Photo: Close friend and Kansas farmer enjoys a break. Credit: Chris Higgins
Thoughts of a businessman just trying to figure it out, while not messing up.
“Isn’t it pretty to think so?” – The Sun Also Rises, Ernest Hemingway
In a previous article, I posed the question, Who Should Lead The Environmental Movement? In this follow up-piece, I want to explain why I struggle seeing myself or any other small, medium or large business owners being leaders or role models in this movement.
You see, I believe most of us start or go into business for similar reasons. We also evaluate success in similar ways. And while I don’t think this stops business people and entrepreneurs from trying to be as sustainable as possible, I believe we should not be the ones leading the environmental charge. However, businesses in agriculture or horticulture must still keep the environment in mind with every decision because we rely on access to natural resources for our success, regardless of the facility we farm in.
Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations. – United States Environmental Protection Agency
Why did I start my business?
I started my business because I was tired of working for someone else. It’s really that simple. And like most entrepreneurs, I was not (nor am I) independently wealthy. So I obviously needed my idea to make money. I also had to add value to an industry I was experienced in and ensure that value was great enough to monetarily reward me for the effort and energy I put into my business.
All businesses share certain characteristics. Making money might be the factor that binds each one together. And whether you own or manage a business, you do what’s needed to turn a profit (while acting within the law and a certain set of ethics). I would go one step further and state that businesses don’t have a choice other than to focus on profit. After all, banks, investors and vendors demand profit (at some time), or they create a situation where a business struggles to exist or continue to operate. (See current state of the CEA Industry.)
The Realities of Running a Business of Any Size
- First and foremost, it exists to turn a profit.
- Owners or managers are beholden to banks, lenders, shareholders and investors.
- Owners have to consider the realities of attracting and retaining good employees in a competitive market place.
- Most businesses (especially agricultural/horticulture) operate within the limits of tight profit margins. Managing cost drives many operational decisions.
- Selling less from one year to the next is not normally an option.
- Business people are not inherently bad people. Capitalism is not an inherently bad system. Both at times can force bad decisions to be made on behalf of a group of people.
- For many business people, success is measured by one’s ability to accumulate wealth.
As a small business owner, I feel these pressures even though I have patient investors and business partners who believe in our vision and want sustainable growth. My business is also traditionally financed, meaning we rely on our own money or loans from the bank to operate. If we are to grow, both require that we turn a profit, as the bank won’t loan to us or we won’t have funds to grow if we’re not profitable.
I also have great employees who have dreams, which cost money. These range from something as basic as buying their kids new clothes or taking the family on an annual vacation to bigger dreams such as buying their first home or saving for a well-deserved retirement. So assuming business owners truly value their employees, they must achieve profit to retain them. If we fail, they will leave for opportunities elsewhere.
We must also take into account the reasons people start businesses. Businesses exist to fill a market need in return for a monetary reward. For most of us, this is seen in our mission and vision statements.
Here are a few examples from leaders in the controlled environment agriculture and food industry:
|AppHarvest||To bring Appalachia into the next generation of agriculture and employ the hardworking men and women in the region.|
|Revol||We provide the freshest, best-tasting lettuce, grown locally and sustainably without the use of pesticides, herbicides or other harsh chemicals.|
|Village Farms||Our Mission is to lead the industry as the premier grower and marketer of branded, premium quality, greenhouse-grown fresh produce in North America. We constantly strive to exceed our customers’ expectations through unparalleled commitment to quality produce and sustainable growing practices.|
|Netafim||We will make drip the irrigation solution of choice worldwide by increasing awareness and delivering comprehensive solutions that are reliable, simple and affordable.|
We will provide our customers with world-class support to ensure outstanding results and peace of mind.
Leveraging our global leadership position, high-quality offering and pioneering spirit, our team commits its agronomic know-how, technological expertise and deep passion to enhance the wellbeing of our customers.
|Grodan||Sustainably feeding 10B by 2030 as the substrate leader for vegetables AND medicinal crops.|
|GE Current||Current is always putting customer needs first, always innovating, and always focused on success.|
No one is better equipped to drive the future of lighting. We power innovation to deliver solutions with an unbeatable reputation for reliability and excellence.
Even when the lights are off, we are always on.
|Koidra||To empower manufacturing’s control operators, including but not limited to growers in controlled environment agriculture, to make better decisions.|
|Kroger||Our mission is to be a leader in the distribution and merchandising of food, pharmacy, health, and personal care items, seasonal merchandise, and related products and services.|
|Whole Foods||Our purpose is to nourish people and the planet. We’re a purpose-driven company that aims to set the standards of excellence for food retailers.|
|Driscoll’s||To continually delight our Berry Consumers through alignment with our Customers and our Berry Growers.|
First, I admire these companies for publishing their mission statements (which came directly from their websites). Yet how many times do you see the word “environment” mentioned? For those that use the word “sustainable,” how do they define it? A business can be sustainable by definition and not environmentally friendly at the same time.
I am well aware of the impact my companies have on the environment, and that our vision and mission don’t mention the environment until you get much deeper into the business plan. The environment is part of our decision-making process, but it is not the primary driving factor (although I might want it to be).
Hort Americas Mission and Vision:
Our Vision: To become North America’s leading commercial horticultural supplier of innovative goods and technical services.
Our Mission: To link the global manufacturers and providers of horticultural goods, services and technologies with the North American greenhouse grower/distributor community timely, efficiently and effectively.
What does it mean to be a successful business person?
Oxford defines successful as “having achieved popularity, profit, or distinction.” I think most of us agree with this definition. While being challenged, the American Dream still drives the definition of “making it,” which mostly centers around financial measurements such as annual salary, financial freedoms, fewer hours worked, having a family, driving a nicer car, owning a bigger home and traveling more. Depending on where you live, “making it” may also include independent wealth and or fame.
This is no different for business people and entrepreneurs. In fact, we are more likely to be focused on “money” than others. In many ways, we have to be. Turning a profit makes our lives easier or less stressful.
Because we prioritize profit, we also heavily focus on costs. It feels like we are pre-programmed to spend less on mundane items in our business processes, even if that means ignoring potential environmental impacts. Here is an example:
Greenhouse tomatoes make up the largest segment of any crop grown in a controlled environment, as determined by the production area dedicated to one crop.
Most growers need something that attaches the vine to the twine to support upright crop growth. Although plastics create environmental issues, it’s often used even though biorational or biodegradable products are available. Below are some real numbers to show the difference in product costs. Which would you choose?
|2022 Bio Comparisons||Grower Price/1000||Premium %|
|22mm clips bio||$28.48||640.56%|
|23mm clips – “plastic”||$4.45|
|25mm clips bio||$34.38||585.11%|
|25mm clips – “plastic”||$5.88|
|Staples/Clips (22mm clip)||$5.36||120.48%|
Mid-2022 pricing provided by Hort Americas. Discounts are available to growers ordering bulk quantities. These discounts can sometimes make the differences even greater than shown in this example.
Choosing the plastic option does not make you a bad person. It simply shows you’re concerned with managing your costs because your immediate need is to turn a profit. It means you are a manager who is concerned with avoiding costs that make you non-competitive at the farmers market or in the produce aisle. In the end, your choice makes you normal.
Capitalism is winning around the world, according to the Fraser Institute Economic Freedom Report.
We must be willing to accept that the world is driven by capitalism. In many ways, this is not a bad thing. Countries that adopt capitalism pursue more economic freedoms and enjoy better socio-economic outcomes. But this in itself outlines problems because the focus is on achieving socio-economic outcomes.
So if businesses are built for profit and governments govern so that we achieve better socio-economic outcomes, at what point do we prioritize the environment? The simple answer is, after people and profit (for many businesses, sustainability is broadly guided by the 3 P’s — People, Planet, Profit).
I believe this is why we look to businesses and technology to solve our problems. Think about it, what are some of the most popular solutions to solving climate change?
- Transportation: Switch from gas-powered transportation to electric.
- Agriculture: Switch from cattle to a meat substitute cultured in a lab.
- Electricity: Switch from coal to clean energy alternatives stored in new battery technology.
- Fashion: Switch from virgin materials to reclaimed or recycled materials with cool labels and logos.
- Consumer packaging: Switch from virgin plastics to bio-based alternatives.
While as business leaders, each of these examples is something we should consider, I find it odd that you rarely hear sustainably-driven companies encouraging customers to “consume less” or “change individual habits.” Why? Changing consumer habits would likely lead to a larger environmental impact than creating a new product or business. Plus, consuming less is not good for our economy or businesses.
Finally, let’s consider discussing the definition of success. In current American culture, successful business founders and owners are often seen as celebrities, icons and role models. Remember that politicians desire socio-economic growth under their watch because this means they stay in office. This encourages governments to elevate business to an elite status, allowing them to dictate or influence the way laws are written. Cities and states then court businesses, offering them incentives to come to their community and invest to increase the economic prosperity of those living there.
And again, we are right back to profit. Without profit or prosperity, these communities would not offer incentives. Young people would not be interested in modeling their lives after business owners, and the government would ultimately care less about their opinions.
What does it mean to be sustainable?
The environment is everything that isn’t me. – Albert Einstein
So where does this leave us? A realist might suggest this presents us with multiple conflicts of interest. I believe these conflicts are best illustrated by asking a series of questions that I struggle to answer. So I will not pretend that I can provide answers for them.
- How can businesses make the right choices for the planet if the market’s competitive nature does not afford this opportunity?
- How can a business continue to grow indefinitely and in an environmentally sustainable fashion, regardless of the product it makes or the services it offers, if the planet has finite natural resources?
- How can a business be truly sustainable if it relies on access to cheap or artificially inexpensive natural raw materials to be successful?
- How does a business appease investors, financiers and employees over time while focusing on environmental sustainability?
- Do we need to select which parts of our businesses we make sustainable? And just outwardly agree that our businesses cannot be completely sustainable?
Answering these general questions always leaves me with a series of even more difficult questions. For example, how does technology save us from climate change when it leads to increased manufacturing and continued dependence on energy consuming of technologies? How do business owners change when they operate in an increasingly competitive global market? Why is preserving the environment the responsibility of businesses?
But, the most difficult internal question for me to tackle is this:
If I am truly concerned about our planet’s health and the people who come after us, do I need to redefine what it means to build a successful business?
I think the answer to this question is most definitely yes. This means identifying alternative sources of funding, as well as ways to compensate employees and produce value. This may also mean we should no longer be concerned with profit. (Note, I said “may.”)
So now ask yourself, with all the realities of being a small or “big” business person, are we (as business owners) the right people to lead the environmental movement? And furthermore, are we the right people and vehicles to tackle social and legislative problems? After all, are we not part of the same people who profit from and created the system?
I loved to be proved wrong. Please email me any comments or questions regarding this article.
Chris Higgins is the founder of Urban Ag News, as well as President and co-Owner of Hort Americas, LLC. Message him here.
2 thoughts on “Becoming an Environmentalist while trying to turn a profit”
This is certainly a conundrum, and one our company is grappling with. Capitalism is directly focused on increasing consumption; sustainability is focused on reducing consumption. Therefore, global industry will have no choice but to reconsider what makes a company successful. Alas, I think the nexus when we as a society make those changes is a long way off. In the meantime, your example of the plastic clips is interesting. If the plastic clips are used over many years, removed from the vines at end of each harvest and reused for the next harvest, then they are somewhat sustainable. The problem we have, especially in the US, is the amount of single use plastic, polymers, Styrofoam etc. where there is no attempt to reuse and/or recycle. Until we as a society change our mindset, there is almost no path sustainability.
Thank you for the thoughtful response.
Regarding the plastics example I used. In greenhouse tomato production growers use their plastic clips for one crop and then it is disposed of along with the green waste. There are many reasons for this including but not limited to: disease/virus management, labor and general cost/risk/reward benefits. In greenhouse tomatoes, the crop season is about 10-11 months. After that the goal is to clean the greenhouse and start new.
What I can say about the farm, profit margins are historically very thin. Farmers are willing to make changes but! they normally wait till those changes are forced upon them and the value of the end product can reflect the differences in production cost.