Contact: Leslie Anderson Maloy, Hastings Group, (703) 276-3256

Summary

Key Findings in the Big Green Opportunity 

Green market opportunities and operating practices should matter to owners of the smallest businesses. As this report makes clear, that’s not only for ethical reasons. Our work – supported by a national survey of more than 1,300+ business owners, reveals a compelling business case for green.

This report is the first major study to look at the green economy from the perspective of small business owners, including owners of “microbusinesses” – those businesses with 5 or fewer employees which represent 88 percent of businesses in the United States. It’s also the first report to consolidate market data on the growth of green segments across a range of industries, trends that reveal immense opportunities for these small businesses.

Here’s what we found:

Green market segments in the United States are growing fast. Growth rates of “green” segments are outpacing conventional segments in every industry where we collected data . (See “The Growing Green Economy,” page 22-31.)

  • From 2002-2011, the organic food segment grew 238% while the overall food market grew 33% (page 25)
  • From 2003-2011, the organic nonfood segment grew 400% while the equivalent overall non-food market grew 33% (page 26)
  • From 2006-2011, the green building segment grew 1,700% while the overall construction market contracted 17% (page 27)
  • From 2001-2010, assets in Socially Investing portfolios grew 32% while assets in investments overall grew 27% (page 28)
  • From 2002-2011, use of renewable energy (not including hydro and nuclear) grew 456% while use of energy from non-renewable fuels fell 3.2% (page 29)
  • From 2002-2011, unit sales of hybrid vehicles grew 646% from 36,000 to 269,000, while sales of vehicles overall dropped by 15% (page 30)
  • From 2002-2011, imports of Fair Trade certified foods grew 1,442% while overall food imports declined 38% (page 31)

The small businesses in our study reported a growing demand for green products and services and greater competition for green-oriented customers. At the same time, business owners reported that their green offerings tend to be profitable, often more profitable, than their less environmentally beneficial offerings. (See “Green Demand” and other study results, pages 12-17.) 

  • 75% of survey respondents who sell green products or services saw an increase in sales of those products and services during the down economy, from 2008-2011.
  • 79% of survey respondents strongly agreed that offering green products and services gave their business a competitive advantage.
  • “High-footprint” industries reported the most competition around green, particularly food & agriculture, building & construction, lodging & accommodation, manufacturing, and real estate, rentals, & leasing.
  • 62% offer green products or services partly because it’s a “competitive requirement” in their industry
  • 76% of all survey respondents strongly agreed that their green products and services are profitable.

Some small businesses at the frontier of capitalizing these green opportunities are capturing significant market and operational advantages. We segmented our 1,305 survey respondents into 3 groups based on the social and environmental attributes of their products and services and their level of adoption of water, energy and/or waste efficiency measures. The Deep Green segment in our study (those business owners whose answers reflected the most intense embrace of “green”) reported significantly stronger performance than their Light Green peers on nearly every dimension we tested. (See “The Green(er) Edge” pages 18-21.)

  • Deep green businesses were significantly more likely then their lighter green peers to agree that being green has enabled them to expand and diversify their product and service offerings.
  • Deep green businesses were significantly more likely to report a competitive advantage from their green offerings than their lighter green peers.
  • Deep green businesses were far more likely to report strong revenue growth through the recession from their green products and services than their light green counterparts.
  • Deep green businesses were significantly more likely then their less-green peers to report that their customers are willing to pay more for green products and services.
  • Deep green businesses in our study were far more likely than their lighter green counterparts to agree that their existing customers continue to support them because of their green attributes.

Green “operational efficiency” practices are increasingly mainstream for companies, including small businesses. While some businesses in our study had adopted only the more expected green practices, such as double-sided printing (69%), a surprising number reported retrofitting their lighting systems (50%), redesigning products to reduce energy requirements (10%), and installing solar photovoltaic panels (6%). (See “Environmentally-Beneficial Savings,” pg. 35.) 

10 key operational investments provide the fastest return on investment, according to small business owners who completed at least 40 of 58 possible actions.

  1. Purchase energy efficient equipment*
  2. Train staff to conserve energy*
  3. Install more efficient lighting*
  4. Recycle and/or reuse in-house plastics, paper, metals, glass, and/or organics*
  5. Redesign product to require less energy in production
  6. Create employee incentives for reducing energy use
  7. Enable energy-saving settings on computers
  8. Increase purchasing of products in local vicinity
  9. Install energy efficient windows
  10. Install solar photovoltaic panels

* Grants/Credits, Tax credits and utility programs were the top sources of financing for the four operational investments with the highest ROI.

A nascent support network has sprung up almost overnight to help businesses sell and operate in environmentally-beneficial ways. We identified more than 160 green certification programs and more than 35 specialty industry trade associations dedicated entirely to green, most of which have appeared since 2001. The explosive growth of this support infrastructure is a clear sign of a rapidly expanding green economy. (See “The Organizations that are Growing Green,” pages 32-34.)

  • The number of specialized green industry associations in the U.S. has doubled since 2001
    (page 32)
  • The number of U.S. green certifications has grown 180% since 2001 (page 33)
  • The number of U.S. green certifications has grown 180% since 2001 (page 33)

Yet, in spite of the clear economic and competitive benefits of green and this emerging support system, many small businesses are poorly positioned to capitalize on the opportunities in this emerging green economy. Many Light Green business owners lack the market insight, customer and peer relationships, know-how, and capital to compete in this new economy. (The current version of our report includes challenges and recommendation for businesses that are already green; see “Challenges and Recommendations,” pages 40-43.  If you’re interested in learning more about the challenges facing traditional small businesses in adopting sustainability measures, please contact the research partners.)

And overall, unlike large companies, which tend to have full-time sustainability staff and are far more likely to have aggressive sustainability strategies, few small businesses have dedicated capacity around green.  By their nature, small businesses – especially the very smallest – lack the resources to hire dedicated, knowledgeable staff to harness the value in green. Only the most green-committed small businesses (primarily those who understood green markets and practices from day one) are truly integrating green into their strategies and operations. (See “The Green(er) Edge” pages 18-21.)

Small businesses risk ceding the “Big Green Opportunity” to larger companies that embrace green and have more resources to invest, but they have real opportunities for capturing value. In categories where consumer demand is driving green growth, small businesses can succeed through laser-like focus on meeting needs of existing customers and attracting new customers willing to pay “Green Premiums.” In areas where green market growth is a response to regulation or the barriers to entry are higher, small business owners often need additional support and guidance along the way. Sometimes that comes in the form of interpretation of new environmental rules and their implications – other times it comes in the form of financing that recognizes the value in green markets and efficiency practices. (See “Big Green Challenges,” pages 40-43.)