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VIEWPOINT: Small Businesses are the Key to a Cleaner Environment

By Rajat Panwar, Ph.D.

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When major corporations tout their contributions to social or environmental initiatives, the world takes note. As just one example, Microsoft, Apple, Facebook, and Google all drew attention at different times this year when they announced plans to work toward becoming carbon neutral. 

But, despite the hype that gets associated with these big-business efforts, it may be that small businesses operating in quiet anonymity are the ones that have the greater impact on the environment — both good and bad.

Large corporations are more motivated to use these initiatives as a means to achieve their financial objectives, whereas small businesses are more serious about making a real difference in their communities.

Given that smoke screening and greenwashing are big problems in sustainability, we will be better off enabling small companies to own sustainability more so than large companies.

That’s one reason why government-sponsored environmental initiatives need to include small businesses as a critical partner if they hope to succeed. For example, President-Elect Joe Biden’s $2 trillion climate plan that sets a target for achieving net-zero emissions by 2050 should consider the role small businesses can play in environmental protection. 

A few facts worth knowing on the issue include:

• Small businesses’ impact is a story of numbers. Although large corporations get more attention, the vast majority of businesses are small. In the U.S., about 99 percent of all firms are classified as small. Even though their individual contribution to pollution is small, collectively it is enormous, which is why it should be addressed. In fact, large companies often pollute through small firms because it is a network of numerous small businesses that feed into value-chains and supply chains of large corporations.

• Grassroots initiatives need to be targeted. A tremendous gap exists between large corporations and small businesses in terms of the resources they can allocate for environmental initiatives. That’s why climate investments like those Biden is proposing should target grassroots initiatives. That would include local food production, support to small landowners for sustainable forestry, grants for circular economy initiatives, grants for businesses that would promote fixing and repairing things, local recycling, and sustainable food systems.

• Small businesses are inspired by different motivations. I have been involved in research into the social and environmental impact of small businesses. My colleagues and I produced intriguing results with our study, especially as it related to what motivates businesses to be good stewards. Small businesses are motivated to pursue social and environmental initiatives mainly to be good community citizens and generate a strong local reputation. Large corporations are typically inclined to pursue these initiatives to enhance shareholder wealth.

Some people may argue that climate initiatives need to take a backseat right now while the country focuses on getting people back to work. But economic stimulus can easily be aligned with environmental protection. 

The initiatives I am talking about will produce new jobs that would support the local economy. If we only focused on giving energy grants, then I can see the rationale in pitting job creation versus climate consequences. But climate investments can be done strategically so that small businesses, entrepreneurs, and landowners get the money to revamp their operations.      

Rajat Panwar, Ph.D. (www.rajatpanwar.com), is an associate professor of Sustainable Business Management at Appalachian State University.

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