Sustainability And The Bottom Line

Marketplace:

Dubner:So getting a high CSR score means that you have to not only pollute less, but you also have to treat your employees and your customers ethically; you have to set long-term goals that may not necessarily help your quarterly earnings, which is what the Street cares about; and of course you have to take time to constantly report your progress to places like the U.N.
Ryssdal: But wait a second: What does that all that do for your bottom line, right? Because companies are in the business to make money and you know, shareholder value and all that stuff. Does this pay off?
Dubner: It sounds like it'd be a bad bet for the bottom line, doesn't it, Kai? Isn't that what you're thinking?
Ryssdal: That's where I'm going, yeah.
Dubner: Unfortunately, you're a little bit off on this. The good news is that --
Ryssdal: Again, I'm wrong with Stephen Dubner!
Dubner: The good news is that there is an upside apparently. So George Serafeim at the Harvard Business School has just finished an analysis of 180 U.S. companies over the course of 20 years to measure the effect, if any, that being a good corporate citizen has on a company's bottom line. Now, he did this by comparing the financial performance of firms that exhibited high sustainability behavior versus low sustainability firms.

George Serafeim: We found that the high sustainability group out-performs the low sustainability group in terms of stock market performance. And also we found that the high sustainability group out-performs the low sustainability group in terms of operating performance as well. Whether you look at in term of assets or in terms of equity, you find stronger performance.

So you do things more sustainably, more efficiently and more ethically, and you make more money?  Don't tell that to the radical anti-environmentalists in the Republican Party, they'll freak out.  They'd rather burn money than do anything sensible.