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When it comes to business growth (or survival), going ‘green’ has proved to be more than a fleeting trend. Reports find that companies committed to sustainable business practices, even during the current market slowdown, continue achieving above-average performance in the financial market. Goldman Sachs found that companies that are on top of their environmental, social and governance (ESG) policy are also leading the pack in stock performance–by an average growth of 25%. As social environmental issues are rapidly moving from marginal to mainstream, analysts forecast that companies failing to adapt sustainable business models are likely to lose competitive advantage.

“We’re at a point where socially responsible investing is evolving beyond avoidance strategies—eliminating companies that are involved in tobacco, for example—to ones that take an integrated look at ESG. This is all part of the same movement to understand how to harness this information for better returns.” – Paul Hilton, Interim Director Social Investment Strategy at Calvert, a leading socially responsible investing firm.

Deborah Fleischer of Green Impact, which provides environmental consulting, wrote in GreenBiz on three compelling reasons why sustainability makes good business:

1. It will save you money: A global consumer packaged goods company reduced its greenhouse gas emissions by 16 percent, even when increasing production by 76% — improved energy efficiency saved the company about $30 million in 2007.
2. It will provide better access to capital: Companies that are high on Dow Jones Sustainability Index may find that they have an easier time getting capital. Socially responsible investors typically won’t lend to companies that don’t have a sustainability policy.
3. It will drive top-line revenues: STMicroelectronics made a commitment to become carbon neutral by 2010 with a 40-fold increase in production. The process of figuring out how to achieve this ambitious goal was a catalyst for corporate innovation, increasing the company’s market share and saving millions of dollars in the process.

Companies who plan for the long term are the ones that will be ready to meet the demands of a more sustainable market. Even in these economic hard times, keeping your social and environmental indicators healthy are as important as the economic ones.

Image Courtesy: Time Inc.

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