Policy Making

Romeu Gaspar's picture
There is a clear link between corporate sustainability and financial results, but which one is the trigger? Well, the link can actually run both ways.
Romeu Gaspar
Little doubt remains about the correlation between improved sustainability practices and better financial results: Exhibit 1 compiles the results of close to 160 research papers, most of which found a positive correlation between these two benefits. But which one is the trigger? In other words, do better sustainability practices lead to improved financial results, or does the availability of funds lead to increased investments in sustainability? In this article we explore the issue of causality between sustainability and financial performance, and what it means for various stakeholders.
Exhibit 1 – Results of 159 studies from 1972 to 2008, analyzing the correlation between sustainability and financial performance
Exhibit 2 – Stock market returns of the CDLI and Global 500 indexes (2005-2012)
Exhibit 3 – Suggested virtuous cycle of good management, sustainable practices and increased financial performance
Exhibit 4 – Results of 159 studies from 1972 to 2008, analyzing the correlation between sustainability and accounting/market metrics
Exhibit 5 – Bi-directional correlation between sustainability and innovation
Exhibit 6 – Payback period for sustainability initiatives, as reported in 2012 by members of the Carbon Disclosure Project
Romeu Gaspar's picture
The greater good is a worthy motive to address climate change, but it’s not a particularly effective persuasion technique. Routine, reward and social proof work far better.
Romeu Gaspar
Simple actions like switching off the lights or turning down the thermostat can lead to substantial savings: studies suggest that behavioral change alone, without any technology update, can result in 5 to 20% carbon emissions savings. The human mind is however far more complex than any machine, and meaningful behavioral changes in this area have proven difficult.
Exhibit 1 – Behavior and technology based carbon emissions savings potential for an illustrative hospital and region
Exhibit 2 – Two examples of leveraging routine - weight loss programs and Durham Water’s social experiment
Exhibit 3 – Two examples of leveraging reward - Gainsharing and RecycleBank
Exhibit 4 – Two examples of leveraging social proof - Yelp and Opower
Cátia Carias's picture
In these dire economic times, organizations across Europe are postponing environmental goals. They shouldn’t: this is one of those areas where you can have the cake and eat it too.
Cátia Carias
March 2007 set the date for the “20-20-20” targets in the European Union: 20% less carbon emissions, 20% more renewable energy production and 20% more energy efficiency. Five years and an economic crisis later, and with only eight years left to reach 2020, a recent report states we will fall short of some of these objectives. In the midst of this grim scenario, something stands out: the Covenant of Mayors, a group of more than 4250 European municipalities voluntarily committing to surpassing EU’s “20-20-20” targets”. Can they do it? They can, but most of them probably will not.
Exhibit 1 – Emission reduction targets for the Covenant of Mayors signatories
Exhibit 2 – CO2e emission reductions and NPV for all the shortlisted measures
Exhibit 3 – CO2e emission reductions and NPV for all the “financially viable only” measures