No Surprises, Green Is Great For Business

by Brigid Milligan, Sep 21, 2011, 10:15 AM

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We've been saying it for years: green is good for business. But as the Carbon Disclosure Project's (CDP) annual Global 500 reported last week, green isn't just good for business -- it's great for business and positively impacts the bottom line.

Many have long thought that being green is a luxury that requires extra cost, and that's partially true -- from a consumer standpoint, organic products can be two and three times more costly. As Ron Ashkenas noted on the Harvard Business Review blog earlier this year, many view sustainability as a Faustian choice, knowingly making choices that have instantaneous benefits but no long-term gains. In today's challenging economic environment, it's to be expected that many companies would place less of a priority on sustainability as they focus on more pressing business issues.

The CDP, which examines the carbon reduction strategies at the world's largest companies, surveyed nearly 400 of the Global 500 companies and reported that choosing to implement sustainability as a core component of business has incredible long-term benefits. In their latest report, they found that companies that had a strategic focus on climate change doubled the average total return of the Global 500 from 2005 to mid-2011.

Considering the economic difficulties that companies have faced the past few years, it's a staggering return on investment and a validation for green marketers that have long championed holistic sustainability programs over segmented initiatives that while effective, may only impact one part of a business.

With that level of success, it's no wonder that companies are increasingly incorporating sustainability initiatives into core business strategies. The CDP reported that 68% of companies reported that climate change was central to their business plans -- a 20% increase from last year.

What does this mean for green marketers and public relations practitioners?

1. Understand the stakes. The CDP is backed by 551 investors with approximately $71 trillion in assets, which means its impact on the financial community is significant and its influence continues to grow as sophisticated investors are recognizing the long-term value of companies that have true sustainability programs. Likewise, the barrier to entry is increasing as more and more companies enter the field.

2. Understand requirements for success. Investor-focused sustainability rankings such as the CDP and Dow Jones Sustainability Index are known for being meticulous, competitive and resource-intensive as they require companies to answer comprehensive questionnaires and provide detailed reporting information. As we develop marketing and communications programs, it's important to understand reporting metrics and requirements so that it can be built into current and future initiatives.

3. Create holistic programs. Just as sustainability has become a core component of business initiatives, marketing and communications programs should be positioned as addressing key business priorities.

4. Identify opportunities for innovation. Sustainability is, by its nature, future-looking as it puts in place programs in the present that should mitigate long-term risks. With increased challenges and competition comes a tremendous opportunity to propose innovative solutions that are future-forward.

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