Green Businesses, Green Buildings, And Greenbacks - Doo Consulting Blog

Earth Day 2012: Green Businesses, Green Buildings, And Greenbacks – Part 1 of 2

How is business for you in 2012?

For companies with a congruent commitment to sustainability, and with LEED-certified buildings (see Part 2 of this series), it seems business is very good.

Empirical studies reveal that companies that have chosen to put sustainability high on their priority list outperform their competitors. Those for whom the bottom line is the only concern do well – but not as well.

That’s what research done by Harvard (and London) Business School professors, Robert G. Eccles, Ioannis Ioannou, and George Serafeim, has shown. Their working paper, called  “The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance” studied the two samples of two sets of firms of the same size, financial performance and growth prospects, from the period from 1993 to 2010.

Ninety of the firms were identified as having made commitments to enhance their environmental and social performance, where the other sample of ninety took a more traditional approach, regarding these factors as externalities, and financial performance as primary.

An example of their findings is illustrated in the relative stock performance of each set of companies. One dollar invested in the a value-weighted portfolio of sustainability-minded companies would have grown to $22.60 during the period of the study. The same dollar invested in a value-weighted portfolio of the traditionally-run companies would have grown to $15.40.

The authors suggest that, since much of the low-hanging fruit of sustainability has already been plucked by watching the bottom line, those companies who make a special commitment to social and environmental performance are forced to innovate to make good on their promises. And, in fact, in innovation is where new opportunities for profits are found.

Doing good can lead to doing well – so start with making a commitment to a triple bottom line – people, the planet, AND profit. If you are looking for guidance on where to start, contact Doo Consulting to facilitate your next planning session.

And please read part 2 in this series for a revealing study about the impact of green buildings on corporate performance.