Let’s face it—our planet is in bad shape. Climate change is accelerating, plastic waste is plugging our oceans, ecosystems are disappearing, and yet, we continue to extract what’s left of the world’s resources.
As a business owner, it’s increasingly important for you to do your part for the planet. It's not enough to sell a few eco-friendly products and opt for more sustainable packaging. Sustainable businesses consider their impact on the planet and society at every turn—a process that is embedded in the core of everything they do.
Getting started can be daunting. This guide to sustainable business will show you exactly what it means to be sustainable, why it’s important, and what sustainable business practices you can put in place.
What is a sustainable business?
A sustainable business aims to positively impact the environment and society—or, at the very least, reduce the negative impact it has on these areas.
It analyzes every step in its manufacturing, shipping, and selling processes to identify where it can become more sustainable, reduce its carbon footprint, and do better for the planet.
Each decision is backed by the desire to improve the environment, whether through natural materials, community initiatives, or focusing on long-term plans rather than short-term gains.
Sustainability efforts focus on three core pillars:
- People
- Planet
- Profit
Keeping these three pillars in mind ensures the fair treatment of employees and local communities while minimizing (or reversing) environmental impacts.
Is it the same as an eco-friendly business?
The terms “eco-friendly” and “sustainable” are often used interchangeably. While there are many similarities, there are some important differences too. Sustainable businesses aim to maintain a prosperous economy for future generations and make choices that don’t deplete the earth’s natural resources.
Eco-friendly businesses aim to minimize or eradicate harmful effects on the environment. In eco-friendly businesses, everything from production to packaging must be safe for the environment.
What makes a business sustainable?
Sustainable businesses implement strategies touching on the three pillars: people, profit, and planet. They aim to reduce any negative environmental and societal impact their operations have by tackling global issues like:
- Climate change
- Human rights issues
- Fair working conditions
- Pollution
- Income inequality
- Depletion of natural resources
- Racial injustice
- Gender inequality
For example, the organic snack brand Nature’s Path is committed to producing products without toxic farm chemicals and encourages employees to reduce their consumption in any way possible. Similarly, Salt Spring Coffee has become carbon neutral by reducing long-range trucking, upgrading to energy-efficient equipment, and using biodiesel in delivery trucks.
Why is sustainability important in business?
As well as curbing global issues like climate change and inequality, sustainability drives business success in several ways.
Increase the chance of investment
Investors often use environmental, social, and governance (ESG) metrics to determine the impact of a company. They’ll use this information to decide whether or not to invest and are more likely to back a brand with a lower carbon footprint.
Improve financial performance
Research by McKinsey shows companies with a high ESG rating are more likely to have a lower cost of debt. It also found brands with effective sustainability initiatives perform better financially.
Meet customer expectations
Consumers expect brands to be sustainable—and they’ll pay more for it. Some 90% of consumers are willing to spend an extra 10% on more sustainable products.
Gain a competitive edge
Meeting customer demands and showing you understand current global concerns will give you a competitive advantage over brands that are carrying on as normal.
Reduce costs
Working toward a more sustainable future can actually save you money. Some 33% of businesses that integrate a sustainability strategy to improve their efficiency manage to drive down costs and can boost profits by as much as 60%.
How to create a more sustainable business model
- Assess the problem (or problems)
- Define the objectives of your sustainability plan
- Outline your sustainable business strategy
- Implement your practices
- Assess your results
1. Assess the problem (or problems)
The first step in becoming more sustainable is figuring out what problems you’re up against. What matters in one industry might not be important in another, so it’s critical to examine the key sustainability problems spanning your team, company, customers, and industry.
Determine what each of these groups considers a priority—is it reducing your carbon footprint or providing opportunities to marginalized communities around the world?
Here are some sample questions you can ask each group to determine what matters most:
- What impact does the business have on the local community?
- How much waste are we creating?
- What does our company culture look like?
- Does our hiring process attract diverse job candidates?
- How are we minimizing our impact on the planet?
2. Define the objectives of your sustainability plan
Once you know what the biggest issues are, you can start to put together your sustainable business strategy. This will depend on your target audience, your product, and what you consider to be important.
If you’ve discovered your hiring process isn’t diverse or you’re producing far more waste than necessary, you can set objectives to tackle these issues. For example, you can set a goal to reduce waste by 5% month-over-month or aim to improve your hiring process by seeking help from external professionals.
Use SMART goals to create realistic objectives. Each goal should be:
- Specific
- Measurable
- Achievable
- Relevant
- Time-based
This ensures you’re not creating unrealistic goals and have tangible outcomes to work toward. Use these objectives to create a mission statement you can circulate internally and one you can publish on your website.
3. Outline your sustainable business strategy
Your business strategy should create a fine balance between improving your impact on the planet and ensuring you still turn a decent profit. After all, you can’t help save the planet and its people if you go out of business.
Create two layers to your strategy:
- Small sustainable changes
- Big sustainable changes
The small changes can be little things like turning the electricity and heat off overnight or using a motion sensor to automatically switch off lights when no one is in the building. It could also include activities like switching out your current packaging in favor of more eco-friendly materials.
Bigger changes need more time to be implemented but can lead to higher-impact results. For example, you might set up local initiatives to provide living wages to community artisans who help make your products or replace your existing equipment with energy-efficient versions.
Your strategy should ultimately lead you toward your sustainability objectives, which is why it’s important to choose goals that you can realistically measure.
4. Implement your practices
Creating a strategy and implementing it are two very different things. When you’ve decided what you want to achieve and how you’re going to get there, it’s time to put the steps in place to make it a reality.
When implementing your sustainability practices, think about:
- What resources you need to make it happen
- What milestones you can create to make it more manageable
- What the timeline will look like for each activity
- Whether you need buy-in from external stakeholders
- How you’ll track the results of your efforts
5. Assess your results
Like any strategy, you won’t know if your sustainability plans are a success unless you track them against your initial objectives. Remember to revisit your goals regularly to make sure you’re still on track and are getting the results you hoped for. This is a good opportunity to determine if you need to change tactics or create bigger goals.
Choose key metrics to track, such as your carbon footprint, the percentage of waste, reduced electricity bills, or the number of local organizations you’ve partnered with. This will give you clear, measurable ways to track your progress.
Examples of sustainability in business
The sustainability strategies you choose to implement in your business will be unique to your operations, missions, and industry—no two strategies are exactly the same. This means sustainability in business can take on many different forms, including:
- The use of sustainable materials in the manufacturing process
- Optimizing supply chains that aim to reduce emissions
- Partnering with community initiatives to reduce waste
- Sponsoring educational needs in marginalized communities
- Using renewable energy sources to power production lines
Here are some real-life business sustainability strategies in action.
Meow Meow Tweet: Sustainable packaging with clear instructions
New York–based natural vegan skin care company Meow Meow Tweet does a great job of working with sustainable packaging. There’s an optimal way to discard or recycle every element of its product packaging, including paper boxes, glass jars, and paper tubes, and it makes that very clear to customers.
On every product page, you’ll see The Breakdown. Take the page for Meow Meow Tweet’s Rose Geranium deodorant, where it tells you its paper tube and seal can be disposed of in your backyard or municipal compost.
United By Blue: Minimizing material waste and creating a circular business model
Philadelphia-based United By Blue uses bison fiber as insulation in its apparel products. It’s a layer of the bison’s shaggy coat that is shaved off as part of regular maintenance. When cofounders Brian Linton and Mike Cangi learned about this underused sustainable fiber, they created a supply chain that would give them access to it before it was thrown away. With that, they established a circular business model. And the company isn’t sacrificing quality: Bison fiber is warm, moisture-wicking, lightweight, and soft.
Two Days Off: Using 100% renewable energy to power the office
Two Days Off is an independent, women-owned carbon neutral lifestyle brand based in California. Not only does it focus on thoughtfully crafted clothes, it also wants to put consumers at ease, knowing its sustainable clothing manufacturing didn’t come at a cost to the environment.
With the help of nonprofit Climate Neutral, Two Days Off measured its emissions and is taking steps to procure 100% renewable energy for its office operations. It also works with suppliers to limit the use of air freight and supports factory partners in energy efficiency improvement. Then, it offsets any remaining greenhouse gas emissions.
Seventh Generation: Green products and sustainable practices
Home care brand Seventh Generation uses plastic-free packaging and zero-plastic solutions that aim to make the world a better place for the next seven generations.
Along with sourcing plant-based ingredients to use in its products, the brand is committed to paying all workers in the supply chain a living wage, regardless of their place of work. Seventh Generation is also a B Corporation, which means it meets the highest standards for verified social and environmental performance.
Patagonia: Encouraging responsible consumption
Outdoor brand Patagonia doesn’t buy into the fast fashion craze. Instead, it does the exact opposite, encouraging shoppers to return broken, worn, and old items so they can be repaired and redelivered.
The brand’s Worn Wear program allows customers to trade in and buy used Patagonia gear to reduce emissions and overall consumption.
Sustainability for the planet and profit
Ready to start contributing to the health of the planet in addition to your business’s bottom line? By following the recommendations above, you’ll join the growing small business movement to protect the planet for future generations (and entrepreneurs). What’s more, you’ll find buyers ready and waiting to support you.
Read more
- 8 Eco-Friendly Packaging Ideas for Your Store
- Sustainable for the Long Term- 7 Ways to Stay True to Your Values—and Meet Customer Expectations
- Shopify Is Eliminating the Climate Impact of Merchant Shipments Over BFCM
- What Does Working Remotely Mean for the Planet?
- Carbon Offsets- A Field Guide to Shopify’s Selection Process
- 40+ Sustainable Clothing Brands Making Garments for Good
- The Current Climate- How to Sustain an Environmental Business During COVID-19
- Shopify’s Sustainability Fund- How We’re Investing to Reverse Climate Change
Sustainable Business FAQ
What is meant by sustainable business?
What is an example of a sustainable business?
- Patagonia’s Worn Wear initiative lets customers trade in and buy used clothing.
- Meow Meow Tweet shares recycling instructions on its product pages and packaging.
- Seventh Generation uses eco-friendly materials and sustainable business practices.
What are the 5 stages of sustainable business?
- Precompliance: When a company does everything it can to reduce costs, regardless of its impact on the environment.
- Compliance: When a company complies with regulations and begins to create company policies.
- Beyond compliance: When a company starts addressing low-hanging fruit, like saving energy and reducing electricity costs.
- Integrated strategy: When a company implements sustainability practices because it benefits the business.
- Purpose and passion: When a company implements sustainability practices because it’s the best thing to do for the planet.
