Natural Order Customers get their products, clients get their services-but the environment is still waiting on its big shipment of respect.

Within weeks of taking office, President George W. Bush sent outa message: Business growth will be a higher priority than theenvironment. Bush acted quickly in pronouncing the Kyoto Protocoldead in the United States, angering leaders of industrializednations who, alongside the previous U.S. administration, hadhammered out what was to become the foundation of a treaty among178 nations promising to lower greenhouse gases. At the same time,he pushed energy production rather than conservation as thesolution to the energy crises on the East and West Coasts. By the30th anniversary of the first Earth Day this past April, theenvironmental movement seemed to be losing ground, with businessgrowth coming possibly at the expense of the environment.

Playing WithRainbows

But entrepreneurs like 26-year-old Darren Patrick aren'theaded in that direction. Patrick may not have been demonstratingin Genoa against globalization, free trade or corporate pollution,but he is acutely aware of businesses' impact on theenvironment as he runs his business in San Antonio.

Patrick founded Rainbow Play Systems when he was 20; three yearslater he was a millionaire. Rainbow sells redwood and red-cedarresidential playground equipment in 14 Rainbow stores throughoutsouth Texas and Mexico. The company will ring up approximately $6million in sales this year, but it's that success that makesRainbow one of the nation's largest consumers of redwood.

"Since the onset of our business, we have always beenconcerned about our lumber purchases and the mills that fulfillthem," says Patrick, who purchases lumber only from millsparticipating in sustained-yield programs that protect thepopulation of the nation's redwood trees. But Rainbow goesbeyond simply making an effort to sustain its own naturalresources. The company uses its marketing program to educatepotential customers about the benefits offered by sustained-yieldprograms. "These programs have been successful environmentallyand, for us, by creating a sustainable resource," saysPatrick. "Today, we have more redwood trees than everbefore."

Patrick has unintentionally embraced the conceptenvironmentalist Amory Lovins calls "natural capitalism."In his book, aptly titled Natural Capitalism, Lovins notescompanies that eliminate waste and become more environmentallyefficient prosper while their competitors that are environmentallyinefficient fail.

Patrick, along with hundreds of entrepreneurs like him, isforging the next industrial revolution by following-intentionallyor not-the four principles of natural capitalism: increasingproductivity of natural resources, modeling industrial processesafter biological systems, selling service-based solutions for theenvironment, and reinvesting in natural capital.

Green Makes Green

In the past decade, more companies have discovered that as theybecome more environmentally friendly, they become more financiallyattractive-a corporate makeover of sorts. As their numbers haveincreased, so has the evidence supporting their claims.

For example, a study by professors Michael Russo of theUniversity of Oregon and Paul Fouts of Golden State Universityrevealed firms with the highest return on assets went beyondcompetitors in terms of pollution control and waste reduction.Also, the environmentally sensitive financial analysts at the DowJones Sustainability Group Index discovered stocks of companiesthat account for their social, financial and environmental impactoutperform the stocks of companies that don't. That study wassupported by one by Innovest Strategic Value Advisors findingcompanies with superior environmental performance generate superiorfinancial performance. And Vanderbilt University found that 80percent of environmentally sound companies financially outperformtheir higher-polluting counterparts.

As these studies shore up Lovins' claims, natural capitalismis pushing its way into the pantheon of strategic planning. Yet theconcept remains young (read: relatively unknown); therefore, mostentrepreneurs stumble onto it. What starts as a concern for theenvironment and for government regulation evolves into soundmanagement strategy, as employees and franchisees of BrianScudamore's $10 million 1-800-GOT-JUNK? discovered.

Each year, franchisees of the company pick up tons of junk,primarily from homeowners who want to throw things out-after springcleaning, for example. They haul away old TVs, wood, appliances andfurniture. If Scudamore didn't care, they could just take thejunk to municipality transfer stations to get dumped. End ofstory.

So to protect the environment and earn more money,1-800-GOT-JUNK? recycles cardboard, paper, concrete, sheet rock,metal, tires, furniture, garden refuse, and the list goes on."Our target is to recycle a minimum of 40 percent of allloads," Scudamore, 31, says. But there's even more to itthan that.

"We've turned our recycling system into a profit-sharesystem," says Scudamore, noting that greed-onceenvironmentalism's perceived nemesis-can potentially be itsally. "Our people get 20 percent of all the savings from whatthey recycle. Instead of paying $120 to dump a load, they may pay$70 as a result of recycling. It's win-win-win for the company,the franchisee and the environment."

Struggling to Be Green

Stumbling into natural capitalism isn't always an easy fall.Just ask Eloise Gonzalez-Geller, founder of Miami-based interiorfinishing contractor Commercial Interior Contractors Corp. (CIC).Her $1.2 million company does everything it can to help theenvironment. Employees write notes on waste paper. Recycled glassis used as an aggregate in the company's terrazzo floors, andCIC donates leftover tiles to a local school's art department.Then Gonzalez-Geller decided to expand her effort and successfullybid on removing carpet from government renovation projects, usuallyat airports, where it frequently contains trace amounts of jetfuel. But the program is a frustration: "No private companieswill pay to recycle their carpets. It's cheaper to throw themin landfills," Gonzalez-Geller, 39, laments. "At thispoint, I'm losing both money and energy with thecarpet-recycling project." Even so, she believes that in thelong term, she'll overcome those companies' hesitation andearn not just environmental benefits but financial ones aswell.

A CrackdownCometh

Just can't bring yourself to care enough about naturalcapitalism's financial and environmental advantages? Take note:As an entrepreneur, you're the new target of federal and stateenvironmental agencies.

Regulators increasingly view aggregate small-business waste as apotentially large source of air and water pollution, which expertssay may lead to a crackdown. Therefore, it makes sense forentrepreneurs who aren't already thinking green to start.

As the environmental practices of small companies are placedunder the microscope of regulators, you need not go it alone. Agrowing number of government and private-sector programs have beendeveloped for the small-business market. For example, the EPA has aWeb site tailored to entrepreneurs, marking an end to the purelyadversarial approach of days past. It's a dramatic change.

On that first Earth Day in 1971, a canyon of enmity andmisunderstanding sat between business executives andenvironmentalists. Thirty years later, that canyon has narrowed toa crack, which environmentalists and entrepreneurs easily hop.Maybe it's because today's entrepreneurs have greatercontrol of their companies. Maybe it's because many of them arefrom a more environmentally attuned generation. Maybe it'sbecause being environmentally sensitive is just the right thing todo. In the end, the reason doesn't matter. What does matter isthat more entrepreneurs are discovering the benefits of naturalcapitalism. More are working to do what they can to strike abalance between business and the environment. In doing so,they'll not only preserve the environment, but they'll alsocreate more efficient companies, a concept even Adam Smith wouldapplaud.

Natural Resources

Natural capitalism has fostered the growth of organizationsdedicated to environmental strategies that don't sacrificeprofit:

• Business for Social Responsibility isan organization of companies wishing to sustain success whileretaining respect for people, the environment and ethicalvalues.

• Coalition for Environmentally ResponsibleEconomics is a coalition of investors interested incompanies promoting sound environmental management.

• Co-Op America is acoalition of consumers and small companies with social andenvironmental missions. The site has hands-on tools andresources.

• Environmental Entrepreneurs(E2) was started by entrepreneur Bob Epstein for business ownerswho are concerned about the environment but don't know how tofocus their energies. Hundreds of entrepreneurs have made the$1,000 donation to the Natural Resource Defense Council required tojoin E2. Periodically, Epstein asks them to write letters or tocall influential individuals about environmental issues.

• Greenpages.com isan online listing of companies selling environmentally friendlyproducts and services.

• Sustainablebusiness.com givesentrepreneurs information about companies it calls "EarlyMovers"-those businesses that are involved in eco-efficientpractices.

• The EPA has a special sitefor small businesses: www.epa.gov/smallbusiness/geninfo.htm. It providesdocuments and guidelines to environmental regulations as well asopportunities to participate in EPA programs. At www.epa.gov/opptintr/acctg, the EPA helps smallbusinesses determine their environmental costs through theEnvironmental Accounting Project.

Joseph Conlin is a Fairfield, Connecticut, writer whospecializes in marketing, management and the business side of theWeb for several publications.

Contact Sources

• Commercial Interior Contractors Corp.
  (305) 636-3700, ciceloise@aol.com

• Political Economy Research Center
  don@perc.org, www.perc.org

• Rainbow Play Systems Inc.
  (210) 764-1375, www.rainbowplay.com