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Greener Companies “More Crunch-Proof”
Green Futures, 5 May 09


By Claire Baylis

New report tracks value of sustainability commitment during recession

Businesses with a ‘true commitment’ to sustainability are weathering the downturn better than their rivals, according to a new report. Green Winners: The Performance of Sustainability-Focused Companies in the Financial Crisis looked at 99 companies on the Dow Jones Sustainability Index and/or the Goldman Sachs Sustain focus lists. And it found they were outperforming their industry peers – by an impressive average of 10% over three months and 15% over six. Far from being seen as a luxury, sustainability spending is a tool to beat the recession, concludes the report.

The study, by management consultancy firm A.T. Kearney, warned that green initiatives need to be truly embedded in the company’s value chain; it finds scant justification for efforts made “simply to improve public relations or catch up with industry leaders”.

The most surprising finding, says the report’s co-author Louis Besland, was the consistency between industries: in 16 out of 18 of them the companies on the sustainability lists came out ahead financially as well.

“It’s those companies who understand that the world is really changing – and have maybe anticipated it – who are the winners,” says Besland. He adds that such businesses have realised that when you look at sustainability issues, “you are more resource-efficient” too.

Sally Uren, Deputy Chief Executive of Forum for the Future, says these latest findings reflect what she’s been seeing. But in terms of investments in sustainability, she has discerned a slight emphasis shift. “Companies are focusing more on those investments and initiatives geared to deliver shorter-term paybacks,” she explains. So they are investing in greener energy and energy efficiency, for example, rather than in R&D to innovate new products.

Uren believes that, within the next year, we will see a divided outcome. Companies that have worked out that addressing climate change will really benefit their bottom line will still be “doing sustainability”. That won’t be the case for “companies that just had a set of tactical, reactive responses to this agenda, that have largely ended up in their branding [alone]”.

Of course, Uren continues, companies may well survive the recession without really embracing sustainability, thanks to good business planning. “But if they haven’t looked at sustainability, how will they fare in a low-carbon world? You might survive the credit crunch, but you’ll not survive the climate crunch.”

This piece originally appeared in Green Futures, published by Forum For The Future.

Photo credit: flickr/Hamed Masoumi.

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Comments

It is refreshing to see real green companies that actually practice what they preach are benefiting financially, too many companies still spin a good line with very little real substance.

Being made to be responsible for creating pollution is becoming a very expensive business, not polluting or at the very least dramatically cutting your pollution output is now making a lot of sense not only morally but financially.

The harder we hit their bottom line profits the quicker greener innovation become main stream.


Posted by: Government Insulation Grants on 13 May 09

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