Environmental sustainability seems like a trend these days. Almost every big company is promoting an environmentally-friendly product or introducing a new sustainability policy to reduce its carbon dioxide emissions. It’s easy to applaud these efforts at face value. But how can we actually know if a company is truly going green? The answer lies in how they operate each of their business functions. Genuine green companies commit to radical shifts in their business operations to achieve environmental sustainability and social responsibility. It’s all too common for a well-known business to do a bit of ‘greenwashing’, that is, to commit to environmental sustainability goals without actually implementing the processes needed to achieve them.
At Aspiration, we talk the talk and walk the walk, when it comes to environmental sustainability. Our neobank commits only to ethical investments and donates our earnings to reforestation projects. In this article, we delve into how businesses, including banks, go green for the future of our planet.
What does it mean to have a green business?
For a business to be considered ‘green’, it has to meet a few, important requirements. Green businesses can no longer pursue profits with complete disregard for the environmental and social impacts that their operations cause. Instead, they have to radically alter their business processes to meet the needs of an ‘environmentally endangered age’. With rising sea levels, microplastics in the ocean, and an increasingly hot climate, green businesses must operate in ways that help reduce these tragedies. One of the most popular ways that businesses going green do this is to get B-Corp certification. B-corp certified businesses have to meet high standards on various issues, from diversity in the workplace to investments in environmentally-friendly solutions.
Whereas, for example, a company might have used coal-powered electricity before, as a green company it now has to switch to a cleaner energy source like solar energy. To do this, green businesses have to balance their newfound social purpose with profit. This purpose needs to have a positive effect on both the environment and the communities that the business is a part of. It’s only when businesses have built a culture that incorporates the principles of sustainability into their decision-making process that they achieve ‘green’ status.
What companies are going green?
Many businesses all over the world are going green. From cosmetics brands to hotels, companies are switching to green business practices to play their role in the fight against climate change.
The Body Shop, Apple, PepsiCo, and Umicore are some of the big companies today that are building a culture of sustainability.
The Body Shop
The Body Shop, a global beauty products company, has been working since 2016 to become “the world’s most ethical and truly sustainable global business”. Starting with an in-depth review of all of its business operations, the company has implemented a new strategy that aligns The Body Shop’s fairness policies with the earth’s natural ecological cycle.
The company now uses packaging made from methane and carbon dioxide captured from landfills and power plants instead of the traditional plastic packaging made from fossil fuels. It has also worked to ensure that all of the natural ingredients in its products are sustainably sourced and documented to prevent exploitation of resources.
As one of the world’s leading tech companies, Apple has been implementing sustainability initiatives to offset the impact that its manufacturing and business operations have on the environment. It set itself an ambitious new sustainability target in 2020, to achieve total carbon neutrality by 2030.
It has already been working towards that goal. In recent years, Apple has switched all of its facilities to renewable electricity and invested in projects that are restoring wetlands, forests, and grasslands. Its next plan is to make its entire supply chain green.
PepsiCo, a food and beverages giant well-known throughout the world, recently acknowledged that climate change is making it more difficult for them to secure freshwater and grow the crops needed to make their food products. In response, the company has offered a $1 billion Green Bond to fund a series of bold sustainability initiatives in line with the UN’s Sustainable Development Goals. These projects aim to replenish 100% of the water PepsiCo uses in its manufacturing operations and replace their plastic bottles with biodegradable materials to help reduce waste.
It’s not just consumer goods companies that are making the shift to environmental sustainability; even ‘dirty’ companies like Umicore, a former smelting company, are committing to change. Once a leader in the highly-polluting zinc and copper smelting industry, Umicore now produces lithium-ion batteries and photovoltaic technology. The shift to clean energy came when Umicore realized that its environmental impact could no longer be ignored – smelting was contributing heavily to climate change, and it had stopped making the company any profit. The company now invests in clean energy research and development to make the global manufacturing industry more sustainable.
Which company is the most environmentally-friendly?
Patagonia is recognized as the most environmentally-friendly company on the planet right now. Since its foundation in 1973, the outdoor clothing company has stayed true to its mission to build the best product with the least environmental impact possible. It sources all of its materials from organic and sustainable suppliers and produces almost all of its clothing and equipment from recycled fabrics such as nylon, wool, and polyester.
The company rejects fast fashion trends, encouraging its supporters to not buy items that they don’t need and repair the ones they already have. As part of its commitment to help the planet, Patagonia donates at least 1% of its annual sales to the conservation and restoration of the natural environment. Patagonia has now set a new goal to make all of its products from renewable or recyclable materials by 2025. For its visionary business model that prioritizes environmental sustainability above all else, the UN awarded Patagonia a UN Champion of the Earth honor in 2019.
Is green business profitable?
There’s no argument that going green is a growing trend among businesses. But a hard look at the transformations required to make the switch reveals that the process is nowhere near easy. Business analysts say that going green can be extremely costly in the short term, but highly profitable in the long term. This finding is attributed to the fact that sustainable materials and clean energy technologies are currently more expensive than their synthetic, mass-produced counterparts.
Sustainable materials such as organic cotton cost more because fair wages, eco-transport options, and regulatory checks all have to be factored into the price of the product. They need to be processed using special equipment that can take more time and care. Similarly, green technologies available today, such as solar-powered electricity or electric vehicles, need new infrastructure to set up and can become costly when no government subsidies are available. These are barriers in the short term, but in the long run, they help lower costs because the impacts of using sustainable materials and clean energy are less taxing on consumers and the environment. Quality materials can be charged more and last longer. Energy efficiency can significantly reduce operations costs.
Then there’s the marketing aspect as well. More and more consumers are seeking to buy products and services from green companies. Being a green company boosts a business’s global standing, and attracts customers who want to find value in the items they’re purchasing. Though going green may be expensive in the short term, environmentally sustainable business practices can boost sales, reduce costs, and even improve employee morale.
Can banks be green companies?
Yes, banks can definitely be green companies. Just like any other business, banks have facilities and operations that can be changed to meet environmental sustainability goals. Their buildings can be outfitted with geothermal heat pumps to reduce their reliance on coal-powered energy. In the same vein, they can be modified to get their electricity from a clean energy source like a wind or solar farm. They may also switch their company’s trucks and cars to electric vehicles or hybrid models that help reduce their carbon dioxide emissions.
Banks can also get certified as a B-Corporation or become a member of the Global Alliance for Banking on Values (GABV) network. These affiliations help cement a bank’s status as an ethical green business. Both associations require banks to adhere to sustainability and social justice regulations – many of which help ensure that certified banks are committed to producing positive social change. Some B-Corp and GABV member banks invest directly in clean energy technologies, while others, like Aspiration, support environmental sustainability projects throughout the world. Better waste management and energy efficiency are two key areas that green banks focus their efforts on, as part of their efforts to align with the global movement to keep the global temperature below 2°C.
How does sustainable, green banking work?
Sustainable banks offer green financial products and services that create positive change for the environment. At the most basic level, green banks do not invest any of their customers’ deposits in fossil fuels, logging, and industrial agriculture. These traditionally profitable industries emit enormous amounts of carbon dioxide into the atmosphere and lead to widespread environmental damage. Instead, they commit to financing clean energy initiatives such as solar farms and electric vehicles. These green innovations help communities become more climate-resilient. They also help countries become less reliant on coal, natural gas, and crude oil, potentially ushering in an era that could help reverse the effects of climate change.
Green banks also use their customers’ money to fund organizations and community networks working to restore forests and natural ecosystems. They also give out loans to homeowners and businesses who want to purchase environmentally sustainable products and services such as solar electricity systems and electric vehicles. Green banking works to ensure that money becomes a force for good. By siphoning money away from destructive industries and investing it in sustainability projects, green banks generate a cycle of ethical wealth.
What’s the best green banking company?
Aspiration is the best green neobank that helps customers save the planet with each transaction they make. Our Plant Your Change program helps you restore forests by rounding up each purchase to the nearest whole dollar and using the spare change to plant trees. We don’t invest any of our customers’ money in fossil fuels, and we make sure that each of our business investments is transparent so you can see how your money is being managed. We’re a certified B-Corporation that was founded to build a better world.
Try Aspiration today and use your money to help the planet.