Running a GOOD Company or Donating Proceeds: Which Generates a Better Impact?

Running a GOOD Company or Donating Proceeds: Which Generates a Better Impact?

Jun 5th 2019

Running a Good Company or Donating Proceeds

A question that often comes up in our internal meetings - “Should we donate a portion of our proceeds to environmental causes?” or “Should we purchase carbon credits to offset all of our full emissions?”

After much internal reflection and debate, we have decided that for now, rather than donating to external efforts around sustainability, we'll instead invest more in the sustainability of our own operations and products (and in building a great, ethical place to work). 

However, this internal dialog has led us to recognize the importance of goal setting and tracking when it comes to internal improvements. 

This means (1) Establishing clear targets for how much we will invest in operational and product improvements and (2) Tracking the cost and impact of the changes we make.

For example, EcoEnclose recently introduced Direct Thermal Labels with a Zero Waste (recycled, recyclable) Liner. Right away, we replaced our existing labels (which were free from UPS) with our Zero Waste Labels. 

This change, while essential to our commitment to running a sustainable company, will cost us around $1,500 this year and will:

  • Divert 312 lbs of paper from the landfill
  • Create a market for 262 lbs of post consumer paper waste
  • Saves 2,558 gallons of water
  • Saves 860 lbs of CO2

Woah! Seeing it this way - numerically and clearly - is powerful and showcases the power of various external investment programs.

Here are just a small handful of other places we have sought to utilize the most eco-friendly (albeit more costly) operational solution.

  • All of our packing slips are printed on paper made with 100% post-consumer waste (an approximate additional cost of $1000 this year)
  • All of our shipments go out in house-made boxes or mailers made with 100% recycled content (an approximate additional cost of $2,000 this year)
  • All of our outgoing shipping boxes are custom cut to each parcel (an approximate additional cost of $10,000 this year)
  • When plastic pallets are needed in our warehouse, we seek out pallets made with 100% post consumer resin (this is one small part of our role as the Association of Plastic Recycler’s Demand Champions). (an approximate cost of $500 this year)
  • We typically only buy used furniture for our warehouse
  • We work with EcoCycle and participate in their Green Star Business Program, with the aim of running a business that is as close to zero waste as possible (an approximately cost of $2500 this year)
  • The We Care Cards we provide companies to help them showcase their eco-commitment are now made with 100% post-consumer paper and are printed with vegetable-based inks (an approximate cost of $4,000 per year)

Our next step is to even more systematically track current and new improvements we make, and quantify the impact these changes have on the environment.

In addition to our efforts to run a sustainable operation, we also make constant investments in new product innovations and improvements, with the aim of helping the companies we work constantly up their eco-game. 

Here are just two examples:

  • Providing companies with the option to print in algae ink. Because this is a very new technology, the ink is more expensive and more operationally challenging to use. We are proud to make it available at no extra charge to our customers, so we can help make the ink more available and accessible long-term.
  • Investing in the R&D to improve our products - in everything from the amount of post-consumer waste being utilized to the sustainability of the adhesives being used. That R&D process can be time consuming and expensive, but the thrill of taking a product to the next level ecologically is well worth it.

Again, taking a cue from “the giving model” where it is so easy to understand the investment and impact being made, we recognize the importance of more comprehensively tracking our efforts here in order to estimate the environmental impact of each innovation and improvement made.

Our Own Eco Investment Goals for The Year

  • Invest 1% of Proceeds into Operational Best Practices that Are Measurably better for the Environment or for our People
  • Make at least 20 Specific Sustainable Improvements to Our Warehouse and Operations
  • Introduce 10 Improvements or Innovations to Our Sustainable Packaging Offerings

So What is Right For Other Companies? What Makes a Company GOOD - How It Is Run or How Much It Donates?

It is truly exciting to be in an era of the progressive, conscious business (and conscious consumers!). 

With this growing focus on GOOD business, I have a feeling that a lot of companies grapple with this same question - is it better to work on running the most eco-friendly company possible or is it better to donate proceeds to outside initiatives?

Running the Most Eco-Friendly Company

What do we mean by “running the most eco-friendly company possible?” It is a lot of things! Here are a handful of ideas on what it could mean.

Most companies can’t necessarily take all of these steps with the resources they have and the business model they work within. But to us, running the most sustainable business possible means having a mindset of finding ways to push forward on these types of questions.

  • Producing a thoughtful and sustainably produced product, made with well sourced materials.
  • Producing something that is durable and long-lasting, versus something that is inexpensive but quickly disposed of. 
  • Producing products that can be easily reused or recycled at the end of their life (or, in the case of food and food packaging, can be easily composted). 
  • Supporting your customers in responsibly managing the end of life of your products, through education on how to recycle or compost, upcycling options, take-back programs, etc.
  • Vetting your suppliers and understanding how well they support your values and mission.
  • Developing a packaging strategy that adheres to our sustainability principles.
  • Moving from nonrenewable energy to renewable energy for your operations.
  • Auditing your company’s waste management strategies to maximize opportunities to reduce, reuse / upcycle, recycle, or compost.
  • Finding sustainably produced office supplies, such as recycled plastic pallets, recycled paper, reusable pens, organic food, etc. Stocking your operations and kitchen with reusables instead of disposables.
  • Finding ways to innovate in your field, by encouraging the development of new materials, technology, and processes that improve the sustainability of your product and operation.

There are a few associations and certifications that are designed to help companies operate holistically as a conscious business.

B Corporation is one of the most well known. B Corp Certification measures a company’s entire social and environmental performance, evaluating how a company’s operations and business model impact workers, community, environment, and customers. Additionally, B Corp Certification requires its companies to show measurable improvement year over year.

There are also “commitment programs” that motivate companies to make specific internal goals related to sustainability. One example is the Association of Plastic Recyclers’ Demand Champion Commitment, which compels its members to find new ways to use post consumer, recycled plastic in their operations, with the goal of creating demand centers that help fuel a more robust domestic, circular economy for plastics. Other similar programs focus on achieving zero waste, utilizing renewable energy and employing fair labor and wage practices.

Investing in Outside Change

Many companies donate, occasionally or as a core part of their model. Here are some examples of these types of models.

Buy One Give One: Some companies donate goods as core to their offering. For example, companies like Tom’s Shoes and Bombas Socks donate one pair for every pair sold.

One Conservation Act or Resource Investment Made: An increasingly common strategy is planting a tree for every purchase. A similar strategy is to clean up a specific amount of waste for every purchase made.

Percentage Donation of Proceeds: Many companies are now committing to donating a specific portion of proceeds to charitable organizations and/or ecological initiatives.

Carbon Offsets: Finally, many companies purchase carbon credits to offset some or all emissions generated by business operations. Some even allow customers to add a “carbon credit” to their cart at checkout, enabling people to offset the impact of their purchase.

Many organizations take these actions independently. Others do so in partnership with or as a member of a broader organization. Two examples include:

1% For The Planet: Member companies commit to donating 1% of sales to environmental efforts.

One Tree Planted: Companies can work with One Tree Planted to get trees planted for purchases that are made.

There is no doubt that these “external investment” efforts can have an incredible impact. They direct significant funds and resources towards sustainable innovations, renewable energy development and resource conservation. 1% For The Planet alone, for example, has led to $175 million being donated to environmental causes since its inception.

When done well, these efforts are goal oriented, tangible and measurable. And when you make these types of public commitment, you have to follow through!

Additionally, these types of efforts are a great addition to any branding and marketing strategy. 

Which Is More Important?

So that brings us back to the question - should companies focus on the internal or make outside investments?

This question has been debated at length by academics and social enterprise leaders, often with Toms Shoes as the point of reference. 

There isn’t complete consensus (not surprising!), but from our own reflection and review, it is clear that while something is better than nothing, businesses striving to have a positive impact should think of this work as a hierarchy of actions:

  • First, focus on your own business. Build a good product, find ways to green your supply chain, treat your people and your suppliers ethically, invest in more sustainable operations.
  • Take a queue from external investment programs and make a measurable commitment to continual social and environmental improvements.
  • Then, if it makes sense for your business, make external investments as a natural extension of your existing and deep commitment to sustainability and social change.
  • Recognize that no business is perfectly sustainable. So, all the while, always be looking for new ways to make your product set and operations better and better.

There are countless companies that embody the full scope of impact strategies beautifully.

One of my favorites is Better World Books. This company has made social and environmental impact core to its DNA - by running drives to secure donated books from communities and compasses, reselling these books at reasonable prices, and funding literacy projects worldwide. Better World Books also utilizes the Buy One Give One model, donating one book for every purchase made on their site.

Businesses like these are so authentically focused on their mission that the investments in external initiatives are just one additional way to (1) show the world how much they value sustainability and (2) address the fact that consumption and running a business - even when operating as a truly conscious company - has a negative environmental impact that you want to counter.

That said, there are companies that utilize donation or give back programs as more of a sustainability band-aid or branding strategy than as icing on the sustainable cake.

This type of company may have one sustainability “angle” to their business model, but they aren't necessarily considering the environment across their entire organization, and are often opting for “cheaper is better.”

When it comes to building an impactful company, ideally, any brand that has made the public pledge of donating proceeds or goods, planting trees, or offsetting their carbon footprint - is also asking - “Before I spend money outside my company on external change, am I doing what I can within my means and business model to build a sustainable and ethical operation?”

This won’t mean that every decision a business makes will be in favor of the most sustainable choice - sometimes the “most ecological” way is truly too difficult or expensive. And at times, the right answer is to maintain the status quo but offset the negative impact through outside investments.

But this general mindset will surface the right conversations and push companies to have a great, and authentic, impact. 

We'd love to hear your thoughts! Email us at saloni@ecoenclose.com if you have struggled with this question so we can learn from you (and share your decision making with our community).