Sustainable product revenue growing six times faster than alternatives
Revenues from sustainable products or services are growing up to six times faster than 'normal' equivalents, according to new research from the Investor Responsibility Research Center Institute (IRRCi).
The Institute, which provides data-driven information to investors, analysed 12 companies listed in the S&P 100 that sold and tracked ‘sustainable’ products and services.
The study found between 2010 and 2013, revenues from these portfolios grew by 91% – around six times faster than the rest of the companies’ products.
“It’s a totally false dichotomy to suggest that sustainability somehow comes at the expense of growing a company,” said IRRCi executive director Jon Lukomnik.
”In fact, leading corporations are realizing a substantial and positive impact on revenue from their sustainability products and services.
“The trend we’re seeing is that corporate sustainability programs are evolving from adhering to the best environmental, social, and governance standards to becoming a critical element of a company’s growth strategy.”
The study also found that sustainable products have grown as a share of major firms’ portfolios from 17% in 2011 to 26% in 2014.
The report defined sustainable products as “items that have an explicit environmental advantage over equivalent existing products”
Report author Thomas Singer added: “More than a matter of responsibility or reputation, sustainability has become a potentially lucrative business strategy for a broad range of companies.”
The companies surveyed within the report said that a driving force for their range of sustainable products was “customer demand” for solutions that address global sustainability challenges, such as climate change and resource scarcity.
The companies also suggested that the success of a sustainable range required broad stakeholder support, including getting the CEO on-board, and clearly communicating the green benefits to customers.
The IRRCi stipulated that its research was a relatively small sample, and held back by the ‘wild-west’ nature of the nascent sustainability sector, where companies operate under their own guidelines and methodologies, leading to limited and unstandardised data.
In May, consumer goods firm Unilever revealed that 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.
Cosmetics giant L’Oreal has also committed to a target for all products to have positive environmental or social impact by 2020.
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