by on 13 February, 2009 - 11:02
by: Jennifer Rice
A new study by global management consulting firm A.T. Kearney indicates that firms with "true commitment to sustainability" outperform industry peers in the financial markets. The study, called Green Winners: The Performance of Sustainability-Focused Companies During the Financial Crisis, found that in 16 of 18 industries, sustainability-focused companies outperformed their peers by 15% in a six-month period. The performance differential translated to an average of $650 million in market cap per company.
The big takeaway for me is seeing that the companies prospering now were the companies who embarked on this journey ten years ago, well before it became a media-worthy item. Now these companies have pulled ahead of the pack in terms of competitive advantage and are building momentum.
The report cited as an example a global consumer packaged goods company that "views sustainability as not just a philanthropic endeavor but a fundamental part of its business strategy." It began its sustainability efforts more than 10 years ago and has incorporated sustainability practices in every link of the value chain.
Despite increasing production volume by 76 percent since 1998, and over the same period reduced greenhouse gas emissions by 16 percent, water consumption by 28 percent and energy use by 3 percent, according to the report. In 2007, improvements in energy efficiency led to a $30 million savings. Over a 16-year period, the company saved more than $500 million by optimizing packaging volume.
And it's not just about savings.
IBM has generated $500 million in new contract signings in 2 quarters from their Big Green initiative. Clorox is projecting $40 million in first-year sales from its GreenWorks line. General Electric vowed to improve the energy efficiency of its operations by 4% a year and double its revenues from relatively clean products to $20 billion by 2010.
This is a trend that is not going away. If your business hasn't committed to baking in sustainability (and/or a social-good outcome that's more directly related to your business) into your business strategy, the mounting data on both consumer expectations and competitive advantage suggest that you will be left behind.
Original Post: http://brand.blogs.com/mantra/2009/02/in-the-downturn-green-companies-outperform.html
This blog reflects the personal opinions of individual contributors and does not represent the views of Futurelab, Futurelab's clients, or the contributors' respective employers or clients.
RSS
Ethan says:
17 Feb 2009, 19:54
Consumers are looking for company responsibility and accountability--particularly when it comes to the environment. This is a part of a trend (http://sparxoo.com/?p=167)that is sweeping across nearly every industry and will continue as we see the effects of global warming in our everyday lives.
Tim Albinson says:
14 Feb 2009, 00:41
Granted, in this report, companies with a history of commitment to sustainability reaped the most benefit. However, as someone once told me, âYou donât have to be born green to be green.â Even a business that starts pursuing sustainability initiatives today will be positioning itself for success, even in these tough economic times.
Tim
www.2sustain.com
James Smith says:
17 Feb 2009, 10:12
One of the changes from bubble to post-bubble mentality was that everyone switched their investments to more stable stocks and commodities. Its a fairly long-term mindset.
For a firm, there is little better demonstration of their commitment to the long-term than thinking on a geological time scale.
Add your comment