You've probably heard it a thousand times before: corporate sustainability is not only good for the planet but it is good for a company's bottom line. But we can make those claims until we are blue in the face and it wouldn't mean anything unless there was some strong evidence to back them up. Well, now there is.
A new study by George Serafeim at Harvard University found that companies that put a higher value on corporate sustainability over the long term show stronger stock market and operating performance than companies that don't. In a recent piece on American Public Media's radio program, Marketplace, Serafeim says:
"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."
The tricky part about these findings, which were based on data from companies over a 20-year period, is that it is still unclear which way the causal arrow points. In other words, correlation is not causation. Do companies that value corporate responsibility perform well in the market because of their better than average sustainability efforts or are companies with strong market performance just more likely to emphasize sustainability?
Whether emphasizing sustainability is how these companies became profitable or whether they emphasize sustainability because they are profitable may not be critical to drawing conclusions from the study. The key take home point is that more profitable companies are embracing sustainability. And no matter which way you slice it, that is a good thing.