What does it mean for startups to be a green investment?
It’s clear that there are definite revenue benefits to being seen as a sustainable brand. A 2023 report from Accenture found that 72% of consumers look for sustainable products, and over half would pay more for products designed to be reused. In addition, many investors are looking towards green investing to improve their portfolios while making an impact.
But positioning a business as sustainable isn’t as easy as pledging to plant trees. Failing to live up to stated commitments or not doing enough can lead to accusations of greenwashing. This outcome can significantly damage a startup's reputation.
A 2022 study titled The Impact of Greenwashing Perception on Consumers’ Green Purchasing Intentions: A Moderated Mediation Model discovered companies associated with greenwashing were negatively impacted by it. Consumers reported that they hesitated or decided not to buy from these organizations.
The best way to successfully implement green initiatives at your startup is to integrate sustainable practices from the ground up. In this article, we’ll review how you can better position your startup as a green investment with practical actions to articulate your commitment to a better world.
What Does Green Mean to You?
Sustainability doesn’t only cover climate initiatives. Both the Environmental, Social, and Governance (ESG) guidelines and the United Nations’ Sustainable Development Goals (SDG) challenge several related problems, including food security, fair labor, good governance, and gender equality.
For that reason, it’s crucial to determine how your business will reflect standardized green values. This process is akin to mapping out your business values. However, you should consider every aspect of your business – from suppliers to business practices. Doing this ahead of time not only helps you better position your startup but can also help you prepare for certification.
Next, you’ll want to take these defined green values and implement them within your startup’s operations. In some cases, this might require difficult compromises. Low-cost suppliers, for example, may no longer be an option. Or you may need to exchange the underlying technology vendor for your software with a more ethical vendor.
Many of the processes you are making more sustainable will likely be behind the scenes. However, it’s possible to highlight these initiatives to consumers and investors through marketing materials.
Track Data from Day 1
It is impossible to determine how well your green initiatives are fairing unless you can measure them. Setting clear objectives and selecting KPIs to follow will enable you to better present progress to investors in annual reports. Some examples include:
Energy consumption saved
Number of employees hired with a fair wage
You can also collect data on specific products to provide a granular view of your startup's sustainability
Publish an Annual Impact Report
Annual ESG reporting is already mandatory for companies operating in the European Union, but releasing a public impact report can be beneficial even when this is not required by law. This key differentiator highlights your startup’s commitment to sustainability.
An impact report discloses your organization’s green initiatives and progress toward them. Your impact report does not need to be long. However, it should include specific data.
Investors generally use these reports to evaluate a potential investment. That said, you can repurpose the data for your marketing collateral as well.
Check out our recent Impact Report for an example of what to include.
Stress Earning Potential
Some investors may believe that green startups and businesses must sacrifice profit to succeed in their mission. However, this isn’t the case.
One report found that 70% of business executives believe ESG initiatives positively affect revenue. Furthermore, businesses that stress their ESG position publicly experienced a 9.1% average profit increase.
Certification may be the easiest way to position your product or service as sustainable. There are several types of certifications available to green businesses, some of which are general and others are industry-specific. For example, the USDA Certification is specific to organic farming and food, while the B Corporation Certification supports businesses across industries.
Each certification has its own requirements. However, it’s your startup will need to present clear documentation and data that demonstrates your commitment to sustainability. You may also need to present information on key stakeholders, suppliers, and the leadership team.
More On Positioning Your Startup
Aligning your startup operations to your specific sustainable values, tracking impact progress, releasing reports, and getting certified are just a few of the ways you can highlight your startup as an authentic green investment.
But having a strong network of climate-conscious individuals can help, too.
The Wallet Max Hub offers founders and small business owners a space to collaborate with investors, potential partners, and consumers. This Eco-Business Network makes it easier than ever to learn from experts in sustainability while better positioning your business.
Join the Hub today and boost your business network.