Guest post by Tim Kovach, Energy Product Coordinator, COSE
For the majority of small businesses, the business case for sustainable and energy efficiency just isn’t strong enough to make any real investments. Most articles and analysis discuss how going green can help a business reduce its energy costs and improve its brand recognition and popularity. However, it can be difficult for small and medium enterprises (SMEs) to sign off on projects that have projected payback periods of three years when they are concerned about having cash on hand three months now.
If one focuses entirely on these more obvious benefits of sustainability, it can make it difficult to believe that we will reach a tipping point on small business sustainability anytime soon. However, there are a number of added benefits to sustainability and energy efficiency that are often overlooked but that can help SMEs reap tangible, short-term dividends on their investments. These include improved productivity, a decrease in lost time to sick days, and being better equipped to recruit talented employees.
Several studies have shown that energy efficient upgrades and sustainable building practices can improve employee productivity significantly. According to a 2003 study from the Center for Building Performance and Diagnostics at Carnegie Mellon, taking steps to improve indoor air quality and installing energy efficient lighting both have strong positive effects on productivity. Enabling workers to control air temperature at their workstations increased their productivity anywhere from 3.5-36.6%. By installing high-efficiency lighting fixtures, businesses can experience a 3-13.2% increase in worker productivity. Taking advantage of natural light also has its benefits. The report notes that utilizing daylighting can improve productivity 3-18% and even increase sales by as much as 40%. Taken together, these numbers can represent a considerable advantage for any small business, especially considering that the EPA estimates that even a 1% increase in the productivity of office workers is enough to offset the costs of such upgrades.
A second major benefit of sustainability and energy efficiency comes from the added value of countering what is commonly known as Sick Building Syndrome.” Many businesses work in facilities that were not built in a sustainable manner. They have poor ventilation, lack access to natural light, and contain equipment and materials that release large amounts of volatile organic compound (VOCs). All of this can take a serious toll on the health and well being of employees, as indoor air quality leads to a number of health issues. Fortunately, green buildings go a long way towards mitigating these issues, providing businesses with considerable added value in the process. According to a 2009 article in the Journal of Sustainable Real Estate, green buildings produce an average financial benefit of $37-55 per square foot of facility space for businesses. This is due to the face that better indoor air quality improves productivity by 6-9% and reduces sick days by 2.88 days annually, per worker. The average value added to a business per worker is $6,432.
Third, sustainable businesses are better equipped to recruit the best employees. A recent study from Johnson Controls provides strong evidence that Generation Y is highly concerned about the environment and expects employers to become more sustainable. Ninety-six percent of Generation Y respondents said they want their employer to be environmentally friendly or at least environmentally aware, and large percentages — 47.4% and 47%, respectively — would like to see water saving features and solar panels on site. But it’s not just Gen Y workers who are increasing their commitment to sustainability in the workplace. The study noted that 98% of 26-35 year old respondents want their employers to be environmentally friendly or aware. This suggests that SMEs ignore sustainability at their own risk, particularly in this time of economic uncertainty.
I recognize that many SMEs still struggle to find a convincing argument to make the move towards sustainability. But going green is not some altruistic move that SMEs should make just because of personal beliefs or commitments — it is a smart business decision that will make them more competitive in the long run, one that they may not be able to afford to pass up.
Tim Kovach is the Product Coordinator for Energy at the Council of Smaller Enterprises in Cleveland, Ohio. He works to help small businesses cut their energy costs, reduce their energy use through energy efficiency, and improve their sustainability efforts through COSE’s Energy Solutions. COSE, a small business support organization with over 16,000 members, provides cost-effective group purchasing programs, advocacy on legislative and regulatory issues, and networking and educational resources to help Northeast Ohio’s small businesses grow.