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Overview

Using Business as a Force for Good Is Good for Business

Before launching into the main content of this book, it is important to get one thing clear from the start: using business as a force for good is good for business. One of the most persuasive arguments for increasing your company’s social and environmental performance is that you will save money, enhance profitability, and generate more business value. If you or others in your company, such as the CEO, CFO, or an influential board member, are skeptical about anything that hints of “green” or “socially responsible,” then this section will give you a brief snapshot of the bottom-line, business case for sustainability.

Indeed, a veritable who’s who of thought leaders such as Accenture, Deloitte, Goldman Sachs, Harvard Business School, McKinsey & Company, and PricewaterhouseCoopers have released data-driven case studies, global surveys, and exhaustive reports that offer compelling proof that using business as a force for good is good for business.

For example, Goldman Sachs reported that “more capital is now focused on sustainable business models, and the market is rewarding leaders and new entrants in a way that could scarcely have been predicted even fifteen years ago.” Goldman Sachs found that there has been a dramatic increase in the number of investors seeking to incorporate sustainability and environmental, social, and governance factors into their portfolio construction.

In a report that echoes this sentiment, the International Finance Corporation found that the Dow Jones Sustainability Index performed an average of 36.1 percent better than the traditional Dow Jones Index over a period of five years. Comparable results have been found by some of the top academic institutions in the world. For example, a recent Harvard Business School study concluded that “high sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market as well as accounting performance.”

Accenture, in a global study of CEOs’ perspectives on sustainability, found that 93 percent of CEOs see sustainability as important to their company’s future success. Accenture reported that “demonstrating a visible and authentic commitment to sustainability is especially important … to regain and build trust from the public and other key stakeholders, such as consumers and governmentstrust that was shaken by the recent global financial crisis.”

Although some claim that sustainability is a passing trend, Deloitte stated that “sustainability is a critical business issue that is quickly becoming a mandatory requirement.” Deloitte went on to argue that social and environmental responsibility will continue to be relevant because, unlike other business issues, sustainability is being shaped by constituencies such as shareholders, regulators, consumers and customers, nongovernment organizations, and other drivers outside of a company’s locus of control.

If you are on the fence, PricewaterhouseCoopers found a “positive, statistically significant, linear association between sustainability and corporate financial performance,” and McKinsey, in no uncertain terms, said, “The choice for companies today is not if, but how they should manage their sustainability activities.” McKinsey also reported that a fragmented, reactive approach to sustainability is no longer enough. “Companies can choose to see this agenda as a necessary evil—a matter of compliance or a risk to be managed while they get on with the business of business—or they can think of it as a novel way to open up new business opportunities while creating value for society.”

Importantly, sustainability is not just about reducing your environmental footprint. Goldman Sachs notes that “research at both the corporate and university levels suggests that this next generation of employees and consumers have specific needs at work that are dramatically different from previous generations. High among these is a desire to align personal and corporate values. To attract and retain this group, we believe that companies need to provide rewards beyond financial gain.”