Tuesday, September 25, 2012

Data Shows that Sustainability Pays

A large amount of data is now available as investors are increasingly demanding more transparency and greater corporate responsibility. A large and growing pool of data indicates that sustainability is a profitable endeavor. According to an article in the Harvard Business Review by Gerrit Heyns, a partner at Osmosis Investment Management in London, England, companies that invest in sustainability do better financially. According to the data cited by Heyns, sustainability focused companies outperform the market.

The data indicates that resource efficient companies (those who use less energy and water and create less waste in generating a unit of revenue), tend to produce higher investment returns than their less resource-efficient rivals.

Resource-efficient companies also display high levels of innovation and entrepreneurship, pushing core value metrics above the average large cap global business.

What these findings suggest is that an investment strategy based on resource efficiency not only outperforms global benchmarks, it also identifies forward thinking management teams that are preparing for a resource constrained economy.

As Heyns states in the concluding remarks of his article, "Resource efficiency is a leading indicator of economic performance and one that every investment manager should be tracking. It's about time that the financial community woke up to this fact and started to take advantage of the data."

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