2Sustain

As a life-long environmentalist, I have always believed that ultimately, businesses will do well by doing good. Now, there’s data to back me up.

The Grocery Manufacturers Association (GMA) and PricewaterhouseCoopers recently published an analysis of data from 60 large companies, 27 that reported sustainability data and 33 that did not. Over the past five years, the companies that reported sustainability data consistently showed higher median gross margins and return on sales, higher return on assets, and stronger cash flow and rising shareholder return.

A summary of the report cites two factors that might explain why companies that report sustainability data achieve higher return on assets: investment decisions and operational improvements associated with adopting sustainable practices.   

The same may be true for the generation of cash flow. Companies that reported sustainable data experienced higher free cash flow to sales ratio -– most likely because they made operational improvements and adopted best practices along the value chain.

The GMA-PwC analysis also showed that sustainable companies saw higher gross margins and return on sales. Maybe that’s because companies with sustainability strategies tend to operate more efficiently? Or, perhaps consumers are now willing to pay more for goods produced in a sustainable manner?

At this point, it’s hard to determine if green companies are simply better able to adapt to changing markets and consumer demands, or if there’s a growing consumer appreciation for products made by companies with sustainable strategies.

Either way, though, I think the message is clear: now, more than ever, businesses truly are doing well by doing good.