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Small companies growing thanks to green products

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Staff writer |
Green productsGrowth rates for green businesses are rising faster than in conventional America's economy, creating opportunity for the 88% of US microbusinesses with five or fewer employees.

These findings come from "The Big Green Opportunity," a new survey of 1,300+ businesses conducted in 2012. Respondents said the greener a product, the more likely its sales increase, with 75% reporting an increase in green business from 2008-2011 at a 19% price premium compared to traditional goods.

The survey hints at a shift in consumer demand toward sustainability creating "green competition" among businesses, especially those with high environmental footprints. 79% of small businesses – particularly those in the food, personal goods, and construction markets – say offering green goods or services gave their business a competitive advantage.

The economic promise of green business is most strongly shown in the construction industry. When America's housing bubble burst, the recession began but not when it came to green building. Between 2005-2011, the green building segment grew 1,700% while the overall US construction industry shrank 17%.

By the end of 2011, green building represented 38% of the US construction market, up from just 5% in 2005. Profits have followed growth, with green building worth $54 billion in revenue in 2011, and forecast to hit $200 billion in 2016.

Spurred on by the need to save money and green building's market growth, small businesses have also overwhelmingly opted to invest in small-scale renewables instead of fossil fuel to power their operations and energy efficiency measures to help cut costs.

From 2002-2011, renewable energy consumption grew 456% while non-renewables (oil, natural gas, and coal) fell 3.2% Survey respondents also reported purchasing energy efficient equipment, training staff to conserve energy, and installing efficient lighting were the top three actions they took to produce the fastest return on investment.

While not as massive as green building's growth, sustainable food and personal goods are also turning healthy profits. The organic food market segment grew 238% from 2002-2011 to hit $29 billion in revenue, while the overall food market only grew 33% during the same period. That may represent just 4.2% of the overall food market, but profits are projected to more than double to $78 billion in 2015.

The same trend was seen in the organic non-food market. Green goods like clothing, personal care, pet food, and household products grew 400% from 2002-2011 while the overall non-food market grew 33%. Revenue also jumped, from $439 million to $2.2 billion.

Assets in socially responsible investing portfolios grew 32% to $2.3 trillion from 2001-2010, and produced a 13.2% return compared to 0.4% for the overall investment market during the recession.

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