Going green isn't just about doing good. It's also smart business for a lot of companies on the Inc. 5000.
Ray Mullen, founder and CEO of Idaho-based Mullen Crane and Transport, says the trick to his business is providing cranes for use in the hot industry of the day. For a decade, that hot industry had been oil refinery construction. Then, quite suddenly, Big Oil's focus shifted unexpectedly—changing Mullen's business forever.
In early 2001, when they began appearing outside California, wind farms started to replace gas fields as his big money ticket. Mullen was commissioned by a then-obscure company called Enron to build his first wind farm. "I hadn't even heard of Enron," he says. "Of course, soon everyone would know about Enron."
An Enron scandal and seven years later, 45 percent of Mullen's business is from building oil companies' wind farms. Ranked No. 1334 on the Inc. 5000 this year, the company has contracts with British Petroleum, Chevron-Texaco, and Sunoco to erect fields of about 100 windmills to generate electricity without using non-renewable resources. These fields have been spurred on by an awareness concerning sustainability and earth preservation that has colored the business world "green."
The nation has been effectively "greenwashed" as melting glaciers and astronomical fuel prices legitimize concerns about changing climate and depleting resources. Eco-awareness is no longer exclusive to the LOHAS—lifestyles of health and sustainability—market. Business owners say this is a sign that sustainable operations are no longer a matter of good corporate citizenship; instead, they are a matter of good business strategy.
Mullen says Big Oil's alternative energy strategy means few oil refineries are being built while windmill construction, and his business, explodes: He is breaking sales records daily, with growth expectations around 50 percent this year.
Brian Potter, the Leadership in Energy and Environmental Design (LEED)-certified CEO of Boston-based mechanical contracting company Thomas G. Gallagher, No. 4774 on the Inc. 5000 list, has also seen the green part of his business grow as LEED becomes a standard acronym in selling a building's value. LEED, the Green Building Rating System developed by the U.S. Green Building Council (USGBC), provides a suite of standards for environmentally sustainable construction.
"Over the past 18 to 24 months LEED is getting a broader audience," Potter says. "When it first started, it was end-users or owners-operators only—the institutional folks. But now it has spread into the development market, where developers are seeing their buildings are more marketable if they're built to LEED standards."
But going green is becoming more than a matter of marketability, as state legislation forces businesses to look at how their operations impact the environment. Pennsylvania, last month, passed legislation that will require businesses to track their greenhouse gas emissions, and 25 states already have in effect renewable portfolio standards (RPS) that require electricity providers to obtain a percentage of their power from renewable energy sources, like wind or solar, by a given date. The Department of Energy, in May, released a "20% Wind Energy by 2030" report, essentially an RPS for the entire nation, outlining an aggressive plan to obtain 20 percent of the United States' electricity from wind power within 22 years.
Bonnie Ram, co-manager for the DOE report and program director at Columbia, Md.-based technical and management consulting company Energetics, Inc., says green business staying power is related to renewable energy's saving power—saving both the environment from detriment and business from energy costs.
"Now you don't just have the philosophical reason, you also have the cost-benefit side, especially with wind, which is one of the only commercially available renewable power sources," she says. "Wind is gangbusters right now, and I'm not so sure it's because people want to go green It's because they see they can make money at it."
Regardless of industry, eco-aware business practices mean more than recycling; the key is product or service lifecycle: "It's a completely different way of looking at how you produce something," she says. "If you're only looking at the end of the line, then you're missing 90 percent of where you're spending your money." A cradle-to-grave analysis of how a product or service is executed will reveal areas where material consumption can be reduced, which translates directly into cost savings.
"By looking at their lifecycle effects, (companies) are going to save money and contribute to the mitigation of climate change because they'll be reducing their carbon footprint," she says. "But that isn't just a philosophical approach, it's smart business strategy. And I think in the future there's going to be requirements, so they'd better get with the program."
The promise of future requirements—not to mention the greenhouse gas emissions, the production of toxic solid waste, and the diminishing availability of fossil fuels that continued non-renewable practices will perpetuate—is prompting existing companies to adjust their operations, and has also created a successful clean technology market in which startups can grow rapidly.
Spark PR, a San Francisco-based public relations firm for technology companies, created an entire clean technology division after venture capital firms started pouring money into the new industry. Spark PR is No. 3943 on the Inc. 5000 list. Second quarter data released earlier this month shows investment in clean technology rose 41 percent from the beginning of the year, and was up 83 percent from last year.
Beyond the profitability of eco-investment, Spark PR's CEO Alan Soucy sites practicality: Minutes into a conference call, all the lights in his office shut off. "If we had solar…," he sighed. Forty-five minutes later, the lights had yet to come back on, and the death of the phone's backup battery abruptly ended the interview.
Soucy observes that much of the clean-tech investment is coming from people who have already made their fortunes, so they have more of an attitude of trying to leave their mark on society than investors in previous business trends. "There seems to be a genuine interest to contribute to something beyond money this time around," he says.
Construction and technology industries are banking on building sustainability, but consumer industries' green is the dollar bill, or rather the 209 billion of them that represent the LOHAS market of consumers who will go out of their way to buy sustainable products.
Wayne Zink is CEO of Endangered Species Chocolate, a company that operates on a conservation platform and has always practiced eco-friendliness, including a solar-powered website and a promise to donate 10 percent of its net profits to habitat, humanity, and species. The company is ranked No. 1973 on the Inc. 5000 list this year. He says five years ago, none of the major retailers—Target, Walgreen's, Wal-Mart—were interested in his brand, but now its rapid growth indicates the lure of the LOHAS market and the growing base of mainstream eco-aware consumers is changing the face of business.
"When the CEO of Wal-Mart—its own island of business, its own category of retail—the head of a multi-billion dollar, multi-national company says, 'Wow, we are destroying our planet,' and it becomes very serious and spends millions of dollars to reduce its carbon imprint, I think it's pretty clear that business in general, capitalism in general, understands that the destruction cannot continue," he says. "It's way past being a small group of people who are 'tree huggers.' It's now mainstream good business to practice sustainability."
In an effort to perpetuate and aide this shift in business strategy, Andrew Wetzler, in February, founded Green Business Alliance (GBA), a Boca Raton, Florida., company whose mission is to make "greenifying"—the company's coined word for making business practices sustainable—as straightforward and easy to implement as possible.
Interested companies pay a fee to go through the three- to six- week process, where GBA analyzes existing operating procedures, and then develops new guidelines to make general business practices, energy use, employee and office areas, and outdoor spaces certifiably green. "Greenified" members agree to an annual review of their sustainable practices.
Executive director Hilary Kusel says the green movement is in its beginning stages, and education on what it is to "be green" will proliferate the practice. GBA hopes to be sustainability's version of the Good Housekeeping Seal of approval, giving businesses a recognizable legitimacy to which they can strive, Kusel says.
Despite the clear environmental benefits of going green, business owners and experts say like anything in business, green means money. "It's not just a fashion statement, it's smart business sense to conserve resources," DOE consultant Ram says, "because if you use fewer resources, you're going to have less costs, and you're also going to contribute to mitigating climate change.
Read more recent articles by Sara Hottman:
Choose from a category below to browse this year's Inc. 5000.
CHOOSE ANY OR ALL FIELDS:
Provides custom software development, system integration and professional services to commercial as well as federal, state and local governments.
Revenue Growth: 109.6%
2006 Revenue: $8.1 million