The 21st century has seen tremendous growth in ecological awareness and environmental movements in the face of the effects of climate change. In order to fight the short and long-term impacts of an increase in global temperatures, we need every section of society to contribute and change the way they operate. Likewise, businesses, both big and small, must continue to adapt in order to reduce their overall carbon footprint and keep our global environmental targets on pace to be fulfilled. A shift by companies towards being green businesses or at least adopting environmentally friendly practices is critical going forward.
A green business can be simply defined as one that does not have a damaging impact on the environment, the economy, or society. Businesses are now becoming more aware of the need to be environmentally friendly, and we are seeing a radical change in the direction that a lot of enterprises are taking.
With ESG (Environmental, Social, and Governance) practices becoming an important criterion for business decisions, a number of Indian companies are switching to renewable energy resources to power their businesses, and are increasing the presence of sustainable products and services in their revenue mix. Practicing this ethos, in 2021, the Tata Group unveiled India’s largest solar carport at the Pune car plant of Tata Motors. This solar carport, along with providing covered parking for finished cars, will also help provide green power to the plant and reduce the company’s carbon emissions by 7,000 tonnes annually.
Similarly, Godrej & Boyce, the Godrej group’s flagship company, said it aimed to have 30% of its annual revenue come from “Good & Green ” products in the upcoming years. In FY 2020, 44% of the energy requirements of India’s premier IT company, Infosys, were met through renewable resources. ICICI Bank, one of the country’s largest private lenders, has established an environmental framework to vet certain new financing opportunities for green businesses.
But it is not just large corporations that have to change the way they function to secure a greener future for us all. Even medium and small-sized enterprises (MSMEs) can adopt sustainable practices to help the country move towards a greener future. But why should they do it?
Let’s have a look at some of the advantages of a small or large company going green:
Brand image: Multiple surveys have found that consumers are now increasingly attracted to brands and companies that are environmentally friendly. An Accenture report from 2021 found that three-quarters of consumers are now inclined to buy from companies that ethically source their materials. The report also found that there was a general shift away from price and quality as being key indicators for consumers to prefer a brand over others, and that the purpose and vision of the company mattered more. A shift from traditional ways to green ways of doing business can be seen as forming deeper connections with your customers and expanding your reach to new audiences.
ESG investments: It stands for environmental, social, and governance investing, which has skyrocketed in recent years. ESG investors focus on sustainable investments, with the environment and human conditions playing a pivotal role in their decision on whether to invest or not. According to Bloomberg, ESG assets are on track to exceed 53 trillion USD by 2025, meaning a lot more companies should seek to go green to open up new investment opportunities in them. One of the innovative methods that companies use for going green is Virtual Power Purchase Agreements or VPPAs, which is having a virtual energy contract with renewable energy producers. If a company signs a VPPA, it agrees to pay a fixed price for each unit of renewable energy produced by a renewable energy company, such as from solar or wind energy farms, though in some cases they may not be end-users of this energy. Such contracts help companies meet their green energy targets and their sustainability goals, while at the same time they support renewable energy producers to have a fixed income source.
Financial improvements: Traditional business beliefs would state that a company going green would reduce profitability. However, recent studies have stated that this is not the case. From saving on utilities through the sustainable usage of energy to the surveyed improvement in morale, and positive impact on the businesses perception in society, companies are finding the move to being green comes with financial benefits. New financial arrangements are being created to ensure companies remain profitable. These include a change in both the structure and nature of both bonds and loans. A new source of pride for investors is being a part of Green bond issuance by a company. Green bonds are bonds that are specifically created to raise money for environmentally-focused projects and have grown in popularity in recent years. They fund projects that provide green jobs and promote economic and climate resiliency. Not only companies, but in 2022, the Indian government too announced plans to issue 3.3 billion USD in sovereign green bonds to fund sustainability-focused projects.
Preparedness for future legislation and investments: As the world moves to reduce its emissions and puts forth legislation to enact this, companies can benefit from being ahead of the curve and going green. By going green early, a company can significantly increase its profitability by taking advantage of the tax incentives and subsidies now available for green companies. Going green would also allow companies to escape fines or have to rush their transition to being sustainable. By being ahead of the curve, companies can also open themselves up to a growing section of investment firms that practice ESG investing that we discussed earlier.
As you can see from the examples above, companies have multiple reasons to begin the journey of going green, and several large companies are already seeing the benefits. Amazon, Facebook, and Google have all pledged to power all of their data centers with 100 percent renewable resources in the coming years, saving them an estimated 10 percent on their utility bills. United Airlines, one of the USA’s largest airlines, saved approximately 2 billion USD in 2019 by doing away with in-flight magazines, reducing the plastic in their bathrooms and on the plane, canceling duty-free items, and beverage carts. All of these contributed to unnecessary waste in the form of plastic and paper pollution.
Smaller businesses and consumers, in addition to large conglomerates, have an undeniable responsibility to increase sustainable habits and have a more green business style. Green lifestyles involve reducing our carbon footprints, increasing our dependency on environmentally sustainable brands, and changing the way we commute from traditional means to e-vehicles.
Yulu is a proponent and practitioner of green business. We offer consumers mobility with a reduced carbon footprint and are focused on accelerating the adoption of alternatives to conventional transportation. Our easy-to-use EV’s are sustainable not only in the fact that they are powered by batteries but also because we are able to bring change at scale by motivating more people every day to switch to shared mobility rather than depend on personal mobility. And as we move forward in a bigger and bolder way, we hope to see many more of you join us in this ride towards a green future!