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'Green-back': Does the Environment Sell in Investor Communications?
By Robbin Goodman
Financial communications have typically been focused on messages that support return on shareholder equity (ROE). Does the environment have a place in this type of communication? Increasingly, the answer appears to be “yes.”
Just this week, the Wall Street Journal reported that representatives of 55 investment firms and other groups wrote a letter to Securities and Exchange Commission Chairman Mary Schapiro, asking the regulator to require annual sustainability reports. The lead author, Lisa Woll, CEO of the Social Investment Forum (SIF), told the newspaper that social and environmental issues are paramount to a business’s financial outlook and merit more disclosure. She goes on to posit that the recession might have been mitigated or avoided if corporations had been required to disclose information about social practices.
The fact is that investors—both professional and individual—have become more conscious of the environment, and are putting companies under more scrutiny. Socially responsible investing accounts for an estimated $2.71 trillion out of $25.1 trillion in the U.S. investment marketplace today, according to the SIF, and companies are following the money.
Beyond simply paying lip service to social responsibility by posting statements to their corporate Web sites, a number of leading companies are making strong commitments and taking strong actions. They quite possibly are being rewarded by their investors. For example, Google has initiated several climate change-related initiatives—Renewable Energy Cleaner than Coal, RechargeIT, Climate Savers Computing Initiative, Google Power Meter and going Carbon Neutral—on renewable energy and climate change. Walmart now wants to know the carbon footprints of the products on its shelves.
IBM, in addition to greening its own and customers' data centers, launched a suite of consulting services that helps clients reduce their carbon footprint. The pharmaceutical company Novo Nordisk is a leader in sustainability reporting, in its initiatives to reduce its carbon footprint and in using alternatives to animal testing, which sets it apart from industry peers.
Companies will “do well by doing good.” Investors are learning that investing in companies with top environmental records can lead to superior financial returns and will support companies that enhance life on earth. Strong environmental performance equates to better management overall, which translates into stronger earnings and greater shareholder value.
Robbin S. Goodman is Executive Vice President and a partner at Makovsky + Company, one of the top 15 independent public relations firms in New York City and a co-founder of Interraction, a consortium of experts from a variety of business disciplines working togetherto address the risks and opportunities presented by climate change.
July 27, 2009
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