or return on investment. We also show them how other businesses have gotten started and what they’ve already achieved, because knowing where to begin can be the biggest challenge. And often there are additional drivers like a competitor already doing it, or a customer demanding it. So it’s important to focus on the bigger picture beyond the initial cost.
JW: Does that win over the climate-change skeptics?
HL: Yes, all the time. If they are willing to engage in conversation and they are good business people, they get it. Ironically, selling our services to “believers” who may have taken a few green steps is often harder, because it’s difficult to get them to do more. They think they’ve done everything they can. It’s often easier to start with people who know very little about the topic.
But let’s assume the skeptics are right. Call climate change a hoax. I wouldn’t advise you go to Vegas on the odds of that being correct, but if all you care about is maximizing profits, you’ll do the exact same thing as if you were scared to death about climate change. We know how to solve this problem at a profit, and the smart companies are doing it. Why is Wal-Mart going green? Trust me, it’s not out of the goodness of their heart. They are going green because they are saving money.
JW: Can you give us an example of a small business you’ve worked with?
HL: Well, I think a great example came from a workshop we completed last year in the San Francisco area. We worked with Scandic Springs, a small, custom manufacturer of precision metal parts. They use a lot of cardboard packaging to ship their products, which is a major expense for the business. We encouraged them to look at their packaging and try different options like using a smaller corrugated thickness and removing some of the cardboard inserts. They discovered that using just a little less cardboard on each box didn’t impact the quality of the packaging, but they estimate it will save them about $8,000 a year. And it cost them almost nothing to implement.
JW: For the average business owner, which actions provide the quickest returns?
HL: Putting in more efficient lighting has a very quick return. Most small businesses are probably throwing money away using lighting as space heating, because the old-style bulbs create more heat than they do light. Some local governments already have ordinances about changing out old-style fluorescents or changing out incandescent bulbs to thecompact fluorescents.
JW: What about businesses for whom energy is not a big part of their costs?
HL: Yes, many small-business owners might say, ‘It’s not a big number, so why should I care?’ But if you have money sitting around in the bank, what R.O.I. are you making on this money? A couple of percent if you are lucky. Why wouldn’t you invest in something with a much higher R.O.I. by implementing these measures?
And there are other gains as well, like improved worker productivity. Improving the quality of the workplace, with things like a lighting retrofit or improved ventilation, for example, will give you higher labor productivity. You typically pay 100 times for salaries what you pay for energy, so if you can get a 1 percent increase in their productivity, that dwarfs all the energy savings.
JW: Are there any trends small businesses should be tracking?
HL: It depends on where you are. For example, there is a new law in California that will require building owners to come up to a new energy code. Many cities are now requiring recycling because they are running out of landfill and their costs are going up. Last January, the S.E.C. passed guidance on companies reporting their carbon footprint, so if you are an S.E.C.-regulated company, you better be paying attention to that. And where the big companies go, shortly thereafter go the smaller companies who supply them.
If you are a small business that is any part of the Wal-Mart supply chain or any other large retailer, and you are not focusing on sustainability, you are at risk of losing your biggest customer. These retailers will be looking for some level of green accounting on the products they are buying.
Also you should start looking at what your competitors are doing, and recognize that sustainability could provide a competitive advantage. Besides the cost savings, your customers want to do business with companies that are improving the quality of the community. And employees believe a more environmentally responsible business is a better place to work. How are you going to attract or retain the best talent if you don’t have a program like this in place?