Monday, June 23, 2008
NEWS: Companies Reporting Sustainability Data Come Out On Top
As many of us have suspected, a recent report by GMA and PricewaterhouseCoopers titled “The Food, Beverage, and Consumer Products Industry - Achieving Superior Financial Performance in a Challenging Economy - 2008” now confirms that those companies which report sustainability data consistently generate higher cash flow, outperform on gross margins and return on sales, and experience rising shareholder return and higher return on assets than non-reporting businesses. Greater return on assets and cash flows can likely be explained by wise investment decisions and operational improvements. Better overall performance may be attributed to the following two explanations. First, sustainable practices often result in leaner operations which in turn yields cost savings on energy and inputs. Second, consumers support environmentally-conscious companies, paying a premium for goods produced through sustainable practice. Still, it may be too soon to determine if green companies are better at a) meeting consumer demand, and/or b) adapting to fluctuating markets, than non-green firms. We can, however, safely conclude that sustainable practice is paying off at the bottom line for those companies committed to green business.