Sustainability and its Impact on Brand Value
One of the latest buzz words found in management journals, websites, and corporate documents is “sustainability.” Some people even want to recognize it in a company’s balance sheet as an asset. Okay, let’s not go that far.
It is undeniable that sustainability is a new way of doing business; in the same way “re-engineering” or “just in time” were in the late 1980s. Sustainability is not an asset that can be bought or sold; rather it’s becoming an integral part of many a company’s philosophy. Just as company management practices influence business value, so do sustainability initiatives. Therefore, the question is: How does it create value?
Moral motivations to invest in sustainability are not in dispute: climate change, poverty, you name it. But what companies don’t know yet is what level of investment they should make and what is the measurable benefit of investing. When the benefit is not clear enough to justify investments on economical grounds, managers easily turn to initiatives that guarantee short-term results and everyone’s jobs, especially with recession knocking on the door.
There are some direct benefits, such as: compliance with an increasingly rigorous legislation; cost savings derived from optimization of production lines and supply chains to reduce energy consumption; reduction in CO2 emissions; desire for more ethical products; and simply satisfying an emerging and cynical green consumer. But most importantly, incorporating sustainability as a business practice will not only increase companies’ brand value, but also guarantee a long life for the business.
Relationship between sustainability and brand value &n ...