Economic feasibility - Januar 2016
To set up and head a commer­cial enter­prise on a sustainable basis and making it finan­ci­ally successful is a challen­ging task. One of our main jobs is to support those who do just that.

As a profes­sional organiza­tion working with pioneers and start-ups for many years now, we have learned that sustainable businesses only make sense when they make money. A respon­si­bi­lity towards the environ­ment and to humanity is not a contra­dic­tion to business success. Sustaina­bi­lity is no guarantee for better sales but, in addition to an altru­i­stic ethic which often motivates alter­na­tive green business, it does offer clear and sober commer­cial advantages.

Do good and talk about it

If you do good, talk about it. Adver­ti­sing a sustainable product is setting yourself apart from conven­tional business. Sustaina­bi­lity repres­ents an increased market value. Even though the sustainable textile and leather goods indus­tries continue to occupy a niche market, the demand for these products has increased measur­ably in the last few years.

An additional advan­tage is the sense of security that offering especi­ally a certi­fied sustainable product gives:
for the consumer who knows he is buying a “clean” product, for the retailer who can rely on getting what the label promises for the manufac­turer whose business and products are regularly audited.

Sustaina­bi­lity alone is not enough to succeed

It is clear that businesses opera­ting on a sustainable and socially accoun­table basis must overcome many hurdles on the way to a positive earnings state­ment, especi­ally the smaller start-ups. The market for sustainable textiles and leather goods conti­nues to have the character of a niche market and the selec­tion of suppliers is very thin. Meeting minimum quanti­ties can be a major chall­enge for manufac­tu­rers and brands. This is especi­ally true for products outside the mainstream or that are not basics.

The surcharge for sustainable manufac­tu­ring is signi­fi­cant. The additional costs for decent wages all along the produc­tion chain, i.e. for suppliers, upstream suppliers and their suppliers must of needs add up to more. These in compa­rison increased  costs are augmented by the price of certi­fi­ca­tion or the add-on cost to change indivi­dual produc­tion stages to a sustainable process.

And yet many green enter­prises manage not only to exist on the market but also to grow. These produ­cers have a compe­ti­tive advan­tage based on their acquired exper­tise, a dense and stable network, quality, product research and innova­tion. A green retailer can play the aces of a sophisti­cated marke­ting concept, a well-thought out product assort­ment and client focussed counseling.

Trans­pa­rency across all the compli­cated produc­tion chains is paramount for all. On the one hand, infor­ma­tion is neces­sary to enable retailers to advise consu­mers where, how, and by whom the product was produced. On the other hand, all parti­ci­pants along the sustainable supply chain seek to share or explain costs by sharing respon­si­bi­lity for them.

Savings possible through sustainable business

Astute resource manage­ment can help compa­nies by achie­ving reduc­tions in material and energy costs. A positive side-effect can be reduced waste and emissions, thereby enabling a company to achieve its environ­mental impact goal.

The biggest market advan­tage is achieved by compa­nies that are certi­fied. IVN advises all start-ups to research certi­fying costs early on and to include these costs in their business plan. Quality seals such as GOTS or NATUR­TEXTIL BEST or NATUR­LEDER offer distinct compe­ti­tive advan­tages in company adver­ti­sing and at the same time they are an instru­ment of quality management.

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