By Max Tau, Capgemini Netherlands
Making the business case for structurally sound and resource efficient practices has never been more clear.
According to data collected between January 2005 and September 2012, companies that exhibit excellence in resource efficiency produced higher investment returns than their “less efficient rivals”.
Writing for the Harvard Business Review, Gerrit Heyns, partner with Osmosis Investment Management, explains that resource efficiency is no longer a “nice-to-have” company target. He concludes that this factor is a leading indicator of economic performance and that the investment management world is starting to seriously pay attention to.
An additional positive coming out of this report is the use of sustainability data.
“In the past decade, investor demand has increased transparency and communication, creating a large and growing pool of data on corporate sustainability. With this, objective decision-making can happen.” Explained Heyns.
From an investment perspective, a company exhibiting a focus on resource efficiency can represent a reflection of how the company is run structurally.
“What these findings suggest is that an investment strategy based on resource efficiency not only produces returns in excess of global benchmarks, it also identifies management teams that are forward thinking, aware of the economic imperatives brought about by resource constraint. Just the kinds of companies a responsible investment manager would put clients’ money into.”
These conclusions should not come as much of a surprise since companies that have made the shift to resource awareness, generally, are doing so in order to cut waste. However, there is now hard data to help support those making the business case for sustainable practices.
Some will make the argument that companies who are indexed as having higher rates of resource efficiency are simply better positioned financially to invest in waste prevention, environmental health and safety technology, as well as better forecasting and procurement practices. That is all true, but then the question must be asked: When the top performers are prioritizing resource efficiency, does the rest of the market follow?
Source: Harvard Business Review
Max Tau is a technology and Supply Chain Execution consultant at Capgemini Netherlands. As a member of the Sustainability Framework within Capgemini, he specializes in information technology based solutions to environmental and efficiency related targets.