Ambitious CR strategy could boost revenue by 20%
Companies that are fully committed to sustainability and corporate responsibility (CR) could see a potential revenue boost of up to 20% - equivalent to $1.8bn for some of the largest publicly-traded firms.
The Project ROI report said its estimates come from research into more than 300 academic and peer reviewed sources, supplemented by interviews of executives and CR practitioners. The projections are most accurate for large publicly trade companies.
As well as the potential revenue boost – stemming from “enhanced competitive positioning and deepened customer engagement” – the report claimed CR can help a company in several other areas. For example, share prices could be boosted by up to 6%, while improved preparation for crises could be worth $378m to listed companies.
Valuable human resources
The report also claims that a sustainability strategy can reduce staff turnover by up to 50%, with employees willing to take a 5% pay cut to work at an ethical company.
The report follows recent comments from sustainability leader Interface, whose innovation director Nigel Stansfield told edie that the firm’s green reputation helped it attract and retain top-level talent who would normally “have no interest working for a flooring manufacturer”.
The Project ROI report also pointed out that these benefits would only be enjoyed by companies with a fully commited CRP approach. “It is not enough to simply fund or manage environmental, social, and governance programs, one must differentiate good CR management practices from less effective ones," reads the report.
“Companies that make a strong commitment to CR tend to generate ROI”.
Greenwashing won't wash
The report defined ‘good’ CR firms as having quantifiable goals, engaging stakeholders, and having clear ESG goals that aligned with existing business strategy. “In contrast companies perceived as not fully committed to CR are less likely to generate ROI," it states.
"Such companies may engage in philanthropy and select environmental and social practices, but exhibit a disconnect between these practices and core operations.”
Project ROI also highlighted several case studies of leading CR businesses including Unilever, Pirelli and IBM.
Dutch consumer goods firm Unilever, for example, claims its 'Sustainable Living' brands accounted for half of the company's growth in 2014 and grew at twice the rate of the rest of the business.
Another report from the Investor Responsibility Research Center Institute (IRRCi) in June found that revenues from sustainable products or services are growing up to six times faster than 'normal' equivalents.