Business owners in Philadelphia have a new incentive to go green. In December 2009, the Philadelphia City Council passed a proposal to offer tax incentives of up to $4,000 for certified sustainable businesses.
In order to qualify for the tax incentive, businesses must be certified as B Corporations by the nonprofit organization B Lab, which is based in the Philadelphia area. More than just an environmental designation, certified B Corporations must meet social and environmental standards and commit those standards to the company’s governing documents. This is meant to ensure the company’s sustainable character will survive changes in management or ownership.
During discussions at a city council meeting, Philadelphia’s director of sustainability, Katherine Gajewski, described a sustainable business as one that will “minimize environmental impacts while improving the local community.” This can be accomplished through the standard sustainability initiatives, such as recycling and using high-efficiency lighting, as well as through community-oriented practices, such as patronizing other local businesses or hiring from local low-income communities.
The tax incentive is expected to be mutually beneficial for businesses and for the city. While a sustainable business reaps financial benefits, the city will gain the advantage of businesses that support the residents, the environment and resources of their local communities.
The Philadelphia City Council set a limit of 25 businesses per year that can be awarded the tax incentive. Initially, the council had hoped to offer the tax incentive to more businesses, but the economic climate caused them to take a more financially conservative approach. The pilot program is set to run from 2012 through 2017, after which it will be eligible for renewal once it has been reviewed by the city council.
According to B Lab co-founder Bart Houlahan, other Pennsylvania cities are considering following Philadelphia’s model and creating their own sustainable-business tax incentives.
Although Philadelphia is the first city to offer a tax incentive to sustainable businesses, the federal government has several incentives for green businesses:
- Owners of energy-efficient commercial buildings can claim a deduction of up to $1.80 per square foot.
- Businesses that use hybrid vehicles in their operations may be eligible for tax incentives up to $12,000.
- Grants are available for businesses that use renewable energy resources, such as solar heat, wind power or fuel cells.
Additionally, several states have incentives for businesses and individuals using renewable energy or energy-efficient resources. For a guide to each state’s programs, visit the Database of State Incentives for Renewables and Efficiency.
About the Author: Leslie Potter is the assistant editor of HorseChannel.com. She enjoys supporting local businesses in downtown Lexington, Ky.