The evolving regulatory landscape and consumer sentiment are making genuine sustainability efforts and reporting of those efforts a growing imperative.
In March, the Securities and Exchange Commission proposed how public companies would have to report greenhouse gas emissions and the potential effects of climate change on their business. Last month, it followed up with proposed rule changes for Environmental, Social and Governance (ESG) investment funds that invest based on a company's ESG standards. These new rules would make the funds clarify and prove their credentials and label them accordingly.
According to a recent survey of U.S. adults, consumers expect and value green behavior from companies. Most respondents say they are more likely to support companies that promote their environmental commitment. And at the same time, over 40 percent surveyed agree with the statement "sustainability is a ruse to distract from bad things companies do." And a strong majority believe that such efforts need to be verified by independent organizations. The challenge for small-to-medium-size businesses is to show that their sustainability efforts reflect sincere intent.
While compliance is a few years away, tracking the extent of environmental impact can be complex. For example, Apple's latest environmental progress report spans 128 pages, and that's atop a 64-page ESG report. Smaller companies can also take steps toward encouraging more sustainable actions through education and disclosure.
1. Find a lighter touch toward disclosure.
Light, a startup that's building phones optimized for keeping you sane when you want a break from social media and other distractions, recently shared useful pointers on how to measure sustainability on the cheap.
The company focused on estimating the carbon emissions throughout its product's lifecycle--from components through manufacturing and distribution through customer usage--with the ultimate objective of purchasing carbon offsets to ensure carbon neutral status.
It says it avoided costly consulting and software licensing for its lifecycle analysis by simplifying calculations without creating artificially low estimates. It started with the components in its bill of materials that had the greatest environmental impact and public info available from other manufacturers. It then used a similar blend of primary and secondary data for estimating later lifecycle stages. Light offers its customers an option to split the offset charges, and claims the majority do so. It's working on optimizing its cardboard packaging for future models, too.
2. Ride the market realities.
Of course, Light's path isn't the only way to show customers a sustainability commitment. In some instances, sustainability is part of a product's DNA, and the challenge lies in making the better environmental choice more palatable to a customer base. One example is Brooklyn-based e-bike maker Civilized Cycles. Civilized's Model 1 is a luxury e-bike designed for American riders with a sturdy suspension for extra comfort.
To drive exposure and give prospective customers a sample of the pricey bikes' features, the company is working with luxury hotels and resorts. Civilized supplies a promotional video on the hotel's introduction TV channel, and the hotel staff sets up and remotely manages the e-bike rentals managed by an app downloaded by the guest. Civilized gives the venue 25 percent of the rental fare and charges no fee, does regular maintenance, and carries a liability insurance policy naming the hotel as insured. It can even supply helmets.
3. Get your sustainable messaging right.
There are also opportunities for B2B vendors. As we have seen through initiatives such as Amazon's investment and rollout of Rivian vehicles, electric truck fleets have also become a key component of lessening the environmental impact of delivery. However, few companies control their own fleets.
Ikea is taking on last-mile delivery in New York City via EVs from Fluid Truck. The startup runs an electric truck peer-to-peer system for individuals, small businesses, and now big ones, too. The trucks that Fluid manages for Ikea come from fellow Coloradan Lightning eMotors, which electrifies chassis from mainstream truck companies, and Workhorse, which is building its own. Ikea parent company Ingka Group's investment arm now is a minority investor in Fluid.
While industry giants can take bold steps in reducing their emissions by leading by example, smaller companies and startups can also take action to improve their business's environmental impact. Done earnestly, this can help consumers understand their rationale without appearing to pander. The key approach is messaging that communicates a sustainability sensibility, acknowledges the limits of their efforts, and offers evidence of investing in improving those efforts.