Aligning Corporate Growth with Environmental Sustainability

In the first CFO survey of its kind, “The Role of Finance in Environmental Sustainability Efforts” has found that “CFOs and other senior finance executives overwhelmingly report that environmental sustainability is an increasingly important issue for their companies, and that a range of significant financial benefits are achievable for companies that can implement strategies that truly reduce their impact on the environment.”Top sustainability objectives include regulatory compliance, improving energy efficiency / reducing greenhouse gas emissions, and reducing the environmental impact of operations.  The survey also found that the greatest barrier to implementation lay in “measuring the effects of sustainability on shareholder value and financial performance.”  According to Lauralee Martin, CFO at Jones Land LaSalle, this potential for sustainable growth remains largely untapped:

“Most CFOs believe sustainability can lead to cost savings, increased revenues, greater customer retention and a competitive advantage, so clearly this is an opportunity that can not be ignored.  The question each of us should ask is whether we are taking an aggressive enough position, given the rapidly approaching tipping point of this issue.”

For the entire article, go here or here.

Advertisements

2 Responses

  1. There are many companies that are currently on this bandwagon to becoming more sustainable, and I feel that investors and consumers are really starting to value these sustainable advances in the companies they are associated with. I firmly believe that large corporations are the best vehicles through which to promote sustainable issues because they are in the public eye, and the nation can see the actions they are taking. I am currently a grauduate student in a sustainability class, and it seems that more and more students are interested in this topic. I found an interesting article which talks about how MBA students are beginning to focus on sustainability and some of the initiatives they are taking. The article can be found at: http://www.businessweek.com/bschools/content/jul2005/bs20050715_9296_bs001.htm

    I think it is great that current CFO’s are interested in this topic. The fact that future MBA’s are also extremely interested in the issue of sustainability also shows that as they are hired by large companies the companies will continue to focus on sustainability in the future.

  2. Ashley,

    I think you raise an excellent point that corporations are one of the best platforms to drive this mission for increased sustainability across society. However, they are only part of the solution. One of the major institutional incentives for corporations to act is the sort of costs and externalities they are forced to internalized based on government regulations — so the two cannot be separated.

    Right now the voluntary actions of corporations due to the cost-saving benefits or positive PR is great but in order to create a truly sustainable capitalistic economy, we must incorporate much of these factors into the very laws that companies are forced to follow. In essence, measures like mandatory accounting of carbon footprints, environmental impacts and other disclosures must occur alongside 10-K’s and other Securities filings. Only when the governments figure out ways to tie the actual stock prices of these companies to their corporate stewardship, will a true sustainable business emerge.

    At that point Milton Friedman will actually be correct when he said that the only duty of a company is to its shareholders.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: