By Luz Plaza, contributor via the Underground Group
⏰ 9-minute read
Both consumers and investors flock to companies that care about the environment. But be on the level, because they’ll also blacklist “greenwashers” who make false claims about their impact on the environment.
Green business certifications are a stellar way to win the approval of said consumers and investors. However, they’re not all created equal.
Prove your company’s green cred by choosing the appropriate certification for your industry. Read on for a complete rundown.
Getting a green business certification pays off. Consider that fully 86% of consumers say companies should take a stand on social and environmental issues, according to the Shelton Group’s 2018 Brands & Stands report. Not surprisingly, they take that commitment into consideration when deciding what to purchase.
The growing demand has not gone unnoticed by investors. A green business certification can also help you secure green bonds, which fund projects that benefit the environment across energy, transportation, construction and other sectors. According to analysts, there aren’t enough certified investment opportunities to sustain these bonds’ triple-digit annual growth. Fund managers are actively seeking companies that are looking to keep a healthy balance sheet while helping the environment.
Despite the growing demand from consumers and investors alike, there still isn’t a central governing agency in charge of regulating and certifying the green practices and claims. Although that has left the door open for some companies making false claims — aka greenwashing — we are seeing regulatory movement to discourage false claims. False claims about environmental impact can land any company in hot water with the Federal Trade Commission, not to mention civil litigation from private parties.
If your brand is seeking prove its impact in a legitimate way, respected certifications exist. Before moving forward, heed experts’ considerations and learn how to identify the most reputable green certifications.
What does “green” even mean?
Green business certifications are given to firms that adopt principles, policies and practices that improve quality of life for individuals and benefit the planet. For consumers, they can provide assurance that a company is delivering on its promise of following green business practices and being environmentally and socially responsible. For companies, they can help make a service or product more competitive. However, the lack of oversight from a central governing agency means that companies can create their own definitions to back claims that a product is organic, natural or carbon-neutral.
That opens up a big gray area. For example, the Department of Agriculture defines “organic” and certifies whether a product is compliant. Yet many items regulated by the Food and Drug Administration rather than the USDA, like cleaning and personal care products, make organic claims. Another example are products labeled “cruelty free.” Since there is no legal definition of the term, regardless of the label many could be anything but.
This has led to confusion and distrust, and consumers are pushing back. Market researcher The Hartman Group says four in five people are ambivalent or distrustful of “natural” claims.
An apple, sure. A granola bar with 23 ingredients? Not so much.
👉 Consumers are skeptical of companies that call themselves “natural,” and rightly so: There’s no universal, legal definition of a “natural” or “green” business.
A "green" business is any that uses practices to improve quality of life for individuals and benefit the planet.
Why you should choose a third-party certification
“In the absence of regulation, we are seeing (green) certifications coming up and filling a void that should be filled by the government,” says Karen Yarussi-King, president of Global Regulatory Associates, an organization dedicated to providing regulatory solutions for small and midsize businesses.
Yarussi-King cautions her clients to tread carefully when it comes to third-party green certifications, which may have little internal oversight.
That’s not to say companies should shy away. Consumers care about sustainability, and they’re choosing with their wallets to trust claims backed by third-party certifications and government agencies.
“Certifications granted by a third-party organization, like a non-profit, government or industry association, ensure there is no financial conflict of interest that could dampen the certification’s credibility,” Yarussi-King says.
Which certification you adopt depends on your product or service, but look for third-party organizations that examine a business’s impact across all critical areas and not in a silo. Granting organizations that offer guidance around implementing green initiatives tied to the certification and give businesses access to a network of specialists they wouldn’t have otherwise set you up for success.
And by getting certified, your business joins a network of like-minded companies. There is power -- and market awareness -- in numbers.
👉 In the absence of universal “green” standards, seek certification from a respected third-party organization.
Residential LEEDs the way
LEED (Leadership in Energy and Environmental Design) is the most widely recognized green building rating system in the world, with certifications in 165 countries and territories and more than 90,000 compliant projects as of 2019.
It’s a gold standard for how to build consumer awareness and trust and deliver real cost and environmental benefits.
“In 2018, the residential and commercial sectors accounted for about 40% of total U.S. energy consumption,” says Daniele Horton, founder and president of Verdani Partners, a leading full-service sustainable real estate consulting firm.
Adopting green building strategies can reduce environmental impact and improve performance at any stage of the building lifecycle, from design and construction through operations and renovations, she added.
In addition to providing a globally recognized sustainability achievement, LEED certified buildings deliver substantial cost savings, says Horton. We’re talking reductions of 34% in CO2 emissions, 25% in energy consumption, 11% in water use and diversion of more than 80 million tons of waste from landfills, per a study by the Department of Energy.
Further, according to the 2018 World Green Building Trends Report, certifying projects provides an assurance of quality, lowers operating costs and increases rental and occupancy rates, as well as increased value at point of sale and future-proofing assets. Certified buildings are also healthier for occupants.
👉 LEED is the most widely used green building rating system in the world. Other industries, like cosmetics, don’t have such reliable third-party certification systems.
LEED is one of the world's most reliable, well-known and used green business certifications.
So how do you choose which certification to pursue?
When choosing a green business certification for your company, Yarussi-King suggests working with an organization that checks off all these boxes:
Recognizable and relevant to your audience.
Managed by a third-party organization and avoids financial conflicts of interest; think a non-biased, nonprofit, industry association or government agency.
Has expert-developed and science-backed standards and guidelines.
Has a clear and transparent certification process.
Requires third-party testing or a comprehensive investigation.
Provides support to certified businesses, including expert guidance during and after the certification process.
Green business certification can offer many benefits; the key is selecting the most reputable certification that aligns with your business's values and needs. The requirements, application process and costs vary widely. Some organizations certify the entire business operation, while others certify specific products.
For example, a B Corp certification applies to the entire business, and the application fee is calculated based on a business’s annual sales, ranging from $1,000 for companies with annual sales of $150,000 and below, to $50,000 and up for those with sales over $1 billion.
On the other hand, the Rainforest Alliance’s agriculture certification can apply to individual farms and groups of farms, and the costs associated with each are different. For companies that benefit from selling Alliance-certified foods, a royalty-based model applies to various crops, say a fraction of a cent per pound of green coffee or $32 per metric ton of crude coconut oil.
Beverage company Calafia Farms has a green business certification from the Rainforest Alliance.
Although each certification has a unique application process (usually outlined on their websites), you will likely need to:
Submit proof that you meet the issuer’s standards and requirements.
Undergo third-party testing, verification or inspections (which your company will pay for).
The renewal period also varies. Some recertify yearly (USDA Organic, the Leaping Bunny) while others last longer. (B Corp lasts two years; LEED lasts three years.)
In general, you can find professional help through the certifying body. However, if the process seems confusing, there are consultants who can help assess if a green business certification is the right decision and help manage the process.
👉 Each certification has its own unique application process and renewal schedule. Many of the certifying organizations have consultants on staff who can help you make sense of it all.
Below, we’ve rounded up some of the most well-respected and popular third-party green certifications, based on insights from Horton and Yarussi-King as well as findings from the Hartman Group report mentioned earlier. You can use them as a starting point for your green certification search.
🏢 General green business certifications
B Corp Certified
What it certifies: Companies commit to balancing profits and purpose and striving to have a positive impact on employees, communities and the environment.
Granting organization: B Lab
Certified businesses: Beautycounter, Patagonia
What it certifies: Low carbon emissions and a commitment to further reduce and offset existing output.
Granting organization: Carbonfund.org Foundation
Cost: Varies based on project
Certified business: Alaska Airlines
What it certifies: Products in 500 categories that meet 27 standards, including Cleaning Products for Household Use, Adhesives for Commercial Use and Restaurants and Food Services.
Granting organization: Green Seal
Certified businesses: Office Depot, 3M
What it certifies: Products, services and buildings meeting energy-efficiency standards established by the Environmental Protection Agency.
Granting organization: United States Environmental Protection Agency
Certified businesses: Bimbo Bakery, General Motors Co.
Rainforest Alliance Certified
What it certifies: Environmental protection and promotion of workers’ rights. The certification applies to products like coffee, chocolate, fruit and paper.
Granting organization: The Rainforest Alliance
Certified businesses: Califia Farms, Tom’s of Maine
SMaRT Consensus Sustainable Product Standards
What it certifies: Compliance of consensus-based sustainable product standards covering about 80% of the world's products.
Granting organization: The Institute for Market Transformation to Sustainability
Certified businesses: Philips, UBS Securities
Sustainable Forestry Initiative (SFI)
What it certifies: The use of fiber from certified forests, certified sourcing and post-consumer recycled material.
Granting organization: Sustainable Forestry Initiative
Certified businesses: National Geographic, Time Inc. (Meredith), McMillan, Pearson
💄 Consumer goods green business certifications
What it certifies: 100% animal-testing-free cosmetics and personal-care products. Everything on the supply chain must comply.
Granting organization: Coalition for Consumer Information on Cosmetics and the European Coalition to End Animal Experiments
Certified businesses: Covergirl, Supergoop
NPA Natural Seal
What it certifies: Use of at least 95% natural ingredients approved by the National Products Association, excluding water.
Granting organization: Natural Products Association
Type: Industry association
Certified businesses: Dogswell, U.S. Packaging
Fair Trade Certified
What it certifies: Workers receive fair compensation, safe conditions and environmental protection.
Granting organization: Fair Trade USA
Certified businesses: J.Crew, Larabar
🍏 Green business certifications for food companies
Animal Welfare Approved
What it certifies: Compliance of high-welfare animal farming and humane slaughter practice.
Granting organization: Animal Welfare Institute
Certified businesses: Cow Belle Home Milk Delivery, Athens Bread Company
What it certifies: Vineyards and companies committed to protecting natural and human resources.
Granting organization: Vineyard Team
Certified businesses: La Crema, Laetitia, Justin, Byron, Sutter Home Winery (Los Alamos Vineyard)
What it certifies: Products are produced according to rigorous best practices for GMO avoidance, including testing of risk ingredients.
Granting organization: Non-GMO Project
Certified businesses: Ben & Jerry’s, Bob’s Red Mill
What it certifies: That entire farms follow biodynamic farming practices.
Granting organization: Demeter Association
Certified businesses: Guayaki SRP, Holistic Roasters
What it certifies: Compliance with U.S. Department of Agriculture organic standards.
Granting organization: USDA, National Organic Standards Board, National Organic Program
Certified businesses: Justin’s, Horizon Organics
🚧 Green certifications for construction and buildings
LEED (Leadership in Energy and Environmental Design)
What it certifies: Energy efficient and cost-effective green buildings. It measures building performance in areas such as Energy, Water and Waste Efficiency, Transportation and Site Selection, etc.
Granting organization: U.S. Green Building Council
Certified businesses: Grand Rapids Art Museum, multiple Starbucks locations
What it certifies: Buildings that promote healthier workplace environments and improve occupant wellbeing and productivity.
Granting organization: Center for Active Design
Certified businesses: Bloomberg HQ (NY), Jacobs (Boston)
BREEAM (Building Research Establishment Environmental Assessment Method)
What it certifies: Environmental assessment of buildings popular with international companies as it “has a more adaptive approach to allow for regional conditions compared with LEED.”
Granting organization: BRE Global
Certified businesses: BMW; University of California, Davis
🌱 The bottom line
This is just a sampling of green certifications available — there is no one-size-fits-all approach. Before pursuing any certification, consider the cost and whether you’re prepared to be transparent and continue renewing year after year. And make sure that your market recognizes the cert.
“Unless they mean something to the consumer and are government-based or managed by credible organizations without vested financial interests, they might not be worth it,” says Yarussi-King.