The Business of Green

Jeffrey Taylor earns a living creating 2-D and 3-D animations to illustrate engineering processes and criminal court testimonies, but last year a client persuaded him to go in a new direction–toward helping people picture the benefits of environmental sustainability. He was a bit apprehensive about venturing into a brand new area, but his research revealed a growing sector in need of just the type of cutting-edge visuals his business provides.

In addition to pursuing its other projects, Taylor’s company, CrossPlatform DeSign L.L.C. in Richmond, Virginia, is now negotiating three green illustration projects worth at least $150,000. The company’s graphics will help the public and policymakers visualize green processes, from energy-conserving rooftops to runoff-reducing permeable pavements. Contracts from clients such as the City of Richmond and the Commonwealth of Virginia will help 2010 revenues surpass $400,000, more than double the $171,000 the company grossed last year.

Taylor is just one of a number of savvy black entrepreneurs who are growing their businesses by tapping into the multibillion-dollar green economy, which includes mission-driven recycling and alternative energy companies as well as traditional businesses looking to squeeze out waste from their supply chains.

His timing couldn’t be better. Companies are recognizing their need to reduce energy consumption and help consumers do the same and, though there’s considerable doubt about climate change, there’s also considerable urgency about reversing its course. And there are more federal dollars flowing in support of environmental causes. The Obama administration invested an historic $80 billion in clean energy programs last year, including smart grid electricity, home energy efficiency, and state and local renewable energy projects.

United States Environmental Protection Agency Administrator Lisa Jackson has said this is just the beginning. “We are far from the end of the conversation on the green economy,” she says. “This president is nowhere near being done pushing clean energy as a way to solve our problems with respect to our need for jobs, our need for a clean environment, and our need for national security–because we are way too dependent on foreign oil.”

Together these developments suggest new markets and funds for vigilant minority entrepreneurs. “There are tremendous opportunities, especially with the administration talking about increasing minority participation in the green areas,” Taylor says. “But access is still a problem. Where is the money? How do you find grant programs? How do you partner with larger corporations who hold the big contracts?”

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Identifying Opportunities
The first step toward profiting from the green economy is appreciating its scope and identifying the ways that existing skills, connections, and businesses can dovetail with it. Taylor, for example, didn’t radically depart from his core business. His cost structure, team members, and services remained the same; he simply added the illustration of environmental issues to his existing portfolio of presentations.

There are infinite opportunities for other businesses to get a green tint as well. The clean energy segment of the green economy alone includes 68,200 businesses and 770,000 jobs in all 50 states, according to the Pew Charitable Trusts, a nonprofit, nonpartisan think tank in Washington, D.C., that provides grants to improve public policy, inform the public, and support community service. The organization’s 2009 report The Clean Energy Economy counted actual jobs, companies, and investments nationwide within five categories: clean energy, energy efficiency, environmentally friendly production, conservation and pollution mitigation, and training and support. That’s just one-half of 1% of all U.S. jobs, but from 1998 to 2007 the sector grew at more than double the pace of total jobs, and it’s received roughly $12.6 billion in venture capitalist funding in recent years.

Estimates of green job growth indicate broad interest in this sector. IHS Global Insight, a leading forecasting company, predicts 2.5 million new green jobs by 2018 and 4.2 million by 2038, including renewable power generation, residential and commercial retrofitting, renewable transportation fuels, and positions in engineering, legal, research, and consulting. A report from the United Nations Environment Programme (www.unep.org), which works to implement the U.N.’s policies and plans for underdeveloped  countries, estimates that job growth in energy alternatives alone could exceed 20 million worldwide by 2030.

The green economy is even larger if one includes not just companies that supply clean energy products and services but also businesses that consume clean energy in an effort to be more environmentally responsible. “I don’t like the term ‘green economy’ because that makes it sound like a fad,” says Carolyn L. Green, co-founder and managing partner of EnerGreen Capital Management

, a Radnor, Pennsylvania-based private equity firm. “I’m interested in new technology and existing companies to improve or clean up their operations. We also look for successful companies that we can expand into newer, clean technologies or energy production.”

Unlike the dot-com boom before it, green has staying power. “Individual dot-com companies didn’t last because they didn’t focus on something sustainable–there was a lot of hype,” Green says. Her firm focuses on late venture and growth stage companies

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involved in the energy and environmental industries. “For anything to be sustainable it has to make money, and it must add value to existing companies or products.”

So entrepreneurs can profit from the green economy without developing capital intensive, game-changing technologies or alternative energy sources. Many investors in the green space are looking for better mousetraps–that is, incremental improvements that fill supply chain gaps, eliminate bottlenecks, or reduce energy demand. Things such as manufacturing high-efficiency windows and low-energy drywall, or supplying parts for smart grid electricity readers hold great potential for immediate impact.
“There are all sorts of things where if you just think about problems a bit differently, you can come up with better solutions,” Green says. “Those sorts of things aren’t sexy but they add value and they last.”

Follow the Money
The second step toward deriving revenue from the green economy is drilling down from public sentiments and presidential proclamations to specific sales opportunities. This takes time, research, and persistence, says Lynnette Young, CEO and executive director of Sustainable Atlanta, a nonprofit that promotes environmentally sound practices and policies.

The key is putting someone in charge. “You hear a lot about small businesses not benefitting from the Recovery Act,” says Young. “It’s still a federal bureaucracy. Someone’s got to start asking questions, networking, finding out what other people know and how they are doing it. We’ve got to make these steps and get on board because if we don’t we are going to be left behind.”

Taylor’s research led him to EPA grants, minority certification programs, and corporate diversity initiatives. “[The Minority Supplier Development Council] is a key tool because it opens up your business to other, larger corporations that have diversity

goals,” he explains. “Instead of flying blindly by just contacting businesses, it gives you a direct connection to the companies and their supplier diversity initiatives, including matchmaking and mentor—protégé programs.”

Still, finding the right niche takes time, says Malcolm Jackson, director of operations for Bumblebee Energy Solutions, a home energy audit company in Dallas. He tried wind power and electronics recycling before settling into energy auditing. “[The wind] industry went into a lull, and that taught me to look for a business that could survive the vagaries of tax incentives and political will,” he says.

The burgeoning energy efficiency area fit the bill for Jackson, and he launched Bumblebee in 2009 with a $50,000 investment to fund needed insurance, marketing, and equipment, including infrared thermal imaging cameras and carbon dioxide detectors. Jackson should do well. According to the Pew report, consumer demand for products and services that lower energy consumption–and bills–has spurred job growth for energy meter manufacturers, efficient materials installers, and energy-use consultants.

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But it’s not just consumers who are giving small businesses an incentive to ramp up sustainability efforts. Increasingly, large companies view their suppliers as extensions of themselves and expect them to share their environmental convictions. Take NRG Energy Inc., a Princeton, New Jersey-based wholesale power generation company. It has demonstrated a commitment to the environment through measures ranging from double-sided printing (to save paper), to major investments in clean generating facilities and technologies, and it seeks suppliers with similar corporate values.

“More and more global companies are seeing that the path they’re on is not sustainable,” says Lynton Scotland, formerly NRG’s vice president of operational excellence. “Developing a culture of conservation is important, because if we do it worldwide it can have an impact. At NRG, we work with our suppliers and choose companies that align with our values.” Scotland is now vice president of energy services at Presidential Star, a Virginia-based construction, green energy, and solar installation company.

Indeed, the State of Green Business 2010 report published by GreenBiz.com, a Website that offers news, opinion, best practices, and other resources, highlights increased corporate investment in 2009, despite the recession, in both green product development and environment, health, and safety. Moreover, the report

documents the efforts of several major players to get their supply chains in line. For example, global retailer Wal-Mart Stores Inc. started a Sustainability Consortium and charged it with the mission of setting sustainability standards for thousands of its products. And prominent food companies, some under attack by activists and consumers, are now pressuring their suppliers–growers, producers, wholesalers, processors, and marketers–to improve environmental performance as well.

“I’ve been witnessing this exciting paradigm shift,” says MaryAnne Howland, president and CEO of Ibis Communications, an eco-conscious marketing communications firm in Nashville, Tennessee. “Today’s most forward-thinking companies incorporate

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some green practices into their corporate responsibility programs. That should be a wake-up call for entrepreneurs and job seekers. This trend has created the need for a green supply chain.” Of course, the key to maximizing the potential in this space is pursuing with purpose and intent relevant and adaptable business ventures. Add in undeniable consumer and government support for eco-friendly commerce, and it seems there’s no better time to go green. Howland, who also chairs the Social Venture Network, a community of socially responsible businesses, says, “If this is where the world is going and you’re thinking about staying in business, you’ve got to follow the money.”

Opportunities in the Green Economy

It’s not easy being green. But if you know which green job* is right for you, it can be. Here’s a snapshot of what’s out there.

Agriculture and Natural Resource Conservation
– Farm workers and laborers, crop, nursery, and greenhouse
– Landscaping and grounds keeping workers
– Production workers
– Environmental engineers
– Environmental scientists and specialists

Clean Transportation and Fuels
– Engineers
– Mechanical engineers
– Assemblers/fabricators
– Production workers
– Machinists

Energy Efficiency
– Heating, air conditioning, and refrigeration
mechanics and installers
– Maintenance and repair workers, general
– Power plant operators
– Carpenters
– Sales representatives, services

Pollution Prevention and Environmental Cleanup
– Environmental scientists and specialists
– Civil engineers
– Environmental science and protection technicians
– Refuse and recyclable material collectors
– Engineering managers

Renewable Energy Production
– Chemical equipment operators and tenders
– Heating, air conditioning, and refrigeration
mechanics and installers
– Electricians
– Machinists