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Practical Business Skills

Environmental Sustainability

When your company makes an effort to “go green” by changing the way it does business to be more friendly to the environment, it can also help your business save money. Going green can help your business save or make money by reducing your utility bills, claiming tax benefits and attracting new customers who want to support green businesses.

Promoting green business practices could also encourage other companies in your community to follow your lead, perhaps by recycling or cutting back on waste. While the priority is making money, taking small steps to be environmentally sustainable can have a positive impact on a local and global scale.

If you’re running a small business, you’re likely having a surprisingly big impact on both the economy and the environment. In all countries, micro-enterprises (those with up to 9 employees) dominate the business landscape, accounting for 70 percent to 95 percent of all firms according to the Organisation for Economic Co-operation and Development (OECD). The small business community in the U.S. contributes approximately $8.5 trillion to the economy — roughly half of the total $17-trillion GDP.

The way you run your business can have a similarly big positive — or negative — impact on the environment. To ensure you’re taking the most sustainable, environmentally friendly approach, it’s important to think carefully about how you handle waste, use energy and consume natural resources like water.

An eco-friendly approach
Day-to-day decisions about energy conservation and the use of water can impact the environment in your community and contribute to greater global environmental sustainability. If you use vehicles to receive shipments or deliver orders, are they eco-friendly? If you are manufacturing home goods, are they sustainable, compostable, biodegradable, recycled or recyclable?

Depending on your product or service, best practices in sustainability can vary. Generally, using refurbished items, utilizing energy-efficient office spaces, recycling and going paperless are all effective ways to reduce your business’s environmental footprint and save money.

Drafting a plan
You can also help ensure a more sustainable business by making your team aware of your intent to consume resources, such as water, responsibly across operations. Get them on board by drafting and sharing an environmental sustainability plan. It’s important for all team members to know that your business has a ripple effect that can affect communities and resources throughout the world. In the end, taking steps towards sustainability is in your best interest and the best interest of your employees, the environment and your community.

A few of the benefits of being environmentally conscious across your business practices include:

Improving public health
Becoming a sustainable business can help reduce emissions and improve air quality. This, in turn, can promote higher standards of public health and environmental protection.

Appealing to Earth-conscious customers
You can raise your brand’s value by appealing to Earth-conscious consumers with your product and practices. Some small businesses also choose to partner with other companies that have a similar environmental stance on community events or business ventures.

Tax incentives
By offering businesses sustainability incentives through tax credits, governments can encourage small businesses to be more eco-friendly. From Europe to China to the U.S., governments are proposing “green sustainability” tax breaks. For example, the head of Indonesia’s Ministry of Industry’s green industry and environment center said there is the need for a new regulation to set sustainability requirements and create incentives for businesses to help the country lower its carbon emissions by the national goal of 29 percent by 2030.

In the United States, local, state and federal governments offer significant incentives to environmentally friendly businesses. In addition, the United States Environmental Protection Agency (EPA) requires manufacturers to meet certain regulations designed to prevent pollution, so make sure to stay on top of requirements that apply to your business.

You may be able to get tax credit for specific energy-saving business investments. Other possible tax write-offs can come from installing energy-efficient air conditioning or heating equipment, solar energy systems to power your company’s operations, or going green with your waste management.

The U.S. Department of Energy (ED) maintains a database of tax credits, rebates and savings opportunities. You can filter the database by your state, the type of business you run and savings category. The North Carolina Clean Energy Technology Center also has a database of utility, local, state and federal programs.

A few examples include:

  • The Business Energy Investment Tax Credit (ITC) is a federal tax credit for businesses that build or purchase new renewable energy-producing equipment. For example, if you buy solar panels for your business, you may be eligible for a credit worth 30 percent of the cost. You may also be able to claim city and state tax incentives for installing the solar panels.
  • If you purchase a plug-in hybrid or all-electric vehicle for your business, you may qualify for a federal tax credit, the Qualified Plug-in Electric Drive Motor Vehicle Credit, worth up to $7,500. The value depends on the vehicle’s electric battery capacity and how many vehicles the manufacturer has already sold. The ED has a list of the current eligible vehicles and credit amount.

    If you purchase an eligible vehicle for personal and business use, you can split the credit between your business and personal taxes. You may also qualify for local or state benefits, such as California’s $2,500 clean vehicle rebate for eligible vehicles.

Note that you will need to file either the form that goes with the credit, Form 3800, General Business Credit or both forms depending on which credits you want to claim and the type of business you run. For more details about tax benefits, check with your state and visit the IRS website.

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The contents of this site have been developed for a U.S. audience.