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Sustainability and Profitability Can Co-Exist: 3 Keys to Growing a Green Business Private equity and venture capital firms are increasingly backing resilient companies.

By Larry Clarke

Opinions expressed by Entrepreneur contributors are their own.

Entrepreneurs are naturally driven toward profitability, but that doesn't mean they can't focus their attention on sustainability, too. Business founders are increasingly launching organizations with strong environmental, social, and governance (ESG) components.

And private equity and venture capital firms are taking notice, backing startups and existing organizations that demonstrate a drive for sustainability, such as those in the renewable energy sector. In the third quarter of 2022, Morningstar reported that U.S. sustainable funds were worth $272 billion.

Even giant legacy corporations like General Mills have started venture capital groups expected to make strategic investments while keeping ESG principles in mind.

And it's not just profitability that has attracted companies to ESG policies. Employees want to be happy, engaged, and productive. Purpose-driven companies help them achieve those goals. Customers also want to support mission-based brands that align with their sustainability and environmental beliefs. Doing good has gone from being the right thing to being the profitable thing to do.

Related: Here's How to Boost Your Business and Benefit the Planet With Sustainable Data Centers

But incorporating ESG into any organization's ecosystem can be challenging and costly. As an entrepreneur or business leader, you don't need to feel like you have to sacrifice sustainability for profits. Here are three steps to success.

1. Rebalance your focus

You can't completely change your company's goals, but you can rebalance your focus.

An excellent way to do this is to modify your marketing strategy to talk more about your sustainable initiatives. That's a way for you to gain ESG traction and attention.

Think of this as creating a self-fulfilling prophecy. The more you talk about your sustainable advantage, the more intriguing you can make your business while raising funds. You don't have to stop doing what you're doing — you have to highlight where you're making a social impact.

2. Assert your desire to be profitable and sustainable

Talk loud and proud about your desire not to put profits above purpose. There's no reason you have to choose one over the other. You can do both. However, your team members and other stakeholders can't read your mind.

First, take time to sit down and define how you plan to leverage your sustainability to bring in sales. Draw a Venn diagram with two circles: one will be profitability and the other sustainability. Then, fill in the circles with your operations, products, etc. Where the circles overlap is where you'll earn profits and be sustainable.

Related: Built With Purpose: Why Sustainable Packaging is Key to This Brand's Success

Once you've identified these places, consider making those points your competitive advantage. Showing how your company brings unique value through transparent sourcing, circular product development cycles, and other sustainable methodologies can set you apart. Consequently, you can tap into the billions of dollars flowing into the sustainable investment economy noted above.

3. Hire experts aligned with your sustainable mission

Getting any forward movement is challenging if a sustainable North Star doesn't guide your team. When you bring employees into the fold, ensure they align with your vision.

A Gallup poll found that younger workers who feel aligned with their company's mission, vision, and purpose are more likely to stay. The longer you can hold onto your solid performers, the more expertise (and heart) they can bring to your company.

You're more likely to meet your objectives when you have a team you can trust to move your organization toward sustainability and profitability. If you have people in place but not a strong sense of how to guide your purpose-profit ship, consider connecting with ESG advisors or experts such as professionals from NGOs. They can show you what you're missing and identify gaps.

Related: Creativity a Prerequisite to Building Sustainable Business: SustainKart's Kanthi Dutt

Remember: You can't do everything yourself. Surround yourself with colleagues who believe capitalism is compatible with greenness and have strong ideas for getting there.

Larry Clarke

Entrepreneur Leadership Network® Contributor

CEO of NanoGuard Technologies

Larry Clarke is the CEO of NanoGuard Technologies, a company that prevents food and feed waste and improves food safety by eradicating harmful pathogens and mycotoxins through its airilization technology.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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