ATTRACT MORE INVESTORS BY TURNING YOUR BUSINESS GREEN
By Eddie Sembatya
Chief Executive Officer-Finding XY
Senior Program Manager, WAII Facility
A sustainable business, or a green business, is an enterprise that has a minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy. Companies are turning green as a business model because it makes them more sustainable and competitive in the market. Sustainability for a business can be realized along your value chain. The value chain includes sourcing of raw materials, production, and consumption of your products or services. When sourcing raw materials, businesses destroy the environment if the materials must be excavated. High carbon emissions are emitted when cleaning and transporting materials. The health of the communities is affected when toxins are released into the environment or the households must be displaced, and farms are destroyed. During production, waste is produced which if not recycled is released into the environment affecting the quality of land or water. On Consumption, the packaging the company uses; if not biodegradable affects the quality of soil or the quality of air if consumers must burn it.
According to the world health organization, climate change is estimated to directly cause over 150,000 deaths annually. Companies whether SMEs or large corporations, contribute to climate change along their value chain. The effects of climate change can be witnessed at the community and at the global level. Negative social and environmental changes have devastating impacts on the economy which affect the business environment. Devastations like Covid 19 have not respected developed economies or income classes. When the changes take place, they affect the balance of life or biodiversity on which all human beings rely. Human beings live in an ecosystem that is balanced by land, water, plants, air, and animals. For a long time, we have conducted business with less regard to how it affected the ecosystem. As a result, we are experiencing more loss of life and businesses failing. The value of a business is premised on its stability and ability to make positive cash flow projections. When we have incidences like floods, water-borne diseases, temperature rise, and others, they create an unstable business environment.
Climate change is a threat to businesses whether they are SMEs or large corporations. A business becomes irrelevant when the market substitutes your offer with a product or service that is more user-friendly. Businesses also suffer loss from reduced supply of raw materials when communities, where raw materials are sourced, are hit by floods. Production is directly affected which leads to financial loss.
Climate change has forced many countries to adopt new rules and regulations affecting trade. Most of these are meant to curb carbon emissions and improve health standards. Businesses that are not adopting the technology or production methods to meet these standards end up unable to access such markets.
Previously what investors required from a company was a positive return on investment in form of profits. Currently, investors have redefined what they consider returns to include social and environmental impacts. Negative social and environmental impacts affect the investors’ reputation and make their investments less meaningful if lives are lost through irresponsible business conduct. Businesses are set up to serve humanity by solving problems or meeting needs. An investment program like the Uganda Green Enterprise Finance Accelerator (UGEFA) is financing sustainable businesses in waste management, tourism, transportation, renewable energy, and green manufacturing.
Being a green business means you are responsible, and you run your operations in the full interest of the customers and stakeholders. Businesses can no longer focus on profit alone but also on people and the planet. Global warming as a result of climate change leads to extreme weather conditions like drought, and floods which destroy property and lives. Businesses are at the heart of contributing to climate change. These changes affect food production, disrupt transportation, increase the spread of diseases, lead to financial loss due to disrupted trade, increase inflation, and many others.
Companies can become more competitive by adopting an impact model in their financial reporting and organizational values. Users are becoming more aware and environmentally conscious. This creates an opportunity to be at the forefront of innovations for sustainability. Businesses that will not adapt will soon be caught up in a regulatory environment that will require a sudden change in technology whose investments they may not afford. There are many units of a business where sustainability can be measured. These include your accounting, technology, communications, production, and transportation. Sustainability is no longer an option but a prerequisite for businesses to stay relevant and competitive.
Climate change is an opportunity for businesses to adopt innovative models, products, and services that slow down carbon emissions, and preserve biodiversity. For businesses to make this leap, management needs to adopt sustainability measures as part of their model and values.