Why companies should care about sustainability.

Last week I blogged about why investors care about sustainability. The other side of the coin is to consider why companies should care about it.

The most obvious reason is that companies (public companies, anyway) should care for the very reason that investors care. And the corollary to that is that companies should care not only because investors do, but because investors care enough that this secondary market in sustainability info is springing up.

Firms that provide investors with financial information think they can make money by supplying investors with this information (and just so we're clear, these are large institutional investors, not mom and pops).

So companies also need to care because they need to have information on their sustainability program easily accessible to these information suppliers. If they don't, they will sooner or later stick out like a sore thumb among companies who do.

But there are other reasons, self-interested reasons, why companies should care:

So... what is your company doing about this latest litmus test for corporate health?

Do Investors Care About Corporate Sustainability?

I ran across a PriceWaterhouseCoopers report on whether investors care about a company's efforts to be more sustainable--and not just in the environmental sense of the word. The conclusion: Boy do they.

The report, Do investors care about sustainability? Seven trends provide clues, provides evidence of an interesting loop: Investor interest in sustainable practices has become so popular that financial reporting companies are now starting to provide easy access to information on these practices. As companies realize how easy it is for investors (and potential investors) to get a hold of this information, they upgrade their own sustainability reporting practices.

Investors are becoming interested in sustainability because recent studies indicate a direct correlation between sustainable practices and profits.

Sustainable practices include such things as:

1. Better management of natural resources that go into a companies products. (A beverage company must protect long-term sources of potable water.)
2. More attention to waste products that flow out of factories.
3. More concern for worker health and safety.
4. More attention to how the company's operations affect the community in which it's located.
5. More attention to making sure energy grids are maintained and that energy generation is sustainable.
6. More attention to climate change and its implications on supply and risk.

Here's the map. I'll post it on Biggerplate too: