I Have A Dream… A Green Dream

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Imagine a world in which socially responsible and eco-friendly practices actually boost a company’s bottom line. It’s closer than you think.

I could not have said it better myself. So reads the front page of this week’s BusinessWeek. In a special report by Pete Engardio, entitled Beyond the Green Corporation, the business industry mag looks at how many large corporations are successfully implementing green initiatives and social responsibility campaigns.

Engardio, with the help of a few other regional correspondents, explores projects like Unilever’s free laundromat in a Brazilian slum and their community hospital in Bangladesh. The company’s CEO, Patrick Cescau, explains corporate social responsibility by saying “You can’t ignore the impact your company has on the community and the environment. [But] it’s also about growth and innovation. In the future, it will be the only way to do business.”

The article points out the “intangibles” that are so talked-about these days: environmental and social “costs” that don’t directly translate into dollars and aren’t required by law to show up on the balance sheet. But more and more, consumers are holding corporations accountable for these practices. “Now there’s a more sophisticated understanding that environmental and social practices can yield strategic advantages in an interconnected world of shifting customer loyalties and regulatory regimes,” and the corporations are giving in and often publishing sustainability reports to their websites (something which was almost nonexistent five years ago).

Jason Kottke over at Worldchanging expressed many consumer’s sentiment recently when he said recently, “Wealth doesn’t just magically materialize into your bank account. It comes from the ground, human effort, the flesh of animals, the sun, and the atom. The global economy is driven by nature, and yet it’s not usually found on the accountant’s balance sheet. Perhaps it should be. I’d like to know the true cost of the stuff I buy.”

Like consumers, investors are also starting to pay attention. Research firms and financial institutions are giving big corp’s sustainability ratings, and analyzing their ability to anticipate future challenges and provide innovative solutions. In other words, some are beginning to use these intangibles to gauge companies’ future performance! Innovest Strategic Value Advisors, who represent large institutional investors, have compiled a list of the world’s top 100 most sustainable companies, giving them a bond-like rating from AAA to CCC, while Goldman Sachs is bringing together 22 brokerages to research intangibles with its Enhanced Analytics Initiative, which ranks energy and mining companies according to their sustainability factors, financial returns, and their access to new reserves of resources. The moral of the story is: sustainability practices are becoming a new tool for investors to filter through companies to see who might be the long-term winners.

Check out the issue for more about Royal Dutch Shell, GE, Sony, Nintendo, BP, PetroChina, Dow Chemical, Phillips Electronics, and more. The article also features some pretty interesting case studies:

• Wal-Mart has decreased its energy usage 17% and saved $2.4 million annually by reducing its packaging
• The Prius has increased Toyota’s brand value by 47% to $28 billion, even though GM’s lineup has a higher average mpg
• Pharmaceuticals giant GlaxoSmithKline is selling 90% of its AIDS medicines and other vaccines at cost to customers in the developing world

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