Why Sustainability isn’t just for Hippies Anymore

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Although the idea of triple bottom line reporting on profit, people, and planet may still cause indigestion for purists of capitalism, the fact that it has become the norm over the exception can no longer be denied. Earlier this year, Ernst & Young published a report indicating that environmental and social proposals made up 40 percent of corporate shareholder resolutions in 2011, up from 31 percent in 2010. Suffice it to say, when investors are pushing the needle on corporate social responsibility, it becomes increasingly difficult for CEOs and board members to look the other way.

So how then do companies strike the right balance of achieving their primary goal (maximizing shareholder wealth) while simultaneously appealing to societies growing need for businesses to act as upstanding corporate citizens? From an environmental standpoint, it becomes a question of materiality, or, more specifically, which environmental concerns are most material to the success of the business, and how those concerns can be turned into an opportunity.

When Levi’s conducted a life-cycle assessment of its 501 blue jeans in 2007, they found that the bulk of energy and water consumed was attributed to two primary sources: 1) the harvesting of raw cotton to make the jeans and; 2) consumer end use associated with heating the water to wash the jeans. With much of their cotton being harvested in drought-prone regions already being affected by climate change, Levi’s saw an opportunity to innovate. The company has since embarked on several water- and energy-saving initiatives such as the development of their Water>Less jeans product line and their Care Tag for the Planet.

For most companies, especially those operating in countries that have implemented a carbon tax (India, Australia, and most of Europe to name a few), the goal is long-term risk and cost avoidance. To remain globally competitive, multinational companies have no choice but to outline a forward thinking strategy for reducing greenhouse gas (GHG) emissions (such as carbon) associated with fossil fuel consumption. It is no longer just a question of brand equity and reputation, but rather a matter of how costs will continue to climb per unit produced if energy and fuel consumption is left unchecked.

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