MASTERCLASS:As green-based companies move further into the mainstream, it is even more important to give good value to customers

THERE IS more to greening a business than simply sticking an eco friendly label on the front. “Greenwashing” is the term coined for those who do that without any depth to their claim to be green.

Donning the corporate equivalent of a pair of sturdy sandals might have worked in the past but it is increasingly unlikely to do so in the future. Both consumers and commercial buyers are now looking for accountability from their suppliers that pays more than lip service to going green. And this goes further than the product or service on offer. It also means being environmentally responsible behind the scenes with a demonstrable commitment to energy conservation, waste control and sustainability.

Going green can be expensive and it brings no automatic guarantee of success. Any new business idea or major shift in how a company operates must stand or fall on its commercial viability not on its colour. This is especially true when consumers are hyper price conscious. It may have been reasonable to have assumed a hefty premium for an organic product or an eco-friendly service before the recession. It is not now.

Businesses with eco foundations are still in the minority here but as the rules to protect the planet continue to tighten this will change. “Sustainability, climate change, good corporate citizenship and going green are no longer part of some fringe discussion,” explains Bartley O’Connor, head of sustainability and climate change consultancy with PriceWaterhouseCoopers. “They are moving mainstream and spell a huge shift in focus for many businesses as public concern over sustainability has started to have an impact on the bottom line.

“These issues are now of strategic importance to business but some are choosing to filter it out or to assume it doesn’t apply to them. In time it will. Big companies and industry leaders are already well into making changes to how they operate, but smaller companies can’t afford to ignore the issues. It’s only a matter of time before their customers are going to want to know what steps they are taking to tackle the issues as part of the bigger supply chain. The business environment is changing but with change comes opportunity.”

For some the term “eco business” still has hippy connotations, but many of today’s most successful green-based companies are far from flaky. For example, sustainable business practices have always been a key part of the Ben Jerry’s ice cream corporate success, while successful businesses have also been built around cleaning companies using only environmentally-friendly products, taxi companies with hybrid fleets and clothing companies using fabrics made from sustainable crops.

“There are strong indications already that within a few years how green your business is will play as big a part with buyers as product quality, price or customer service do now,” says Leslie Codd, managing director of Codd Mushrooms in Tullow.

“We are already seeing it with our bigger customers who are coming under pressure on issues such as sustainability and their carbon footprint. It is working its way down the chain.”

Codd Mushrooms is committed to an environmentally-friendly production system that is chemical free and highly energy efficient. Prior to installing its new energy-saving measures (a wood pellet system and a wind turbine) the company was spending around €200,000 per year on oil and electricity. The alternative energy sources have cut this by around 40 per cent. “The investment involved was around €280,000 but we will see a payback in just over three years, which makes it pretty compelling from a business as well as a green perspective,” says Codd.

The recent construction of a well insulated solid structure in which to grow the mushrooms – as opposed to draughty, hooped poly tunnels – has also helped the company cut both energy costs and the risk of disease. “The problem with hoops is that eventually they bend creating gaps through which disease can enter,” says Codd. “Because we are now in a highly controlled environment we don’t need to use pesticides, so we can offer a chemical-free product at a reasonable price which also gives us a marketing edge. We are hoping to reflect this through the launch of our new brand, The Honest Farmer.”

Codd Mushrooms and Highfield Nurseries (see panel) are examples of long established businesses reinventing themselves to meet the eco challenge. For more recently formed businesses, such as electric vehicle importer Verde Autos in Cork, the raison d’etre was green from the outset. “My commitment was to start a business that would do something positive for the environment,” says founder John Keohane. “Everybody knows about climate change and its consequences so there is a great business opportunity in trying to tackle this problem with new products and practices.

“Of course the project was subjected to the same scrutiny as a non-green proposal. I don’t think any exception should be made for it just because it is green. The bottom line is that if a premium can be justified with an economic payback, then customers can be persuaded to buy green products. If the premium is merely for goodwill then I think the product is dead in the water.”

Verde Autos is committed to both green products and to eco-friendly operation. “We run our offices with renewable energy, recycle 100 per cent of our waste and are committed to purchasing from green suppliers,” says Keohane. “We have also installed energy efficient products in our offices to reduce our energy consumption by over 50 per cent in the last year.”

O’Connor, of PwC, says companies need to work out what going green means for them. “Take the sensible steps that are the most appropriate for your business,” he says. “For example, start with your own operation by reducing energy use and taking waste out of your business. No one is suggesting people should make changes that are not justifiable commercially. There is no point being a leader in the field if it destroys your business in the process.”

CASE STUDY: HIGHFIELD NURSERIES

Since making a brave move from its original premises and changing its product mixes, Highfield Nurseries have strengthened their market position

RADICALLY CHANGING its product mix from short-lived flowering plants to year-round herbs has helped eco-friendly Highfield Nurseries reduce waste and lower costs.

Highfield Nurseries has been a family-owned business since the 1920s. Today it is run by Mark Long whose father and grandfather both worked in the business before him.

In 2003 the family made a major decision to move the nursery from Terenure in Dublin to a 50-acre greenfield site in Oldtown, Co Dublin. It developed the site at a cost of €6 million and the business has been up and running at its new location since 2005 with the primary focus (around 85 per cent) on growing flowering pot plants and outdoor perennials.

Eighteen months ago, however, Mark Long took the decision to radically alter the product mix. It is now 85 per cent herbs and long-life lettuce with the remainder in pot plants.

“Basically there were diminishing returns on pot plants so action had to be taken,” says Long. “The situation was compounded by three bad summers and then the downturn in the market,” he explains.

“Between slowing sales and weather conditions we were losing a lot of stock.”

Long decided to switch the company’s focus to a product that was less seasonal and less affected by the weather.

“We looked at what we could offer that was different and the result is our Living Flavour range of herbs which was launched in March this year with support from Bord Bia.

“The range comprises 16 herbs and three varieties of pick-and- grow-again lettuce. Both products are available year round and we support them with recipes and growing advice on our web site – livingflavour.com – and we also use Twitter,” Long says.

Since launching Living Flavour Highfield’s herb sales are up around 33 per cent. “We have benefited from having a clearly identifiable brand (as far as we know we’re the first branded herbs in Ireland), we have been able to target a wider range of customers and ironically we are benefiting from the recession because people are cooking more at home,” says Rob Lyons, the company’s sales and marketing manager.

As a result of changing its business mix Highfield has reduced waste from 10 per cent to 2 per cent and cut overheads by around 40 per cent. “We are as green as we can be and the glasshouses are modern with very efficient heating,” says Long.

“We sterilise and recycle water and use biological control to deal with pests. We have backed away from going fully organic as it would add around 15 per cent to costs and we don’t feel the market will take this right now. But when things improve it is a simple step for us to go fully organic.”