Green energy isn’t just a buzzword embraced by environmentally conscious consumers. It is also a strategy implemented by some of the world’s best run organizations to save or even make money.
Take Apple as an example. The company recently opened a new headquarters called Apple Park. The $5 billion company headquarters features a suite of solar panels that are capable of producing 4 million watts of energy, saving the company significant energy costs.
Patagonia is another example of a company that realizes the benefits of embracing climate friendly policies. For example, the mission statement on Patagonia’s website reads, “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” By embracing climate friendly policies, Patagonia both reduces costs, while also building more loyal customers.
This article will help business leaders to understand the various advantages of embracing green policies. These policies have the power to lower your organization’s operating costs, and can also make it easier for your brand to resonate with customers, employees, and potential employees.
Lower fixed and variable operating costs
Overhead costs can be a difficult financial burden for businesses to overcome. As organization’s scale, overhead can turn an otherwise profitable business into one that is in the red. Organizations that are able to reduce overhead, like UPS or Apple, have been able to generate incredible business results.
One effective way for businesses to lower operating costs, and to insulate themselves from risks associated with variable operating costs, is to embrace green energy. Rather than relying on rates set by electricity companies, organizations that employ alternative energies that they control, can dramatically lower energy costs, and avoid cost fluctuations associated with variable electricity costs.
To lower energy costs, businesses don’t necessarily need to embrace alternative energy. Take UPS as an example, after implementing an algorithm that routed delivery trucks using a proprietary machine learning system, UPS saved $30 million per mile for each mile the system saved.
Enhance company sentiment by embracing a society-driven mission
A recent study from Nielsen shows that the majority (55 percent) of consumers across 60 countries are willing to pay more for goods sold by brands that have committed to making a positive environmental impact. That means that going green can become a revenue generating practice, and not just a revenue saving one.
Businesses with a well-defined, and highly visible social mission will be able to find differentiation in crowded markets, and will be able to appeal to socially conscious consumers.
Take TOMS as an example, the shoe and coffee company has donated nearly 47 million liters of purified drinking water to people in need around the world. It was recently reported that TOMS is valued at over $600 million.
Take advantage of green energy tax credits
State, local, and federal governments are keen to incentivize green initiatives among the business community. In addition to saving on operating costs, and developing a network of brand loyalists, going green can also provide businesses access to green tax credits, tax deductions, or to earmarked capital.
For example, the United States federal government offers a green energy tax deduction of $1.80 per square foot to businesses that are able to reduce energy consumption by at least 50 percent. The same portion of the tax code, 179D, allows building owners or lessees to take a $.60 per square foot tax deduction if they use certain energy efficient products such as lighting, heating, or cooling systems.
Attract, inspire, and retain talented employees
The same Nielsen study cited earlier in this article found that nearly 70 percent of employees prefer to work for a “socially responsible” company. In an era where employees have increased power, it is critical for businesses to attract and retain the best people by embracing a socially conscious mission. Implementing environmentally friendly policies, and encouraging employees to involve themselves in furthering this company mission is a great way for organizations to inject purpose into any profession.
If you are still not convinced that going green can improve employee performance, consider a study from UCLA. The research compared companies with “internal ‘green’ practices” to organizations with no green practices, and found that employees that worked for green companies were 16 percent more productive than the control group.
Going green can lead to many positive business results. Organizations like Apple and UPS have saved hundreds of millions of dollars in overhead costs by embracing green energy or by finding energy efficient solutions to big problems.
Cost reduction aside, going green can also help organizations to attract and keep customers, since a growing number of people are willing to support businesses that care about social responsibility.
Finally, businesses that go green can appeal to talented employees by imbuing their organizations with purpose. Employees who work for socially responsible businesses will reward the company with increased productivity.