Implications could be huge for companies who fail to recognize sustainability as public environmental sensitivity demand surges
DAVOS, SWITZERLAND‑Eight Canadian companies have made the Global 100 list of most sustainable, privately-held large corporations, placing Canada fourth among 22 countries. Three companies are in the energy sector.
Japan led the way with 19 Global 100 companies, and the U.S. was second with 13. The U.K. was third with 11 companies.
This year’s Global 100 were recognized at the World Economic Forum in Davos.
Natural gas supplier Encana Corp. ranked highest among Canada’s industrial companies taking 12th position.
Headquartered in Calgary, Encana focuses on the development of sustainable unconventional resources. On its website, the company says it applies advanced technology and operational innovation to reduce costs and maximize margins. Its strategic model describes how natural gas can play a significantly expanded role in serving North America’s growing energy needs while focusing on environmental performance and economic growth.
Calgary-based natural gas suppliers Nexen Inc. and Suncor Energy Inc. were also included in the rankings, placing 36thand 56th.
“The Global 100 are charting out a new prosperity agenda reconciling the mega-trend of sustainability with the mega-institution of the corporation. The kicker: sustainability can be a market-beating strategy, as the Global 100’s substantial out-performance demonstrates,” says Toby Heaps, editor-in-chief of Corporate Knights, the Toronto-based magazine that publishes the Global 100 rankings.
Vanessa Magness is an accounting professor at Toronto’s Ryerson University, whose research focuses on environmental accounting and establishing links between pollution, profit and disclosure.
She says companies are realizing that reducing their environmental footprint improves the marketability their products, making sustainability an increasingly market-beating strategy.
“Increased focus on sustainable operations from larger corporations has been driven by public demand,” she says. “Companies are realizing that reducing their environmental footprint improves the marketability of their products.”
While sustainability has not been without cost, it has also shown corporations how to turn waste streams into revenue streams, particularly in the oil and gas sector, where new technologies have cut waste and energy costs, she added. Companies are increasingly using new technologies, such as bio-fuels, that turn waste streams into revenue streams through co-generation.
Not only do these technologies reduce waste, but they also reduce costs because plants are able to power themselves by using waste as an energy source, says Magness.
A professor at York University’s Schulich School of Business in Toronto says sustainability is increasingly becoming a market-beating strategy because there are significant financial benefits.
“This really is a win-win situation for larger corporations,”says Dirk Matten. “Being more sustainable translates to an increased focus on environmental standards that usually demonstrate how companies can cut costs by making operations more efficient.”
Companies have traditionally viewed sustainability in terms of cost to implement, says Magness, but companies are no longer asking: what’s it going to cost us?
“More companies are looking at sustainability as a way to actually save money by implementing these new technologies by, for example, recycling waste to power industrial plants,” she says.
There could also be a huge downside for those who fail to embrace sustainability as governments and consumers worldwide are moving rapidly towards insisting reducing environmental sustainability be a condition of doing business.
Now the question is: what will be the cost of failing to embrace sustainability?