Environmental Comportment Impacts Stock Valuations

According to a Deloitte report, information about a company's environmental conduct directly impacts its market value. The report from is titled, “Drivers of Long-Term Business Value: Stakeholders, Stats and Strategy.” The research drew on an MIT study of US publicly traded companies from 1980 to 2009. The 30 years of data reviewed in the study showed that stock prices dropped an average of 0.65 percent within a two-day window following the release of negative environmental news.

The risks from bad news appear to be greater than the benefits of good news. As reviewed in the study, investors tended to react more strongly to negative environmental news with the effect getting stronger with each passing decade. While positive news on a company’s environmental behavior produced an average increase of 0.84 percent in the stock price, the study shows that the increased valuations have decreased over time.

Video: The Financial Opportunities from Sustainability

In this video Sarah Slaughter, the Associate Director for Buildings and Infrastructure at MIT, address the challenge of sustainability. Many organizations feel overwhelmed by the prospect of being more sustainable. Slaughter addresses the question of who needs to be at the table to build a Sustainability strategy. Sustainability is an important issue for communities and government officials, but is is also a key part of what CFOs need to consider when looking at risks and opportunities. As Slaughter says, if CFOs can find new ways and new products and new services that provide new market opportunities, it's like found money on the sidewalk.

© 2012, Richard Matthews. All rights reserved.

Video: Sustainability is Driving Competitiveness

According to National Business Initiative (NBI) program manager Steve Nicholls, Environmental sustainability is an important business driver for competitiveness.

© 2012, Richard Matthews. All rights reserved.

Sustainable Business Is Growing But It Still Has A Long Way To Go

Despite the growth of sustainable business, this extrordinary transformation has only just begun. The combination of regulation and demand will color the future a much darker shade of green than what we see today. Whether you are a passionate supporter of efforts to combat climate change or a science-hating denier, everyone will have to contend with a business environment that will be unmistakably greener.

The core features of the new green economy are here to stay and will keep growing. This includes things like efficiency, conservation, waste reduction, pollution prevention, supply-chain management, environmental reporting, biomimicry and cradle-to-cradle products.

Although the green economy is a permanent fixture, companies will continue to rise and fall as new technologies emerge and old technologies are rendered obsolete. But the core features of green business will be with us for generations to come.

More and more companies are adopting greener practices and environmentally oriented consulting services are very much in demand. However, the green market is still very young.

The vast majority of businesses have yet to adopt sustainable practices. According to the Sustainability & Innovation Survey by MIT’s Sloan Management Review and Boston Consulting Group, small business has been especially slow to adopt sustainability. Their survey revealed that 82 percent of small companies have yet to go green, and 66 percent of large companies have yet to embrace sustainability. That leaves a lot of room for growth.

The green market is now estimated to be worth $5.27 trillion (£3.2 trillion) worldwide. In the next couple of decades the clean energy market alone is expected to be worth more than$13 trillion.

Today the green market may seem big, but the business world of tomorrow will be much greener.

© 2011, Richard Matthews. All rights reserved.

Related Posts
Cost Benefit Analysis of Sustainable Business
Sustainable Practices are a Strategic Priority for Business
The Overwhelming Logic of Sustainable Business
Sustainability is an Unstoppable Megatrend
Sustainable Successes and Failures
Sustainable Business Methods, Strategy, Management and Reporting
Surveys of America's Greenest Brands
Consumers Continue to Embrace the Burgeoning Green Market
Consumer Demand for Green
Cooperation Between Environmental Organizations and Businesses
Best Green and Sustainable Business Twitter Feeds
10 Business Pledges
10 Great Companies Who Were Green Before It Was Cool"
Predictions for Sustainable Business and the Green Economy in 2011
Social Media Driving Corporate Environmental Sustainability
People Remain Loyal to Green Even in an Economic Downturn
Green's Bottom Line: Staying Competitive in Volatile Economic Times

Sustainable Practices are a Strategic Priority for Business

There are significant opportunities for business related to the war against climate change. Economic returns are powerful incentives driving businesses to adopt more sustainable practices.

Those who acted early are already seeing a return on their investment and gaining a competitive advantage.

Some are waiting for long-term targets that will stimulate the full level of investment in low carbon solutions. However, failure to incorporate more sustainable practices puts firms at risk. Companies who wait for regulation may fall too far behind to catch up to companies that are already seizing opportunities.

To help governments identify climate change opportunities and areas where they need support, businesses must understand these issues and communicate their concerns.

Although an increasing number of companies are reporting reduction targets on carbon only 35 percent of the world's 500 largest companies are engaging with policy agencies and governments to drive climate change mitigation and adaptation.

Business has a key role to play, those companies who act ahead of regulation will be remembered as pioneers, those who wait, risk falling too far behind to catch up.


Related Posts
The Overwhelming Logic of Sustainable Business
Sustainable Business Methods
Best Practices for Sustainable Businesses
Sustainable Supply Chains
Puma's Sustainable Supply Chain
Walmart and HP's Sustainable Supply Chains
Sustainability is a Catalyst for Innovation
Sustainable Brands Innovation Open Finalists
10 Steps to Sustainability-Driven Innovation
Innovation and the Development of Sustainable Products or Processes
Sustainable Brands 2010