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Share Thoughts from Sustainability Interactive -- It's about the bottom line

What is "Green" to the orange-aproned folks at The Home Depot or the Brown™ team (yes, capitalized) of UPS?


Last month, senior sustainability officers from nearly a dozen companies and universities assembled in Atlanta to meet with local business owners to the discuss best sustainability practices.  The event, Sustainability Interactive!, was presented by the Green Chamber of the South, and topics discussed were green alright, but not always in the environmental sense. 


Boardwalk Capital sponsored this event, and I was happy to recruit the sustainability officers and coordinate a fabulous evening.  They were eager to participate in this unique face-to-face gathering, and we truly appreciate their support.  Together, we shed light on the new school of thought being practiced by the world's best managed companies:  That sustainability and environmental issues are directly related to profitability, to brand strength, to employee retention and to customer loyalty (to name a few).  In Coca Cola language, it's called the "social license to operate" -- knowing that you must respect the local resources (often water) in order to be able to sell your product. 


At every table, investors and business leaders heard a consistent story from the sustainability officers.  Doing good is really nice, but it isn't why we undertake sustainability initiatives.  We do it for the bottom line benefits, making investments in the company's future by lowering costs, reducing risks and strengthening our competitive position. It is not a stand-alone effort, but is now an integrated part of management and strategy.


Sometimes the payback for these initiatives can be long.  But in each case, these officers said they needed to show the bottom line enhancement from their recommended program. And that only makes sense.  Much is at stake!  The "do gooder" company that sacrifices its profitability for the sake of altruistic aims had better win a lot more customers hearts.  When they don't -- when the fail to "deliver", the market isn't terribly forgiving. And that competitor who pays no mind to their "social license" just became your new boss.


Fortunately for companies and their investors, those who can successfully balance short term profitability with long term investments have been shown to outperform their peers.  These "best-of-class" companies are our firm's investment focus.  They are raising the bar each year. And as we have seen, many are close to home.