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Legitimate sustainability strategy could be rewarded by shareholders

Posting in Energy

According to a "Green Winners" analysis by A.T. Kearney, companies that have made a legitimate, long-term commitment to -- that is, the practice of us...

According to a "Green Winners" analysis by A.T. Kearney, companies that have made a legitimate, long-term commitment to -- that is, the practice of using human and natural resources today with an eye to making sure they thrive into the future -- have been faring better than their tactically focused peer groups in 16 out of 18 industries. At least when it comes to the financial markets.

Indeed, the consulting company found that these companies had a stock market performance differential of 10 percent over a three-month research period; the gap widened to 15 percent over a six-month period. A.T. Kearney picked the companies to examine based on their inclusion in either the Dow Jones Sustainability Index or the Goldman Sachs SUSTAIN focus list.

The only exceptions to this trend came from the construction and materials sector, and the personal and household goods sector.

Mind you, there are plenty of companies that describe themselves as sustainable, holding up their sustainability brochures and reports as hard proof. Please, please, please, DON'T ever PRINT a sustainability report on paper. Or, if you must, print on demand.

But I digress.

You can download the entire A.T. Kearney commentary on the link between sustainability and market performance here.

According to the A.T. Kearney researchers, what distinguishes "true" sustainability from tactical lip service to the concept is the following:

  • Long-term planning that is at least five years to 10 years or longer into the future
  • Contributions from outside the company's inner sanctum from policy experts, scientists, business partners -- anyone who can provide value insight and criticism
  • Top-down support
  • A strong corporate governance framework
  • Healthy risk management policies that identify potential corporate liabilities that are related to environmental factors
  • And, a history that proves its long-standing commitment. After all, the Dow Jones Sustainability Index was started a full decade again, long before sustainability was such a sexy headline.

Which is not to say that you should let having no past stop you. But be methodical and thoughtful, and remember that sustainability is really about the triple bottom line governed by Economics, Ecosystems and Ecology.

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Heather Clancy

Section Editor

Heather Clancy has written for United Press International, ZDNet, Entrepreneur, Fortune Small Business, the International Herald Tribune and the New York Times. She holds a degree from McGill University. She is based in New Jersey. Follow her on Twitter. Disclosure