Maximizing shareholder value has a new handmaiden: sustainability. And corporate social responsibility is her mirror.
“Social responsibility should be viewed through the lens of maximizing shareholder value,” commented The Wall Street Journal’s Bruce Nolop. “It’s no longer a ‘nice to have.’ It’s a strategic imperative.”
No matter the industry, it’s increasingly clear that sustainability can drive profit, as Chris Humme, CMO of Schneider Electric, notes. He cites Intercontinental as a prime example of how green practices can lower costs—the hotelier has reportedly saved $30,000 a month at just two San Francisco hotels by micro-managing peak power.[more]
UPS is another company that understands the value proposition offered by emphasizing sustainability. “For UPS, sustainability is about efficiency,” said Rhonda Clark, VP environmental affairs at UPS in an interview with The Guardian. “Any time we’re saving time, we’re saving money, we’re saving miles, we’re saving fuel and we’re reducing C02 emissions. It is just good common sense.”
Greater revenue opportunities are also increasing, particularly when it comes to real estate. CBRE, the world’s largest commercial real estate services firm, surveyed San Diego and found that green buildings commanded 18 percent higher rents ($2.42 per square foot versus $2.02 per square foot) and higher occupancy rates (88.3 percent vs. 84.3 percent) than conventional buildings.
The result? Inceased ROI, as higher rents and lower turnover translate into higher capital values that can average 10.9 percent for new buildings and 6.9 percent for older ones.
Sustainability has yet another strategic significance for companies when it comes to recruiting, because millennials typically rank an employer’s reputation as an important draw for a job.
“It is one of the soft things that many companies don’t understand but it is crucial in the retention and morale of employees,” says Larry Vertal, a senior strategist at computer processing developer Advanced Micro Devices (AMD). “It is amazing how the highest talented people will grill you about your sustainability practices in job interviews.”
Of course, cultivating corporate social responsibility also has a lasting effect on brand identity, as evidenced by another major brand, Whole Foods, which just debuted its first national advertising campaign with the tagline, “Values Matter,” focused on ethical sourcing, healthy eating and transparency.
Clearly, if sustainability is becoming a bottom line priority that corporations all must share, effective integration will require more than just messaging.
“The biggest question isn’t whether consumers are buying green or sustainable products. We know they are,” writes Henk Campher, SVP of business and social purpose and managing director of sustainability at Edelman.
“The problem is to find better ways to bring sustainability to life for the consumers in ways that will resonate with them, and foster even faster growth. To find the solution we need to look closer at brand—the soul of a product identity.”