What is it that makes a business “green”? It is quite amazing to see how “green” is often misused as a business label rather than the ethos of business. The most talked about change in business model, revamping the entrepreneurial ecosystem with concepts and buzz-words in (i.) green business (sustainable production, climate-smart, green finance); (ii.) entrepreneurship (green entrepreneurs, ecopreneurs); and (iii.) green marketing (sustainable brand, eco-friendly product, up-cycling) are trending language. Green marketing has drastically altered consumer behaviors and consumption patterns, and similarly with vocal climate-change activists and demand for sustainable products has created a demand for green business. The green movement in itself is not new, but with global madness of climate change impact and awareness and shift towards co-existing and protecting the environment we live in, and sustainable use of natural resources, green entrepreneurial ecosystem will blossom at higher rate. There is an opportune moment to brand value for companies to green themselves but being mindful of not greenwashing the consumers.
Before delving deep into green business model, it is good to reflect on your business and evaluate future opportunities and risks, and impact measurement methodologies in place to contribute to the green space. With Sustainable Development Goals as a driver for green economy, and the strategizing opportunity of COVID-19 crisis, the push for environmental protection is will be stronger than ever. Often, times green financers in Nepal look at providing eco-loans for installation of solar panels, rainwater harvesting, waste management as key environmental investment opportunities. No doubt, small efforts to combat climate-change enables businesses to be eco-friendly. However, it does not investigate the fact that there could be many environmentally damaging outliers of such businesses that are at all not “Green”. On the contrary, a business could have green operations and require financing for expanding to a new facility, but banks may not see it as “green” financing. Considering the fact that Nepal Rastra Bank has introduced Environmental and Social Risk Management Framework for financial institutions, the need to green the entrepreneurial ecosystem is even more prevalent in Nepal. At a broader context, businesses can adopt the five-dimensional of green strategy to find a fit in strategizing business model. A structured business approach to green operations can also create a pathway to green certification and validating a business for meeting requirements for green financing, carbon-financing, and sustainable practices.
1. Green Policies
Green practices need to be embedded as part of the company’s values and strategy. Green policies need to be familiarized, endorsed, and adopted at strategic level to the daily grind. Green values of the business help in decision making and setting directions. It becomes a set of norms, values, culture, and belief that the organization will live and grow into. Policies will enable businesses to develop framework and procedures on how green activities will be integrated while looking at it from risks and enhancement opportunities and impact. Businesses need to follow the mitigation hierarchy of avoid, minimize, compensate, or offset as they identify risks and map out green business practices. Policies are the driving element of green business practices and gives shape and achievability of other four elements.
2. Green Operations
There are several opportunities for businesses to green their processes, whether it is through supply chain, streamlining operations or managing waste. Businesses can look into how raw materials are sourced and designing strategies to engage with suppliers with environmental policies and practices and have adopted sustainable practices and impact. Likewise, identify areas in packaging and distribution processes to reduce environmental footprint. Assessing manufacturing and production processes can help identify opportunities where green practices can be adopted. This could mean minimizing waste and streamlining processes, using resource circulation processes, and minimizing impact of environmentally hazardous waste and emissions. Waste management and mitigation practices need to be considered to ensure that any waste from business processes are managed and disposed to reduce negative impact on the planet. This would require looking into waste collection and handling, waste segregation and recycling, treatment of hazardous waste, effluent and sewage treatment and minimizing spillages in the environment. There are opportunities and costs associated with it, but for quick wins, businesses can prioritize easily achievable items like improvement in waste management and switching to environmentally safe raw materials and packaging. This impact can be related to SDG 12, Responsible Consumption and Production. Dhukuti by Association for Craft Producers (ACP) has managed this by rainwater harvesting system that is used for factory use, steam from production process is trapped and used for drying, and wastewater is treated and reused. Mahaguthi sustainably sources its fabrics in partnership with local producers and suppliers to manufacture their clothing brand Kalpa.
3. Resource Efficiency
Aligning business practices to SDG 9, Industry, Innovation and Infrastructure, and SDG 13 Climate Action, resource efficient actions can be adopted and implemented. As Nepal continues to strive ahead in production and consumption of renewable energy, this auto-creates opportunity to minimize their carbon footprint by using clean energy. This would mean not relying on diesel generators for backup, and in case of back-up power requirement, switching to solar energy. Eco-loan and green financing programs can help absorb the cost of switching for businesses with higher future rewards for business in terms of sustainability. Considering uses of innovative and efficient technologies during design process can help identify cost-benefit of such technology in the long term, improve production efficiency and minimize maintenance and operations costs. Switching to cleaner technologies will ensure businesses environmental footprint is reduced. The key activity that tend to get overlooked is use of natural resources. Businesses can take a data-driven approach to identify and establish a baseline on dependency on natural resources such as water, air, forestry-products, etc., establish benchmark, and find sustainable methods of consumption of natural resources. The thought process is to not overly consume natural resources that it degrades the environment in the long term creating a negative impact and cost to the business and to the environment. Recently, Yeti Airlines has offset their carbon footprint and invested in efficient technology to reduce their carbon footprint of operations.
4. Life below Water
Adapted directly from SDG 13, Life below Water, businesses can look at water consumption patterns ensuring it is sustainable and not negatively impacting aquatic habitation. This would relate to proper treatment of water to an acceptable industry standard before releasing, ensuring that the aquatic ecosystems like river, lakes, and oceans are not polluted thereby creating a harmful environment for aquatic life. Businesses need to understand that communities and wildlife also need access to water resources and that the operations of business are not restricting access to water supplies. Water is an important source of livelihood, culture, health, nutrition, and basic human rights, and for the biodiversity a crucial part of the ecosystem. Business needs to consider the impact on aquatic diversity and methods of minimizing or compensating for such impact such that aquatic diversity is preserved. This becomes prevalent in hydropower development in Nepal as projects leave stretches of dewatered zone and direct impact on endangered aquatic species and migration. However, responsible projects are investing in international fish ladder and aquatic monitoring and mitigation strategies.
5. Life on Land
Businesses can directly contribute to SDG 15, Life on Land by adopting business practices that is able to manage and mitigate risks to biodiversity and environmental protection. Unsustainable use of natural resources, deforestation, pollution, destruction of natural habitats, etc. can cause negative impact on biodiversity leading to many species being extinct. As part of business practice, negative impact on biodiversity needs to be evaluated and measures taken to safeguard, at certain times meaning changing project location. Environmental protection is usually neglected which can cost the business monetarily in the long term. Environmental protection can be through stabilizing slopes, managing riverways, soil fertility, etc. Business exists in its environment together with communities and wildlife, meaning that all three rely on ecosystem services to function and operate. As such, businesses need to identify negative impacts and mitigation measures to ensure ecosystem services are maintained and there is access to such services. The development of Nijgadh Airport in Nepal will have monumental impact on biodiversity, ecosystem services and environmental protection, and outcry by protestors has already begun.
It is evident that with proper assessment of negative environmental impact of business, establishing baseline and benchmark indicators can help businesses move significantly towards greening their enterprises. Such practices are to be adopted as an investment opportunity rather than expense for long term value addition to business. Being green requires businesses to co-exist with local communities to deeply understand their relationship with the environment and collaborate with support agencies in maintaining and managing the ecosystem. Environmental degradation and irresponsibility can result in outrage by local communities, protests from activisits, regulatory fines from the government, and boycott of products by the consumers. The five dimensional map of green business practice enables companies to look at existing and future practices and identify opportunities and feasibility of actively planning, developing and implementation for adopting environmentally friendly practices. The map enables advocacy groups, green financers, climate investors, think tanks, and regulatory agencies to develop common understanding on green business thus enabling a systematic change and adoption of green practices in the entrepreneurial ecosystem.
