As many companies struggle to figure out a way to cut costs, experts fear that sustainability programs are going to fly out the recession window. But a new study by marketing research firm AT Kearney (PDF)
reports some surprising numbers that show green companies outperforming their peers by as much as 33 percent.
The study looked at the performance of the indexed stock prices for green companies in the last two quarters of 2008 versus the background market in 18 business sectors. Overall, over a six month period last year, 16 of the 18 sectors showed increased performance, the average being about 15 percent.
The authors warn financial managers to look closely at sustainable measures to improve market performance, even though it may be tempting to redline them:
As companies cut costs to get through the current global economic slowdown, there is often a temptation to abandon recent forays into sustainability. Yet ... companies committed to corporate sustainability practices are achieving above average performance in the financial markets during this slowdown. So before tossing out those sustainability practices and initiatives, it might be wise to first determine the real value of the efforts especially the possible rewards for staying the course.
The source of success, according to the report, comes from a combination of increased efficiencies in energy, water and utilities plus sound risk management practices and heightened brand cache. The companies studied also show that innovation becomes a guiding principle, helping drive competitive advantage.
One packaged goods company showed 76 percent growth over 16 years, while reducing carbon emissions by 16 percent and water by 28 percent. The result: $500 million in savings.
So note to CFO's: Green may be the best way to get you back in black.