Thursday, February 26, 2015

The Business Case for Sustainability: Corporations, Banks and Investors

In recent years the business case for sustainability has grown stronger. The combination of corporate engagement, banking support and shareholder demand support the drive towards sustainability. The demand for sustainability increases environmental commitments multiply. There is unprecedented demand for sustainability from consumers, clients and shareholders. Corporations, banks and shareholders are all in business to make money and sustainability is good business.

Corporations

There are a large and growing number of studies which make the business case for sustainability. Businesses are increasingly looking to capitalize on opportunities associated with the green economy and to protect themselves from exposure to environmental risks.
In a Guardian article, Andrew Behar, the CEO of As You Sow, a nonprofit promoting environmental and social corporate responsibility explains it this way: "The business case is that we are at the inflection point of the greatest transition in human history from a fossil-fuel-based economy to a clean economy."

There are a number of very successful corporations that are engaging sustainability. This includes corporations like Patagonia, AECOM and Unilever. The sheer size of the opportunity commands the interest of the business community. The World Economic Forum estimates that the transition to a low carbon economy will require $1 trillion in investments.

Banks

In the last couple of years, a number of large banks have set sustainability investment goals. In 2013 Bank of America and Wells Fargo each committed $50 billion for financing sustainable initiatives and green transport. Most recently Citigroup announced that they would invest an additional 100 billion in sustainability. That is in addition to the 50 billion they have already invested.

Valerie Smith, director of corporate sustainability at Citigroup said that the company’s announcement comes in the face of immense client demand for sustainable investing: “You probably can follow the chain. Our clients are demanding it, our clients’ clients are demanding it, our clients’ investors are demanding it. There is a momentum and focus on solving big global societal problems that everybody is rallying to.”

Investors

Investors interest in sustainability is being driven by lucrative opportunities as a growing body of data shows that sustainability pays. Investors are concerned about both the risk of exposure to environmental concerns and the opportunities from companies with strong sustainability oriented positioning.

The opportunity is huge and investors want in on the action. "It’s the economics now. It’s not just about wanting to save the planet,” Behar said. New metrics are also driving investments in sustainability.

The world is catching up to predictions that called sustainability an unstoppable megatrend driven by a powerful logic

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