How Sustainable is Business in Connecticut?
(originally published on January 21, 2016)
"Uniting big companies with small green businesses, community by community, will infuse our state with new energy and excitement."
With recent news of General Electric moving its headquarters to Massachusetts, Connecticut business owners are feeling anxiety about the business climate in our state. A look at some facts gives us cause for concern:
- In the past several years we’ve ranked as one of the bottom three states in annual economic growth
- Small business has declined or remained static while growing in most other states- Connecticut has one of the highest per capita debts.
- The Malloy administration has raised individual and corporate income tax, sales tax, property tax, unemployment insurance tax, and even raised a cremation tax by 50%!
- Connecticut and New York pay the highest prices for energy.
- Connecticut has lost about 9% of its population in the past 20 years; that’s more than any other state.
Aetna and Travelers are threatening to be next to hit the road. Is there a solution to this dismal picture?
The reality is, most of us don’t really mind paying taxes when we’re making good money. It’s the same for businesses. As long as the revenue is rolling in and the cash flow is looking good, the costs are worth it. So the question becomes, how do we make the high cost of doing business in Connecticut worth it?
"We've got to make the environment here more attractive,” says Joe Brennan, CEO of the Connecticut Business and Industry Association. “I know that that doesn't sound real sexy, but that's the reality."
My answer to Joe is: Sustainability is the new business sexy. Put people and the planet on a par with profits. Build a sustainable business ecosystem and they will come.
According to the Ethisphere Institute, which has been publishing a list of the world’s most ethical businesses since 2007, companies on their list have consistently outperformed the major stock market indices. “On average, listed companies outperformed the S&P 500 by delivering a nearly 27 percent return to shareholders since 2007, compared to the S&P's negative 8.5 percent shareholder return during the same period."
What if we made Connecticut the #1 state for sustainable business? What would that look like?
Many companies are already including sustainability in their business strategy; they’re pledging to conserve energy and other resources, and that’s a great start. True sustainability though, means getting to a tipping point by taking a holistic approach to every aspect of business management. Key tenets of a sustainable business include:
• Be transparent in the sourcing of all products, and set goals to eliminate the use of dangerous resource extraction such as fossil fuels.
• Implement the Precautionary Principle: choose not to produce, use or market substances that are potentially toxic or unsafe.
• Preserve, protect and regenerate nature and natural resources.
• Provide a work environment that is safe, engaging and fair to all employees along the supply chain.
How do we get there?
Much of the answer lies in leadership and good management. Starting at the top, business leaders must develop not only an integrated strategy, but also clearly articulated goals, initiatives and metrics that can be understood, implemented and measured by managers and employees. Assessing those aspects of sustainability that are materially relevant to the company's values and vision is an important and sometimes overlooked first step.
For manufacturing and food service businesses, managing resources from raw materials, to manufactured goods, to upstream recycling is a great way to reduce overall risk for a company and gain a competitive advantage. Reducing waste and increasing energy efficiency are easy ways to find savings, which can then be diverted to important long-term investments.
Not every business is resource intensive; in Connecticut our greatest strength is our human capital, which is driving innovation, technology, finance and other service sectors in which we excel. In this area, more than any other, we have a well of underutilized resources.
A report jointly produced by GreenBiz and The National Environmental Education Fund found that:
• “Losing and replacing a good employee costs companies between 70%– 200% of an employee’s annual salary” and that “employee engagement has resulted in increased employee loyalty, more company pride, and improved morale.”
• “Front-line employees are often in the best position to identify inefficiencies and propose improvements. Environmental & Sustainability education of employees can improve profitability by supporting greater efficiency through less waste, water and energy usage”
• “Companies that equip employees in sales, marketing and other customer oriented positions with knowledge of the environmental attributes of offerings, and environmental issues to place those attributes in context, will strengthen relationships with customers who have similar values or interests.”
Beyond the clear benefits of employee engagement, companies have opportunities to demonstrate sustainability and support the local economy through sourcing locally and encouraging their employees to do the same. Traditional Corporate Social Responsibility (CSR) creates value in the local community through volunteerism and charitable contribution, but CSR can go way beyond charity.
Networking with local vendors and mission-driven businesses helps businesses grow deeper roots, keeps dollars in the community and provides jobs, all while enhancing profitability through employee retention, engagement and empowerment. Uniting big companies with small green businesses, community by community, would infuse our state with new energy and excitement.
Investment is another way to grow a sustainable business ecosystem. A sustainable business ecosystem is regenerative. Sustainable companies invest in financial vehicles that are focused on growing more sustainable businesses. Some of the hottest investments include renewable energy, clean tech, food waste solutions and the growing field of impact investing in social enterprise and non-profits. Investing in the local community means those investments are based on personal relationships. Those relationships are key to keeping investors in it for the long haul. This type of sustainable investment hearkens back to the old days of mutual aid societies, which had some of the lowest rates of default in the history of finance.
Often neglected, but perhaps the most important key to nurturing this ecosystem is storytelling. You can build it, but they won’t come if they don’t know about it! Building brand loyalty is a marketing buzz phrase, but telling a story does more than build loyalty. Storytelling sets a company apart from their competitors, and gives people a reason to pay attention. It puts a face to the brand, and helps earn trust for the products and services the brand offers.
In terms of sustainability, Connecticut has a terrific story to tell. We’re home to the nation’s first Green Bank, which finances and incentivizes renewable energy projects. We are the first “range confident” state supporting electric vehicles with charging stations within 20 miles of one another. We have the first statewide sustainable business council, aptly named the Connecticut Sustainable Business Council, founded recently. Connecticut has nearly 30,000 nonprofit organizations and a growing number of social enterprises with the new designation of “B Corp.” Innovative new businesses like MetroCrops in Bridgeport are turning problems into business opportunities while tackling the challenge of sustainable urban development. For these businesses to be truly sustainable, they need the support of a like-minded community.
When asked by ABC News why they were leaving the state, GE Chairman and CEO Jeff Immelt said that GE wanted to be "at the center of an ecosystem that shares our aspirations." It’s understandable that GE felt isolated from its high tech peers, yet had they been more proactive in developing a sustainable business ecosystem here in Connecticut, they may have found themselves right at its center. We’re losing GE, but that need not be cause for alarm. With a focus on sustainable business values, we can grow an attractive, resilient and regenerative economic environment that makes doing business in Connecticut worth it.