And US companies who are proactive concerning their environmental practices are found to have a lower cost of debt, says a study by Rob Bauer and Daniel Hann of Maastricht University, Netherlands, published December 23, 2010. (The study won the respected 2010 Moskowitz Prize for Socially Responsible Investing, offered by the Haas School of Business at the University of California.)
Whether most executives are aware of such results or not — and probably most are not — they are nevertheless advocating and implementing sustainability programs for their companies around the world. A KPMG International study of executives released April 18 said that, “nearly 55 per cent of US executives say their organization has a formal sustainability strategy in place… Another 12 per cent say they are working on a strategy and an additional 19 percent expect to eventually develop a formal plan… Asked to identify the top three benefits from their sustainability program, the respondents most often chose: better or more efficient business processes and practices; increased profitability or shareholder value; and the ability to attract or retain new or existing customers… ”
Interest in sustainability related issues is growing in companies everywhere. As an example, in the Middle East, a survey published in July 2010 by Sustainability Advisory Group found over 80 per cent of executives in that region proclaimed issues related to sustainability were critical or important to their organization in the next ten years.
So what are companies really doing in regard to sustainability? The London based firm, SustainAbility, publishes a highly regarded ranking of global companies and their sustainability efforts. The highest ranked firms for 2011 were Unilever, General Electric, Interface, Wal-Mart and Marks & Spencer. An outline of their sustainability accomplishments is given below.
Apparently, Unilever, which manufactures food, ice creams, soaps, shampoos and everyday household care products, and more, scored highly partly because of its Sustainable Living Plan. The plan, Unilever says, contains over “50 concrete targets that will: help more than one billion people improve their health and well-being; halve the environmental impact of our products; source 100 per cent of our agricultural raw materials sustainably.” Specifically, “By 2020 we aim to halve the greenhouse gas impact of our products across the lifecycle – from the sourcing of raw materials, through to consumer use and disposal… to halve the water associated with the consumer use of our products… to halve the waste associated with the disposal of our products... Today we source 10 per cent of our agricultural raw materials sustainably. By 2012 we will source 30 per cent; by 2015 50 per cent; and by 2020 100 per cent.”
General Electric (GE) has its ‘ecomagination’ group. Ecomagination products include aircraft engines, locomotives, and wind turbines. GE says, “We launched ecomagination in 2005. We’ve succeeded by embracing the world’s environmental issues as an enormous business opportunity… Overall, in the first 5 years, we invested $5 billion in clean tech R&D, and we generated $70 billion in ecomagination revenues… As for our own operations, we committed to reduce our environmental footprint and, in 2009, our greenhouse gas emissions were down 22 percent compared to 2004, well ahead of our goal.” GE also claims that since 2005 they have reduced water consumption by 25 per cent and attained a 50 per cent reduction in energy intensity.
US headquartered Interface is the world’s largest manufacturer of modular carpet (carpet ‘tiles’). The company says its vision is, “to be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits.” Ray C. Anderson is founder and chairman of Interface and on November 9, 2010, he wrote on GreenBiz.com that, “We are now 10 years from 2020, our target year for achieving zero footprint... at the end of 2009, we were about 60 per cent of the way.” (A zero environmental footprint suggests, on a net basis, making zero demands on the earth’s resources.)
It seems that Ray Anderson of Interface may have provided some inspiration for Wal-Mart to also jump into sustainability. At the instigation of Wal-Mart’s CEO, Mr Anderson addressed Wal-Mart executives at a meeting on sustainability in 2004. In October 2005 Lee Scott, CEO called for Wal-Mart, “ …to be supplied 100 percent by renewable energy, to create zero waste and to sell products that sustain our environment and resources.” A major recent innovation in this regard is Wal-Mart’s pioneering of a product ‘sustainability index.’ The company says that, “with this initiative, we are helping create a more transparent supply chain, accelerate the adoption of best practices and drive product innovation and ultimately providing our customers with information they need to assess products’ sustainability.”
Marks & Spencer (M&S) is the renowned UK supermarket/department store chain. It plans to become the world’s most sustainable retailer by 2015. In its How We Do Business 2010 report, M&S says that since 2007 they have “cut carbon emissions from our operations by 8 per cent... improved store energy efficiency by 19 per cent (after weather adjustment); reduced the amount of waste sent to landfill by 33 per cent; reduced the average weight of non-glass packaging on General Merchandise by 36 per cent and Food by 20 per cent per item… used 400 million fewer carrier bags than in 2006/07; increased sustainably sourced wood to over 70 per cent and sustainable fish to over 60 per cent... become the UK’s largest retailer of Fairtrade certified cotton clothing and helped our suppliers set up 10 Ethical Model Factories.”
Thus, corporations adopting sustainable initiatives are likely to save costs, and may even drive revenues and profits higher. And they might enjoy broader stock market recognition for their sustainability, which could boost their stock prices as well!
Copyright alrroya.com.