“Ethical entrepreneurism” is yet another new business buzzword. What exactly does it mean? What are its impacts on the entrepreneurial imperatives of business and financial success, and how does it apply in our area?
Let’s start with a personal bias: I think that many entrepreneurs launch their businesses because they have identified a problem and believe they have an innovative (and marketable) way to solve it. To me, this is inherently an ethical act. So, by definition, the vast majority of entrepreneurs are by nature ethical —and studies support this.
Ethical entrepreneurship takes this further, by proposing conscious attention to specific aspects of business operations. While grounded in environmentally friendly practices, it includes other important aspects. After doing a little research, here’s my take on some of the key components.
Environmental sustainability.
Most of the elements here are familiar, so it’s largely a matter of degree in terms of putting them into practice. The most obvious is being a business that recycles everything possible, and even encourages on-site employee recycling. Reducing wastefulness — by using refillable water bottles and metal straws, or reusing paper for internal communications — is also part of this. Having staff volunteer days to support recycling efforts takes it one step further. While government recycling pickup programs in our area are limited, drop-off recycling is broader and requires only a small amount of extra effort.
Energy consumption is another major piece. Keeping office or facility temperatures just comfortable enough; creating a culture where lights are always turned off when the room is vacant, electronics are powered down at the end of the day, and curtains or blinds are drawn across sun-facing windows — these all make a difference in reducing energy costs. Probably the top step up this ladder is installing solar panels, for which tax credits are available and which often pay for themselves; our regional weather patterns make solar particularly cost-effective.
Sustainable, local sourcing.
Buying from local vendors not only supports the regional economy, it reduces the environmental (and frequently monetary) costs of shipping. Being mindful of when to buy in large or small quantities, helps both sustainability and the bottom line. Vetting vendors for their own policies is another aspect. When purchasing from companies farther away, especially internationally, including factors such potential suppliers’ labor and environmental practices (the Fair Trade movement) is part of the equation.
Employees.
While staffing costs are a major business expense, a core tenet of ethical entrepreneurism is knowing what constitutes a local living wage and paying all employees at least that much. It certainly leads to happier and more productive employees. Beyond that, establishing a safe, welcoming work environment is vital. Stepping up here can include benefits like offering child care, parental leave, good physical and mental health insurance, continuing education opportunities, etc. Partnering with other local businesses can make some of these options more affordable.
Volunteerism, philanthropy, investing.
Supporting local nonprofits with time and money helps build stronger communities, which indirectly benefits businesses. Sometimes donations of extra supplies can be very helpful without being expensive. For startups to get heavily involved in this arena is asking a lot, but finding creative ways to engage helps build valuable exposure for a new business. When an enterprise matures to the point of investing in other ventures, the environmental and societal impacts of the companies should be considered.
Beyond the right thing to do, ethical entrepreneurism is good for business. Some aspects, such as reducing energy consumption and treating staff well, have direct, positive impacts on costs and profits. Many aspects provide opportunities for enhancing a company’s visibility and image, especially when supported by a good social media program. And, after all, stronger communities are more prosperous communities, with more money to spend with the businesses that help build them.
Keith Twitchell spent 16 years running his own business before becoming president of the Committee for a Better New Orleans. He has observed, supported and participated in entrepreneurial ventures at the street, neighborhood, nonprofit, micro- and macro-business levels.
