Start-ups & Sustainability Series
Dr. Chandra Vadhana Radhakrishnan
Postdoctoral Fellow, Gendered Innovations Lab, Stanford University
Member of Metrics & Indicators Committee, IEEE Strong Sustainability by Design
In the realm of sustainability, metrics and indicators hold a crucial role, encapsulating the essence of the popular adage, ‘What gets measured gets managed.’ Without these vital tools, we lack a fundamental baseline for measurement against established sustainability standards and requirements, hindering our ability to assess progress in environmental and social initiatives. The IEEE Strong Sustainability by Design has an exclusive Metrics and Indicators chapter which aims at providing practical guidelines for measuring what matters in sustainability. While sustainability and its measurement are predominantly associated with corporations today, it’s undeniable that by 2030, startups will increasingly prioritize this imperative.
This is the first of a series of articles on ‘Startups & Sustainability.’ We will explore various facets of sustainability in the context of startups and delve into the ways in which effective measurement can empower them to make more meaningful contributions to a sustainable future. In this first article, we will explore why sustainability matters for Start-ups and how sustainability can be a competitive advantage.
10 REASONS WHY STARTUPS SHOULD CONSIDER SUSTAINABILITY BY DESIGN
Sustainability by design in start-ups refers to the practice of integrating environmentally and socially responsible principles into a company’s business model and operations from the very beginning. This approach recognizes that sustainability is not just a buzzword but a fundamental aspect of a business’s long-term success and its impact on the world.
Doing this in early-stage start-ups helps tap into newer opportunities and comes with various perks. Let’s look at ten reasons why incorporating sustainability can be a business opportunity.
- Cost Savings: Implementing sustainable practices, such as energy efficiency and waste reduction, often leads to cost savings. Startups can cut down on operational expenses and resource consumption, which can significantly impact their bottom line. Ikea has achieved cost savings by implementing sustainability practices. They’ve invested in energy-efficient lighting and optimized packaging, reducing both their environmental impact and operational expenses. These measures have positively impacted their bottom line.
- Competitive Advantage: Sustainability can be a differentiator in a crowded marketplace. Startups that prioritize sustainability may attract eco-conscious customers who are willing to pay a premium for eco-friendly products and services. For eg: take the case of Patagonia: This outdoor clothing company is renowned for its commitment to sustainability. They measure their success not only in profits but also in environmental and social impact. Patagonia donates a percentage of its profits to environmental causes and is a certified B Corporation.
- Attracting Investors: Many investors, including venture capitalists and impact investors, are increasingly looking for startups with a commitment to sustainability. Having a strong sustainability strategy can make a start-up more appealing to these investors. Take the case of Tesla. Tesla is a prime example of a start-up that focused on sustainable innovation. Their electric vehicles and renewable energy products have disrupted the automotive and energy sectors, reducing carbon emissions and we all know the millions of investments that its founder could raise in the past few years.
- Resilience and Risk Mitigation: Sustainable start-ups are better positioned to weather environmental and social risks. By reducing their ecological footprint and ensuring ethical practices, they are less vulnerable to supply chain disruptions and regulatory changes. Everlane is a clothing start-up, known for its commitment to transparency. They provide information on the factories where their products are made and the true cost of production. This not just improved their brand reputation but also made their risks due to labour and environmental issues less.
- Brand Reputation: Sustainability initiatives can enhance a start-up’s brand reputation. Customers are more likely to trust and remain loyal to businesses that demonstrate a commitment to environmental and social responsibility. For example: TOMS is a start-up Known for its “One for One” business model, TOMS gives a pair of shoes to a person in need for every pair purchased, actively involving customers in social responsibility. Similarly, Warby Parker, the eyewear company is a quite well-known brand for their “Buy a Pair, Give a Pair” program that donates a pair of glasses to someone in need for every pair sold, addressing a critical global health issue.
- Market Expansion: Sustainability can open up new markets and customer segments. For example, eco-friendly products may appeal to health-conscious or environmentally-conscious consumers who might not have been targeted otherwise. Thinx, with its eco-friendly and reusable menstrual products, has expanded its market by attracting health-conscious and environmentally aware consumers who seek sustainable alternatives to traditional disposable options. This strategic approach has allowed the company to achieve substantial market expansion beyond the conventional menstrual product user
- Innovation and Efficiency: A focus on sustainability often drives innovation. Startups that prioritize sustainability may discover new, more efficient ways of doing things, leading to improved processes, products, and services. An interesting case study is of Loop, a global reuse platform that partners with consumer goods companies to offer products in reusable packaging. Customers receive products, use them, and return the packaging to be cleaned and reused, promoting a circular economy. Now, this simply created a whole new business opportunity.
- Employee Attraction and Retention: Millennials and Gen Z, who make up a significant portion of the workforce, tend to value working for companies with strong sustainability principles. A commitment to sustainability can help attract and retain top talent. Etsy, an e-commerce platform for handmade and unique items, has a strong focus on sustainability. They have a “Green Team” of employees dedicated to promoting eco-friendly practices within the company. Etsy also offers employees a sustainable commuting program, which includes incentives for walking, biking, or using public transportation. These sustainability efforts contribute to a positive work environment and employee retention.
- Long-Term Viability: Sustainability by design ensures a start-up is built to last. By considering the long-term impact of their activities, start-ups are more likely to thrive and adapt to changing market dynamics. Impossible Foods is a startup that produces plant-based meat alternatives and actively advocates for policies that promote sustainability and reduce the environmental impact of the meat industry.
- Supply Chain Resilience: Sustainable supply chain practices can lead to greater resilience. This is particularly relevant in a world with increasing environmental and social disruptions. The Start-up Pela Case produces biodegradable phone cases made from sustainable materials and has a focus on sourcing materials from suppliers that share their sustainability values.
Sustainability is not just a moral or ethical consideration for start-ups; it is a strategic imperative. Sustainable practices can lead to economic benefits, market opportunities, and enhanced brand reputation, all of which are critical for the long-term success and growth of a start-up. Additionally, as global awareness of environmental and social issues continues to rise, incorporating sustainability into a start-up’s business model is increasingly seen as a fundamental requirement for staying competitive and relevant in the modern business landscape.
In the next article, we will see how startups need to evolve from “sustainable to regenerative”.
Author Bio
Dr. Chandra Vadhana Radhakrishnan is a Fulbright Postdoctoral Fellow at Stanford Gendered Innovations Lab and works on the design of tools and methods for Sustainable Entrepreneurship. She is an accomplished social entrepreneur and has won several awards for her gender and social work apart from her academic contributions. She can be reached at www.linkedin.com/in/connectceevee
