Growth of sustainability
Whole cities are recognising the need for, and getting behind sustainability to develop their people, their environment and their economy for longer lasting growth.
- New York's sustainability include targets to have the cleanest air in the nation, fortify waterfronts and waterways, clean contaminated land, and ensure all New Yorkers live within a 10 minute walk of a park.
- Oslo's sustainability include plans to ban cars from the city centre by 2019 as part of a plan to cut emissions in half by 2020 (as compared to 1990 levels).
- Seoul's sustainability include offers its citizens a ShareHub, which is an online platform that connects users with sharing services, supports sharing enterprises and offers workshops to residents.
- Sao Paulo's sustainability include developing a more qualified workforce, as well as seeking to adopt new technologies to provide better efficiency in design, control and assessment of urban infrastructure works and demands.
- Gothenburg's sustainability include a district heating network which is 1,200 kilometres long and heats 90 per cent of the city’s apartment blocks, along with 12,000 detached homes to reduce Sweden's greenhouse gas emissions, both in the housing and service sector.
- Hamburg's sustainability banning single use coffee pods – which are hard (and sometimes impossible) to recycle – in government buildings and other public institutions such as schools and universities as part of a wider policy to tackle waste.
Who else is getting behind sustainability?
Corporate sustainability can encompass a wide variety of tactics, from giving nonprofit organizations a portion of a company's proceeds, to giving away a product or service to a worthy recipient for every sale made. Here are more examples of companies demonstrating corporate social responsibility:
- BMW's sustainability include a water conservation initiative that helps save 9.5m gallons of water each year.
- L'Oreal's sustainability include ensuring a deforestation-free and sustainable palm production, L’Oréal have mapped their entire Palm production (and Palm derivative) supply chain back to their origin. In 2015, L’Oréal achieved to trace back 80% of its derivatives up to the level of refineries, and 50% up to the mills. By end of 2016, they are aiming to have achieved 100% traceability.
- Coke's sustainability include a global 5by20 initiative has reached more than 1.2m women entrepreneurs across 60 countries since 2010. They have a goal of enabling the economic empowerment of 5m women entrepreneurs across its value chain by the year 2020.
- Auckland Airport's sustainability include installation of new fans, with carbon dioxide sensors, which increase or decrease air-flow according to demand. They achieved 84% electrical energy savings (for cooling) and 56% gas savings (for heating) which equates to a combined monthly energy saving of 62%, 175,000 kilowatts per hour or $11,000.
- Adidas' sustainability include employees accessing an online, open source Learning Campus for self-paced learning activities, video content and group learning activities. It providing resources that support on-the-job learning, social and collaborative learning, and in-person learning activities.
- Biogen's sustainability include effectively neutralising the carbon emissions from sources associated with their business, including internal operations, purchased electricity, employee commuting and business travel, and suppliers of products and services.
- Commonwealth Bank of Australia's sustainability include a commitment to improving financial literacy. In five years (to 2015) they had more than doubled the number of active students (to over 310,000) participating in their School Banking programme.
- Apple's sustainability include over 93% of its electricity coming from renewable sources (in 2015).
Why are companies are getting behind sustainability?
Sustainability can have a positive impact on a company's bottom line and it's stock price.
An Oxford University study of 190, in 2014, on the relationship between sustainability and firm performance, made a strong case for business investment in sustainability, drawing the following key conclusions:
- 88% indicated that operational performance of firms was improved by robust Environmental, Social and Governance practices.
- 90% showed that sound sustainability standards lowered the cost of capital through activities, such as:
- cost saving through reduced electricity use, or
- higher employee engagement and motivation resulting in lower turnover and higher human resource cost efficiency.
- 80% showed a positive relationship between good sustainability practices and stock performance.
Consumers want it
According to Neilsen's October 2015 report, "The Sustainability Imperative", consumers are increasingly willing to pay more for goods and services that are being produced with sustainability concerns in mind. Approximately 66% of global consumers surveyed say they are willing to pay more for sustainable goods, up from 50% in 2013.
What's the impact of companies who are getting behind sustainability?
The Morgan Stanley "Sustainable Reality" study in 2015, indicated a growing number of investors are exploring sustainable investing. In 2012, $1 out of every $9 of US assets under professional management was invested in some form of sustainable investment, primarily in public equities. In 2014 that number increased to $1 out of every $6 – to a total of $6.57t now invested sustainably.
This could be because they found high sustainability firms significantly outperformed their counterparts. Given a $1 investment in 1993 in a value-weighted portfolio of high sustainability versus low sustainability firms, the high sustainability portfolio would have grown to $22.60 by 2010, while the low sustainability portfolio would have only reached $15.40. a difference of over 46%.
What about sustainability on this side of the world?
In Australia and New Zealand, according to a GSIA review in 2014, sustainable investing assets managed by asset managers, super funds, banks and advisers continued to grow strongly due both to strong performance and increasing fund inflows, rising 34% to reach $180b.