Thursday, March 7, 2013

Emerging markets + Environmental responsibility = Big financial rewards

Sustainability and environmental responsibility may not be viewed as a priority in developing countries focused on raising citizens out of poverty. “But the developed world does not have a monopoly on visionaries,” according to a new article in Harvard Business Review. Rather, in markets where the pressures of resource depletion are felt most keenly, corporate sustainability has become a source of innovation.

In one example, Egypt’s first organic farm lowered costs, improved yields by 30 percent, and produced higher quality raw cotton. Far from being an expensive indulgence, organic cotton offered a business model that was more sustainable not just environmentally but financially.

A review of more than 1,000 companies by Boston Consulting Group and the World Economic Forum identified more than a dozen champions whose sustainability practices were “effective, innovative, and scalable.” To make their environmental efforts pay off financially, companies followed one of these approaches:
  • Taking a long view, investing in methods of sustainable operation that led to dramatically lower costs and higher yields
  • A bootstrap approach starting with cost savings from small changes which funded advanced technologies that made production more efficient
  • Spreading sustainability efforts to the operations of customers and suppliers
The companies highlighted in Making Sustainability Profitable demonstrate that economic development and environmental sustainability are not mutually exclusive. Instead, visionary enterprises in emerging markets are showing us that environmentally responsible approaches can lead to big financial rewards.