man with umbrella going against the recession illustration

22nd December 2022

Can Start-ups Still Be Eco-Disruptive In A Recession?

Ryan Kelly

What Does Disruptive Mean In The Business Sphere

While the original meaning of the word disruptive has negative connotations, such as troublemaking, in modern business it has a positive interpretation.

To be disruptive in business or in technology is to create or do something that is innovative and ground-breaking in your sector.

What Does It Mean To Be ‘Eco-Disruptive’?

In terms of the environment and business, to be ‘eco-disruptive’ means to be an especially environmentally friendly company. However, it is more than that. To be truly eco-disruptive is to be an innovator in multiple aspects of environmental preservation in your business policies.

Green Practices Vs Recession

Many businesses who prided themselves on being green prior to the economic turbulence are now concerned about how they can afford to remain eco-friendly in a recession.

The pandemic caused plenty of economic upheavals. The recovery period seemed short for many businesses as a cost-of-living crisis hit, inflation soared, and the war in Ukraine has pushed fuel and energy prices very high.

Business overheads are increasing. Yet, businesses now have a legal obligation to become greener or face heavy fines in the near future.

This isn’t merely adding some goodwill green policies. The UK government is requiring that businesses are carbon neutral by 2050 to meet their promised targets for net zero. In the meantime, businesses are reviewed to see if they are making meaningful steps towards this goal.

On the other hand, businesses cannot meet their green targets if they go bust owing to too many costs.

Launching greener initiatives are often seen as expensive with long-term payoffs. Therefore, there is often a stereotype that commitments to eco-friendly policies are the first projects to be axed during a recession.

However, many businesses panic before analysing the data, and there are many reasons why businesses should commit to becoming eco-disruptive even in a recession.

Companies That Stand By Pro-Environmental Practices In Recession Fare Better than Competitors

It’s a bold statement but true. If we look back to data that came from the 2007-2009 global recession, companies that maintained and improved their green policies actually tended to fare better than their competitors who swiftly abandoned eco initiatives in the wake of recession.

 

How Will Going Green Will Save Your Business Money In Recession?

 

No 1) Energy Costs

Fossil fuels are bad for the environment and a business’s bank account. Converting away from traditional energy sources as much as possible as quickly as possible could save businesses huge amounts of money in fuel and energy costs.

The government is putting the accelerator down on converting away from dependence on fossil fuels so as to be less dependent on Russia. Owing to the war, Russia is using fuel as a pressure point on western Europe and a show of strength and power. As the war continues, the fuel and energy crisis is likely to only get worse unless the UK can steer into alternative energy sources.

Investing in greener energy could be essential for businesses to cut ongoing costs.

 

No 2) Avoid Fines

The consequences of climate change have accelerated and are no longer a distant theory. The UK has faced some of the hottest summers on record as well as dramatic flooding.

The UK’s infrastructure is not yet prepared for a permanent shift in temperature, but it is already happening. It is likely that our summers will become warmer, and our winters will be wetter.

This looming threat is why the government will likely keep to much of its legal incentives around green changes for businesses.

Heavy fines after recession and a requirement to still spend the money and make the right eco changes later mean that businesses should not delay. Large fines coming out of a recession could cripple a company, especially if they then have to invest in green policies later anyway by law. Businesses are frequently at their financially weakest coming out of recession, so delaying eco business practices will hurt you more than help you financially.

 

No 3) Sustainable Brands Were More Successful In The Last Recession

Data from the previous recession reveals that overall sustainable companies performed better and bounced back faster than their competitors. While many companies panic at the word recession and then focus purely on cost cutting, those that are dedicated to eco policy gained an advantage.

According to research from the last recession, B Corps were 64% more likely than other businesses of a similar size to make it through the economic downturn positively. B Corps is an American concept standing for Benefit Corporation. What makes something a B Corp is that it is certified by non-profit B Lab for meeting high standards of environmental performance. B Corps not only did well in the USA during the last financial crisis but also throughout the pandemic.climate tech

Some companies at the forefront of environmentalism will clearly do well in the recession since climate tech is one of the sectors dubbed recession-proof.

Why Were Eco Disruptive Brands More Successful?

Greater Customer Loyalty – Customers of green brands tend to be more loyal, even during a recession. While everyone’s funds are squeezed, those that choose eco friendly products and companies are often choosing them because of their own values and ethics rather than just the price tag. Many people are not willing to compromise their beliefs, regardless of their hardships. Shopping by ethics creates strong brand loyalty if you continue to be eco disruptive for your customers.

Recession Fuels Love Of Transparency – Strangely enough, consumer demand for transparency and ethics continues during a recession. In fact, sometimes it might grow. Transparency and honesty are very important to customers, especially if they have green ideals. When brands treat their customers as smart individuals who can make informed choices, they will often get better results.

Eco-disruptive And Innovation Go Hand-In-Hand – Those businesses that succeed, not only at enacting more sustainable practices but at being truly eco-disruptive are usually highly innovative. To incorporate substantial green policy, and to do it profitably often necessitates creative, resourceful, and out-of-the-box ingenuity. These are exactly the traits that will be an advantage in steering profitably through the murky waters of recession.

Sustainability Is More Cost Effective – Companies that dedicate themselves to renewable methods and eco-circularity will be able to extend resources and become more cost effective. Sustainable practices usually reduce energy consumption and waste, which makes businesses more profitable. An example would be hotels having guests reuse their towels. It is such a simple policy change, and most people dry with a towel more than once anyway. Yet it can significantly cut down on water and energy usage. Some hotels saved as much as 25% off their energy bills after making this change to their practices.

Other practices that can make a big difference are reducing unnecessary wasteful packaging for products and switching to sustainable packaging, or reducing fuel when vehicles are idling for logistics firms.

Happier Employees – Morale among staff is higher in companies with strong environmental practices and they have 40% better employee loyalty.

How To Be More Eco Disruptive

Invest in energy cutting – If you can reduce energy usage you will be helping the environment and reduce your business bills simultaneously. Encouraging remote workers like WFH policies can save money on heating, water and lighting in the office and you might be able to save on salaries if staff commute less.

Reduce packaging materials – Reduction of harmful packaging is one of the easiest ways to be eco-disruptive. Often buying the extra packaging was costly anyway, and much of it ends up in landfills.reduce packaging materials

Reduce E-Waste – This is much harder than reducing packaging; however, if carried out successfully, it is one of the most eco-disruptive things you can do as a business. E-waste is extensively damaging to our environment. Not only is it an eye sore as vast quantities end up at landfills, but as the components slowly break down, they release toxic chemicals into our soils and water supply that have been linked to cancer. The UK produced 1.6 million tonnes of e-waste in 2019. In 2021, it was on track to become the biggest e-waste contributor in Europe. By partnering with e-waste recycling and repurposing professionals, businesses can correctly dispose of their e-waste, particularly from computer hardware, with little effort and minimal cost. There are many computer specialists who can manage the entire device life cycle to reduce this operational burden on businesses.

Move From Individual Product Items To Software – Profitability is often seen as an antithesis of sustainability. If you consider making products last longer to help the environment, then how can you sell to previous customers again and again? Surely businesses would lose potential profits? The answer is to look beyond normal products. The Internet Of Things is coming a long way to aid this conundrum. Consider making fridges last longer. People would need to buy them less often. Yet people are looking for their homeware to become smarter and embrace automation, remote control, and robotics. Computer chips link everything in our homes and that is The Internet Of Things. By making more sustainable items, manufacturers can still make profits by selling software updates and new features to these items.

Turn To Inclusive Growth – To become truly eco-disruptive and embrace sustainability in a way that actually makes you profitable, you should cultivate inclusive growth. That is making ethical decisions at each level of your business process, especially for products. It’s thinking about where your materials and supplies come from and how the local communities where they are sourced are affected. It is looking at the environmental and socio-economic and even political implications of your offering to society.

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