So what actions and initiatives can you take to make money by going green?
Many of us are leaning towards using eco-friendly alternatives to everyday products. The words 'sustainable' and 'green' are more popular than ever in the workplace, at home and in the corporate world.
In 2020, Global Data recorded that 45% of UK shoppers actively buy environmentally and animal-friendly products. There is an increasing demand for greener options and earth-friendly alternatives. If you want to make money by going green, combine your passion for business with your desire to save the planet.
Take a look at the main areas of how to make money by going green on this page:
And, if you think that our top forty sounds like hard work and you want to make money by going green by SAVE money, then check out:
Both lists above, 16 Eco-Friendly Ways to Save Money and the Top Forty Ways to Make Money By Going Green, contain actions to make money by going green when starting as an individual. But what happens when you've embraced creating an eco-friendly business?
Number 38 of 'TopEco's Top Forty Ways to Make Money By Going Green', ESG is mentioned. This blog explains how to leverage ESG and make money by going green in today's economy.
"A positive correlation between sustainability and economic profitability."
Arabesque Partners and Oxford University conducted a study called 'From the stockholder to the stakeholder', analysing more than two hundred different sources. The study confirmed a definitive correlation between sustainable business practices and financial profitability.
Research shows that companies that skilfully address their environmental and social impact have better governance practices (ESG) and are more profitable in the medium to long term. In other words, you can make money by going green by attracting the right investors to your cause.
There is a two-pronged approach to making money by going green. There are businesses or entrepreneurs that don't want to attract investment or sell shares and there are those that do.
However, financial success comes from the ability to attract attention and sell services or stock. Business success is the same, and an assessment of victory is growth.
According to many financial gurus, something is dying if your company is not growing. Business owners lose profit, employees, equity, or all three. It's the same with independent entrepreneurs. If you're not growing, you're dying.
Here are three ways you can make money by going green to help your bottom line and the planet:
By incorporating sustainable practices into your decision-making, you can satisfy any future laws on time and under budget. A sustainable approach wins contracts and earns extra tax credits, rebates and savings. There is also a medley of subsidies and funding schemes available to entrepreneurs that want to be more environmentally friendly.
You may get tax relief or be exempt from some taxes, for example if:
You can also pay less tax by applying for schemes to help demonstrate that you’re operating more efficiently and producing waste that’s less damaging.
Being ecologically conscious is somewhat of a prestige symbol. Modern-day consumers frown upon companies actively melting glaciers and clearing vast areas of the earth's forests to plump their already bulging profits. Clever consumers are voting for change with their buying choices, and if companies miss the insight, they will fall. Greenwashing aside, if you run your business with a sustainable eco-friendly approach you can attract attention in your marketing messages and gain a substantial competitive edge over your less 'green' competitors. If you do the opposite then beware the consequences. For example, one of the largest oil companies in the world, Halliburton, was accused of several serious offences. They conducted trade with banned countries and overcharged the US army for supplies during the Iraq War. They mismanaged waste on a large scale, were charged with sexual assault and rape, and exposed employees to hazardous chemicals. So, not a brand that consumers like any longer!
Contrary to old-school, big business thinking where sustainability may interfere with profitability; it is indeed true that you can make money by going green. For example, you can reduce costs by utilising energy-efficient lighting or creatively repurposing existing resources, such as using greywater (kitchen sink water and shower water) for irrigation. In other words, the more sustainable your company gets, the fewer outside resources it will consume. With growing energy costs, everyone must reconsider how they obtain resources. According to a leading research company, in contrast to conventional approaches, a sustainability strategy can significantly diminish operating budgets by up to sixty per cent. Or, put another way, strong ESG propositions relate to higher financial returns and lower downside risk.
We have mentioned ESG a lot throughout the subject of making money by going green, which is because it is the fundamental backbone of the issue.
Let's take a closer look at ESG.
ESG stands for environmental, social, and governance and is a set of standards and criteria for a company's operations that socially aware investors use to screen potential investments.
It's a very mixed bag for ESG investing and making money by going green. Investors may follow various methods for socially responsible investing (SRI). There are many new global risk and sustainability factors for savvy investors to consider, including:
ESG investing is increasing exponentially as more investors utilise ESG data and tools to support their investment decision-making. SRI began in the 1960s, and investors excluded specific trades and industries from their portfolios based on non-ethical business activities. They also avoided 'sin stocks' of companies that engage in activities that can be harmful, such as tobacco, alcohol, firearms and industries that pollute the environment.
With ESG taking an essential role in how to make money by going green, let's break down each element of ESG and take a closer look at the intricacies of financial reward due to environmental, social and governance factors.
So, the conclusion is that if you want to make money by going green, embrace the factors above. The attention you get if you apply the assessments above will get the growth you seek. With the right awareness comes sales and investors. Consumers use many of the factors above to influence their buying choices and investors use many ESG factors to control their asset analysis.
In other words, if you are in business you would be wise to appeal to those using ESG factors when it comes to investment choices. Be seen where it matters most and it will be easy to make money by going green.
Becoming a 'sustainable' or 'ethical' investor is more complex than switching to e-billing or washing your hemp sweater on a cold cycle.
Many investment funds assert themselves to be 'sustainable' or 'ethical', but at the moment, there is no official depiction of what that signifies. This lackadaisical approach means 'greenwashing' is rife.
If you are looking at ethical investments, there are three category badges to be aware of:
Investing in individual stocks and shares that set out to help the planet can be tricky as one person's 'ethical' is another investor's 'no-go'. There is a specific stock market index called the FTSE4Good, which claims only to track the performance of ethical companies. However, its main constituents in the UK are HSBC, Shell, GlaxoSmithKline and AstraZeneca. Somewhat of a contradiction, we can all see that. If it's ethical you want, then avoid that bunch with a bamboo bargepole.
Eco-friendly investments can provide profits as well as environmental benefits. As the world adjusts to climate change, older technologies such as fossil fuels and polluting industries will likely face higher costs and regulatory barriers, providing a market opportunity for alternatives.
Good Green Funds Include:
The following are some of the major avenues for green investing:
As there are a variety of individual shares, it shows that it can be hard to devise a portfolio on your own. So, of course, it will be easier to get broad exposure to companies with sustainable characteristics via a fund that diversifies your money across several different stocks and shares.
While we are happy to switch our light bulbs to LEDs, brush our teeth with bamboo toothbrushes, add our signature to save the local oak and repeatedly buy a bag for life because all the others are dying in a cupboard under the stairs, the ethical investment revolution is sluggish to get going.
At the time of writing this article, the Investment Association puts the sustainable sector in less than 2% of total funds in the UK. Yet research suggests that 11 out of 16 UK-focused ethical funds outperformed the average return delivered by other fund investments in the UK stock market.
John Ditchfield, the head of the Ethical Investment Association, accuses the financial services industry of apparent indifference towards the sector. The evidence shows itself in the number of financial advisers operating in the UK that are part of the Ethical Investment Association - only 80 out of 26,000!
"It feels like people who are in the financial services industry aren't terribly interested in the environment."
John Ditchfield, the head of the Ethical Investment Association
However, the figures are unmistakable. Over the last five years, the average UK fund rose 37 per cent, but the ethical UK funds went up by 47 per cent.
Over the last twelve months, the average UK fund fell 1 per cent while ethical funds were up nearly 3 per cent.
So, what are we waiting for, we should ask ourselves? The first thing on your to-do list this week should be to speak to your fund manager, if you have one, and get your investment ducks in an eco-friendly row.
Or ask us to create an eco-friendly tick-sheet. If enough of you ask, we shall make it happen!
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