At a time when sustainability is being actively removed from the government's economic stimulus packages, new research from the US shows green means go for business. AT Kearney the management consulting firm reports on a study of 99 companies in a Sustainability Index and the Goldman Sachs Sustain Focus List.
The analysis found that in 16 of the 18 industries studied, companies committed to sustainability outperformed industry averages by 15% over the six months from May through November 2008. From a market capitalization perspective, this superior performance averages out to $650 million in protected market capitalization per company.
“Our study indicates that the market rewards specific companies,” said Dr. Daniel Mahler, author of the study. “We find common characteristics among the leading companies that show that sustainability goes far beyond the narrow definition of being environmentally friendly.”
These characteristics include:
- A focus on long-term strategy, not just short-term gains
- Strong corporate governance
- Sound risk-management practices
- A history of investment in green innovations
The study contains discussions of each of the 18 industries studied, as well as examples of best practices from a variety of industries. Together with the macro analysis, these case studies provide a map for companies looking to be proactive in terms of protecting their market capitalization.
While green measures that produce immediate cost-savings such as reducing packaging material and decreasing fuel use will become increasingly common in a cash-strapped economy, Sustainability and the Financial Crisis suggests that investing in sustainability for the long term may be the best way to protect a company’s value through the months — and years — ahead.