Start up green

INNOVATION MASTERCLASS:While their philosophies may differ, green and non-green businesses share the same objective - to make money

THE FACT that Starbucks has changed its coffee sleeves or Anheuser-Busch has shaved a fraction off the base of its beer cans is hardly front page news. But both are significant eco-business initiatives. The can-trimming exercise saved Anheuser-Busch around 9,525 tonnes of metal a year since 1993. The Starbucks changeover to recycled paper sleeves reduced tree felling by nearly 80,000 trees a year since 2006.

These companies are not alone among the ranks of the world's largest blue chips going green. Strong consumer support for green products and eco-friendly business practices means they're all at it - from McDonalds to Walmart. And consumers want more than tokenism.

"One of the things companies big and small must avoid at all costs is 'greenwashing'," says Tom Trainor, chief executive of the Marketing Institute. "This is where a company paints its product as being green when it is not the case. Consumers [can] see that. Greenwashing can seriously damage a brand."

There are two distinct aspects to being an eco business. The first is having a green product or service out front. The second is matching that with a green back office that applies an eco principle to everything from sourcing and manufacturing to how staff do their jobs. For example, allowing people to work from home to cut down on travel miles.

Being green can be a strong differentiator in the marketplace, but it is important to be sure consumers will pay extra for it, particularly in cash-strapped times. Green products can command a premium, but inputs usually cost more too. Implementing green initiatives can be expensive, so existing businesses may be better off focusing on achieving a number of specific targets by addressing key issues such as sustainable packaging, recycling and energy efficiency.

For those starting up, there is a strong argument for thinking green from day one as consumer expectations in this area are only going to rise. Being green is rapidly moving from marginal to mainstream and businesses are increasingly expected to take responsibility for the impact their operations have on society and the environment. As the highly successful Innocent smoothie company puts it: "It's part of our quest to become a truly sustainable business, where we have a net positive effect on the wonderful world around us."

Innocent is a good example of a green business that went for a zany image to get itself noticed. Innocent's "feel-good factor" struck a positive chord with consumers and the business has prospered. Eco-friendly businesses need to have a well thought out method for communicating their green credentials to potential customers. Social media and green websites may be useful as may adding a blog to an existing site, setting up your own site and joining or starting a green business group.

How green to go also depends on the sector. Food is one area where consumers are prepared to pay more for naturally-made products. And with margins so tight in mainstream food retailing, it makes sense for food start ups to build added value into the product from the outset. "Having a green product is only one step on a longer journey," says Trainor. "What smart companies should be doing now is thinking about how green they will look in five or 10 years time when consumers will be even more demanding."

While some are jumping on the green bandwagon for financial gain, many of those who get involved in organic, eco-friendly or sustainable businesses are driven by a strong personal commitment to the green philosophy. For 20-somethings, Lisa Redden and Olivier Vander Elst having a sustainable and ecologically sound business was the guiding principle when they set about identifying their business opportunity. They subsequently set up Green Aer which imports and distributes electric cars and bicycles.

"There is nothing wrong with being ideologically inspired," says Trainor. "But, and it's a big 'but', the business rigour has to follow hot on its heels or the idea will die."

It is generally more arduous to set up a green business due to issues around sourcing, approval and regulation. For example, being organically certified demands time and financial investment. Even for a big company such as Butlers Chocolates, which introduced an organic range 18 months ago, it has not been all plain sailing. "Exporting organic products can be challenging as different countries have different regulations," says marketing director Aisling Walsh. "For us to sell organic chocolate to the US meant meeting a new set of criteria. We took a commercial decision to introduce our organic range and sales are up 15 per cent year on year.

However, there are costs associated with having a dedicated organic line - organic products are more expensive to make and it is more difficult to source ingredients," she says. While their philosophies may differ, green and non-green businesses share the same objective - to make money. Going green won't do that on its own, but green businesses often do well within their chosen niche.

Entrepreneur Quentin Gargan has already been successful with one eco business (solar panel distribution) and is about to start a second in wind turbines. "For me, business and the way I see the world are intertwined," he says. "I couldn't sell something I didn't believe in, but I still want to be successful. Right now I'd like to see the cost of wind turbines coming down so more people could afford them.

"They currently cost around €20,000.  Our objective is to make and install them for around €12,000," says Gargan.