Eco-friendly business: Advantages and Disadvantages

Considering the current environmental scenario across the globe, running a business in an eco-friendly manner has become very important. Nowadays, we hear a lot about eco-friendly ventures. Before beginning the transformation process, a business owner must evaluate the advantages and disadvantages of an eco-friendly business model.

Let us take a closer look at the pros and cons of starting an environment-friendly business:

Advantages of starting an environment-friendly business

1. Increased revenue

Many customers are beginning to realise the benefits of eco-friendly living. So, transforming your business from top to bottom can attract more clients. This will increase the revenue. 70-75% of customers within the age bracket of 15-20 years said they would pay more for products and services offered by environment-friendly companies. Some government firms and non-profit institutions also prefer giving contracts to companies that run in an eco-friendly manner. ESG funds are gaining more popularity. These funds support the companies that are going green.

2. Tax incentives

The government of many countries offer incentives such as tax credits to companies that run in an eco-friendly manner. Several grants and tax incentives are available to green companies and entrepreneurs who aspire to start a business in an eco-friendly way. The government has set some regulations and conditions that have to be met by the companies for getting such incentives. New businesses and start-ups can also receive these grants if they follow the criteria from the beginning. It also helps in making the process of getting a business license hassle-free.

3. Good PR

Going green puts your brand a step ahead because the company’s image improves in the eyes of potential customers. If you decide to implement an eco-friendly business model, you should advertise it as much as possible. You can do it on social media platforms. It will help in establishing good relationships with your customers. Happy customers can recommend your products to their relatives or friends. This will increase brand awareness.

4. Conservation of natural resources

The primary goal of an eco-friendly business model is to protect the planet. By going green, business owners can save natural resources such as water and fossil fuels. Going green also helps in reducing air pollution, water pollution and soil pollution. Business owners can also save money by using alternative means of travelling and alternative energy sources like solar energy. Harmful activities, such as deforestation and mining, can be reduced. One of the advantages of running a sustainable or green business is that it helps in slowing down climate change. All these factors ensure that our planet is left in good shape for our future generations.

5. Employee health

Going green attracts employees with a similar mindset. A green business model also helps in maintaining the health of your employees. Business owners can start to provide healthy and organic food in the cafeteria. They can also use organic cleaning products which are plant-based and do not contain toxic chemicals. It ensures that the business owners are not putting their employees’ health at risk. It results in a decrease in the number of sick leaves and an increase in productivity.

Disadvantages of starting an environment-friendly business

1. Takes more time

Implementing a green business model may not be a quick and smooth transition for a company and its employees. It takes time, and the employees need to be patient. For instance, gathering biodegradable wastes and non-biodegradable wastes in separate containers can be a laborious and time-consuming process. But, once the employees get habituated, it becomes easier. Thus, one should constantly check whether the guidelines are correctly followed until each employee gets used to the process.

2. Substantial initial expenses

Instalment of new and eco-friendly devices requires a substantial initial investment. Considering the current scenario of the economy across the globe, recovering from these initial costs may take two or three years. Hence, this decision should not be taken overnight. Also, business owners should plan their budget well in advance. The audits and certification process for going green also demand considerable investment. Although these initial costs may seem very high, these changes are known to save expenses in the long run.

3. Data risks

After implementing environment-friendly business practices, the first shift that most companies make is going paperless. They run their business with the help of digital platforms. But everybody knows that data leaks have become a significant issue these days. Personal data of the employees and confidential information of the company can fall into the wrong hands. Owners may face difficulties in digitalising the existing process. Computer viruses and system crashes can give rise to severe problems. Due to these reasons, many companies still prefer the traditional methods of documentation.

4. Complex business model

Every business model aims to increase revenue. Focusing on other issues and implementing changes for going eco-friendly can be very tiresome. Maintaining the profits and staying ahead of the competition while doing so can be difficult.

5. Finding new suppliers can be hard

It is one of the significant disadvantages of implementing an environment-friendly business model. Not all vendors and suppliers have the same mindset. Thus, companies need to find suppliers who are aware of the environmental issues. Suppliers who provide eco-friendly products or resources can charge more money. So, business owners need to find suppliers who can provide those products at affordable rates. It requires a lot of dedication and hard work.

6. Consumer backlash

Sometimes, you may fail to follow certain regulations unintentionally. If the consumers realise it, you may face difficulties even if the allegations are not valid. You may lose your customers. It can result in substantial financial losses. Hence, business owners need to be very careful while changing their business policies. They must ensure that those policies are properly implemented.

Conclusion

Business owners should analyse all the advantages and disadvantages of going green before making the shift. After deciding to go eco-friendly, planning the steps and finances well in advance is essential. There will be many obstacles and difficulties. But one needs to be determined, patient and persistent. If you face difficulties, you can consult with advisors who can help you achieve your business goals.

Also Read:

1) TOP 10 Problems Every Small Business Face (And how to fix them)
2) Reasons your Small Business Should Accept Digital Payments
3) Steps to Survive a Recession and Grow Your Business Even in a Bad Economy
4) Reasons Why Every Small Business Should Market on Social Media

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FAQs

Q. What are ESG Funds?

Ans. ESG funds invest in shares of companies that adhere to ESG (Environmental, Social and Governance) principles. Some of the ESG funds in India are SBI Magnum Equity ESG Fund, ICICI Prudential ESG Fund, etc.

Q. Is there any company that prefers investing in the shares of eco-friendly businesses?

Ans. There are several companies in India that provide capital to eco-friendly ventures and invest in environment-friendly companies. Examples of such companies include Rainmatter, UnLtd India, etc.

Q. How to increase the brand awareness of an eco-friendly business?

Ans. Simple marketing strategies such as posting articles that describe the company’s eco-friendly initiatives can be very effective. You can use social media platforms for advertising your products.