Tuesday, March 4, 2014

The Green Economy Outpaces the Conventional Economy: Small Businesses Need to Get On-Board

There are growing opportunities for sustainable businesses. During the period from 2008 to 2011, the green economy in the US has outpaced the conventional economy by a considerable margin. This is particularly true of the the food, personal goods, and construction markets.

The rate of growth for green business products and services are rising faster than conventional goods in the US. This figure is even more remarkable given the fact that this steady growth occurred throughout the depths of the recession.

These are the findings of a 2012 survey of 1,300+ “microbusinesses” (five or fewer employees), conducted by “The Big Green Opportunity,” and reviewed in a June 2013, Cleantechnica article. It shows that 88 percent of US businesses classified as “microbusinesses”  report that the greener the product or service the more likely its sales increase. A total of 75 percent reported an increase in green business from 2008-2011 at a 19 percent price premium compared to traditional goods. A total of 79 percent of small businesses report that green goods and services provided a competitive advantage.

Demand

The survey further suggests that there is growing consumer demand for sustainable products and services which is creating “green competition” among businesses.

“Green segments today are growing far faster than their overall industries,” said Denise Hamsler of Green America. “The growth we’re seeing today is off the charts.”

Green Building

Growth in green building continued to be strong even as the housing bubble burst and the recession set in.  Between 2005-2011, the green building segment grew 1,700 percent while the overall US construction industry shrank 17 percent. By the end of 2011, green building represented 38% of the US construction market, up from just 5 percent in 2005. Profits have followed growth, with green building worth $54 billion in revenue in 2011, and forecast to hit $200 billion in 2016.

Renewable Energy

Small businesses are investing in small-scale renewable energy projects instead of fossil fuel to power their operations. From 2002-2011, renewable energy consumption (solar photovoltaics, biofuels, geothermal, and wind) grew 456 percent while non-renewables (oil, natural gas, and coal) fell 3.2 percent.

Energy Efficiency

Businesses are also investing in energy efficiency measures to help cut costs. Survey respondents also reported purchasing energy efficient equipment, training staff to conserve energy, and installing efficient lighting were the top three actions they took to produce the fastest return on investment.

Organic Foods

Healthy organic food and personal goods are generating serious profits for businesses across the US. The organic food market segment grew 238 percent from 2002-2011 to hit $29 billion in revenue, while the overall food market only grew 33 percent during the same period. Although organic food represents just 4.2 percent of the overall food market, profits are projected to more than double to $78 billion in 2015.

Organic Non-Food

The organic non-food market is also growing. Green goods like clothing, personal care, pet food, and household products grew 400% from 2002-2011 while the overall non-food market grew 33 percent Revenue also jumped, from $439 million to $2.2 billion.

Investments in Sustainable Products

The growing fossil fuel divestment movement has prompted significant increases in socially responsible investing (SRI). Assets in SRI portfolios grew 32 percent to $2.3 trillion from 2001-2010, and produced a 13.2 percent return compared to 0.4 percent for the overall investment market during the recession.

Small Business

The survey indicates that large companies are disproportionally taking advantage of this growth compared to smaller businesses. Many opportunities also exist for smaller companies.

“Adopting green practices provides even the smallest businesses an opportunity to grow,” said Tammy Halevy of the Association for Enterprise Opportunity.

However, small businesses must act soon or they risk missing out on this valuable opportunty.

Taken together, these survey results support the business case for going green for businesses of all sizes. The combination of steady growth, higher sales and bigger margins are unavoidably compelling.

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