Given a choice between two companies that are otherwise equal, investors will place a higher value on the one that is more open and transparent A benefit of business sustainability includes access to investment capital.
As John Friedman writes, "Today nearly one out of every eight dollars under professional management in the United States is invested in some strategy of socially responsible and sustainable investing. Since 2005, SRI assets have increased more than 34 percent compared to 3 percent for other professionally managed assets. By the end of 2009 total assets involved in sustainable and socially responsible investing exceeded $3.07 trillion.
The rapid growth of SRI in recent years is the best evidence that sustainable and responsible investing yields competitive returns. Over the past 20 years, the total dollars invested in SRI has grown exponentially, as has the number of institutional, professional, and individual investors involved in the field."
According to DowJones VentureSource, venture capital funding has not yet fully rebounded to 2008 levels. However, ‘green’ business investment showed a dramatic improvement over the last year. With the current economic upswing, investors are becoming grounded in their assessment of potential and are looking for ‘sustainable’ return on their investments. Our professional consulting finds firms, as always, want to make sure they are committing capital to the right companies and business strategies. The question then becomes: Have the ‘right’ investment opportunities and business strategies changed?
According to Financial Times, there are five key factors investors traditionally consider when evaluating a company’s long-term potential. Coupling these basic measures with business sustainability concepts, today’s investors are developing a new perspective of sustainable business investment.
• The Company’s Product or Service Offering: Are the company’s offerings responsibly sourced and produced using sustainable materials and business processes?
• The Company’s Financial Track Record: Have the full measure of the company’s business sustainability risks been considered in the past and future reporting?
• The Company’s Competitive Differentiation: Is the company on the leading or trailing edge of sustainable practice in its industry?
• The Company’s Strategy: Are business sustainability concepts integrated throughout the company’s business plans or simply a subset of traditional planning?
• The Company’s Credibility: Does the company’s strong business reputation inspire consumer eco awareness? Does it drive purchasing behavior toward a specific product or service?
Our sustainability consulting finds that sustainable business practices are finding their way into existing company offerings, and these organizations are focusing on more than just cost and risk management. Business sustainability leaders recognize the speed and quality of their response to business sustainability opportunities ultimately affects company profitability and strengthens investment potential.