Why should my business be more environmentally sustainable?
The moral argument
The essential science of climate change is now unequivocal: planet Earth is heading rapidly towards climate disaster. Climate change is an issue for the natural world and it interacts with our societal structures to lead us towards a collection of negative global outcomes, including more natural disasters, food insecurity, economic disruption and violent conflicts. A key reason to make your business more environmentally sustainable is to contribute to combatting this trend.
The economic argument
Making your business more sustainable isn’t just morally beneficial. In recent years consumers have increasingly come to value the sustainability credentials of products they buy and the businesses they buy from. A survey by Deloitte, for example, found that about one-third of consumers surveyed in 2021 chose to buy from brands that have environmentally sustainable practices or values.
Making your business and its offering more environmentally friendly can provide a competitive advantage against other businesses selling similar products, as consumers may choose to purchase your sustainable products over their less sustainable options.
Moreover, sustainable innovation can go hand in hand with cost reductions. For example, if you find a way to use a byproduct created by your business as a material for creating another product, you’re reducing the amount of materials you need to purchase. This can be especially beneficial in, for instance, the hospitality industry, as using food waste creatively can both make your menu more interesting and have a huge impact on your sustainability credentials.
Can you make your product greener?
At the heart of any business lie the goods or services that it provides to consumers. To make your business more environmentally sustainable, consider how you can make your offerings more sustainable. For example, could you use more environmentally friendly materials to make your product? Could you use more sustainable production methods (eg methods that require less power or generate less waste)?
Using more sustainable materials and processes can cost more than using cheaper, less sustainable alternatives. Developing new products and manufacturing or service provision procedures can also require your business to invest in resources and commit time to this development.
If you’re concerned that these factors may make it unprofitable for your business to develop a more sustainable product, consider what you’re really investing in. As well as the innate moral value created when you contribute to conserving the natural world, becoming more environmentally friendly can help your business economically.
Protecting your innovations
If you come up with innovative new eco-friendly product designs or production processes, you have created value. You should consider protecting your right to your innovations so that your business can take advantage of the value that you’ve created.
If you have invented a new way of making your product which involves an inventive step (eg it is a truly new way of doing this that no one else in your field or industry has come up with), and which is capable of industrial application (eg it can be used in a manufacturing process of significant scale), you may be able to apply for a patent to protect your new invention.
Although you may be able to protect the rights to exclusively use an innovative environmentally friendly process, if you truly want to contribute to sustainability efforts, you could share your invention with others so that they too can reduce the environmental impact created by their businesses.
However, if you collaborate with other businesses (eg by researching a new means of production together), you should be aware of the possible competition law (or ‘antitrust’) implications of such collaborations.
Competition law prohibits certain business practices which are deemed to negatively affect the competition between businesses in a certain market. One of these practices, prohibited by the Competition Act 1998, is collaboration between businesses which distorts (or affects) competition within a market.
For instance, if you invent a new way of making your product sustainable (assuming that consumers value this innovation and are willing to pay for it), this could give you an edge over your competitors. If you then share the secret with your competitors, this would distort your competitive advantage and the competition in your market more generally. If this occurs your business could be accused of violating competition law and may be at risk of regulatory action or private (ie brought by another business) enforcement action.
There are exemptions to this for businesses who only hold a small share of their product’s market and for collaborations of certain characters (eg for certain kinds of research and development). As a result, competition law mostly affects larger businesses. However, if your business operates in a smaller, niche market, you may be held to hold a large market share in your particular niche market. You could then be subject to competition law rules. This can be a complicated area of law.
If you’re considering collaborating or sharing information with a competitor, you can Ask a lawyer for help considering any potential competition law implications.
If you’re collaborating with another business, you should also consider creating a Collaboration agreement to protect your interests throughout the collaboration.
Evaluate your supply chains
No business operates in isolation. Every business interacts with multiple other businesses on a daily basis: from the business you buy your materials from, to the business you pay to market your products, to the business you buy the office coffee from. To truly lower your business’ environmental impact, consider whether the businesses you interact with are environmentally sustainable.
What is a supply chain?
A supply chain is the system of businesses involved in a product’s lifetime, from origin (eg the mining of the base materials used to create something) to end consumer. Supply chains include service provision steps. For example, the marketing, finance and customer service stages involved in getting a product to the final consumer.
A service can also be a ‘product’. If your business provides services, your supply chains may look a bit different. For example, businesses higher up your supply chain may be those which made the computer you use to provide customer service, or which marketed the service you offer.
How do I evaluate a supply chain?
Evaluating the environmental sustainability of another business is, in many ways, similar to evaluating your own business’ sustainability. For example, consider whether:
they use environmentally friendly packaging and transport
their products are designed and produced sustainably (if not, is a more sustainable alternative available on the market?)
their governance and supply chains are environmentally friendly
You could get this information from business’ websites or by initiating a discussion with a representative of the business to ask these questions.
Some sustainability information about businesses isn’t so easy to come by, and larger businesses and those further back in a supply chain may be harder to communicate with. In such situations, you can search for sustainability information contained in reports that the business publishes about, for example, their environmental impact or strategy or in more general corporate social responsibility (CSR) reports. You can often find reports like these by searching for them online.
You can also look at whether businesses have certifications such as Fairtrade or B-corp certifications. These indicate overall conscientious business practices, which usually include positive environmental sustainability practices.
Which supply chains should I evaluate?
You should consider the environmental credentials of businesses at all points of all the supply chains that your business is involved in. Sometimes there will be steps in a supply chain which you cannot access information about, for instance, those which occur many steps and/or a long time prior to your place in the chain. When this is the case, you should consider all the businesses in the chain that you do have access to information about.
If there are steps in your supply chains that you cannot discover anything about, you could also consider whether this may be an issue in itself. Are businesses being purposefully opaque about where their products come from? Could this be allowing them to hide socially and environmentally damaging practices? Altering your supply chains to include more transparent businesses throughout can help you combat this and ensure to a greater extent that your business’ supply chains are as sustainable as possible.
Can my business’ governance contribute to its environmental sustainability?
You can entrench your business’ sustainable practices in the policies and documents that govern its activities.
If your business is a company it will have its own articles of association setting out how the company is to be run. You can choose to include a commitment to environmental sustainability in your articles of association.
The articles form a binding contractual document in which the company makes commitments to its shareholders. This is, therefore, a powerful way to build a commitment to environmental sustainability into your business’ operations. You can also alter your existing articles by following a specified process.
When incorporating a commitment to sustainability into your articles of association, you should be careful not to make any illegal provisions. If you’re unsure how to do this, you can Ask a lawyer for help.
Workplace policies are documents that set out your business’ commitments relating to certain business practices. They are not legally binding contractual documents, but they should be abided by when appropriate.
An Environmental policy can help you to set out your sustainability commitments and to communicate these to your staff. You could also consider creating a corporate social responsibility policy to set out your commitment to tackling both environmental and community issues.
Create a sustainable workplace
Creating a workplace that is environmentally friendly and which encourages staff, customers and others to take on sustainable habits can also help lessen your business’ negative impact on the environment. For more information, read How to create an environmentally sustainable workplace.