The value of sustainability in a difficult economy…Part 2
I posted yesterday on the value of sustainability in a difficult economy. Today the following article came across my RSS feed: Companies with a Commitment to Sustainability Tend to Outperform Their Peers During the Financial Crisis. It reports on on a study conducted by A.T. Kearney titled “Green Winners: The Performance of Sustainability-focused Companies in the Financial Crisis.” A.T. Kearney studied 99 companies across 18 industries identified as having a “strong commitment to sustainability” and compared their performance with industry averages. Their conclusion…
As companies cut costs to get through the current global economic slowdown, there is often a temptation to abandon recent forays into sustainability. Yet a new A.T. Kearney analysis finds that companies committed to corporate sustainability practices are achieving above average performance in the financial markets during this slowdown. So before tossing out those sustainability practices and initiatives it might be wise to first determine the real value of the efforts-especially the possible rewards for staying the course.
According to their analysis, in 16 of the 18 industries studied (which included Media, Technology, Personal and Household Goods, Automobiles, Health-care, Financial and Chemicals) the companies with a commitment to sustainability had better financial performance than their peers. Their combined performance difference over a six month period was 15% better than their industry peers. By industry segment the performance variance was 5% to 33% better for the 16 of 18 industries showing positive performance. In the 2 industries that they companies did not perform as well as their peers construction materials and personal and household goods the performance was -8% and -6% respectively.
The common characteristics of the performance leaders?
- A Focus on Long Term Health Rather than Short Term Gains
- Strong Corporate Governance
- Sound Risk Management Strategies
- A History of Investing in Green Innovation
Referencing (and amending) my previous post. We will emerge from the current economic downturn and companies that have established a commitment to sustainability will emerge stronger and better prepared to deal with the new economic realities. This is how A.T. Kearney states their conclusions,
The most sustainability focused companies may well merge from the current crisis stronger than ever-recognized by investors who appreciate the true long-term value of sustainability.
You can download a copy of the report (and I recommend it as read for all who are involved in their companie’s sustainability efforts) at A.T Kearney, “Green Winners.”
-FR
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