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Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage Excerpt from Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage

by Daniel Esty and Andrew Winston

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Why Small Businesses Should Care

What about small businesses? Can they sit this one out? In a word, no. Here are six reasons why:

1. Laws that once applied only to big business are encroaching on smaller enterprises. Even bakeries and gas stations must now comply with clean air regulations.

2. Small companies often have an edge in innovation. Of the more than $100 billion in R&D money that each year is plowed into the "clean tech" marketplace, the bulk goes to new, smaller ventures who historically have produced more breakthrough products and services.

3. Going after the consumption choices of individuals remains difficult politically, but advocacy groups have no problem demanding that small businesses curb their impacts. So while personal cars may not come under NGO attack, the emissions from taxi fleets or delivery services make a relatively attractive target.

4. The Information Age is reducing the costs of pursuing smaller-scale actors. New sensors, information systems, and communications technologies make tracking pollution and monitoring regulatory compliance cheaper every day. Even tiny enterprises now find it hard to fly under the radar.

5. Large customers are putting pressure on small-business suppliers to comply with environmental standards. One little New York-based software developer we know found itself answering tough questions posed by a Tokyo-based telecom company with an aggressive auditing program for its supply chain. To stay on the list of preferred suppliers, the company had to implement an Environmental Management System -- much more than a company its size would normally do.

6. Small companies can be more nimble than their larger competitors. Entrepreneurial businesses can move quickly to take advantage of changing circumstances or meet niche demands. Q Collection, a "sustainable"home furnishings company, produces couches, tables, and chairs without toxic dyes and with wood sourced entirely from sustainably managed forests. The furniture is priced at the high end of the market, but the company has found a customer base of interior designers who want the natural option. And Hawaii-based Kona Blue has launched an environmentally friendly fish farm to meet the growing demand for fish raised free of hormones and antibiotics.

Copyright © 2009 Daniel C. Esty and Andrew S. Winston