The rise in world affluence holds promise for better lives and also comes with significant risks to ecosystems if prevailing patterns of consumption, energy production, and waste persist. Meeting the needs and desires of all people while preserving resources requires innovation of new technologies and business models. The need to reduce consumption and waste creates new opportunities for business to grow while at the same time helping people, economies, and ecosystems through the innovation of efficient processes, and regenerative goods and services.
There is a range of external influences that are exerting pressure upon the business sector in general terms. These trends have led to much higher expectations of companies’ environmental and social performance by customers, employees, communities, regulators, and shareholders. Many of the goods and services supplied by ecosystems cannot be replaced at any reasonable price and the private sector has an economic interest in managing its portfolio of natural capital wisely. Ecosystem goods and services are not free, common goods but rather are assets with a market value. Companies that ignore ethical, environmental or social issues may destroy value through inadequate management of risks and may also limit value by missing new market opportunities.
Environmental sustainability has become highly material to society as resources essential to life have become increasingly scarce, with rising demand and diminishing supply. As these markets for these resources develop and mature, competitive advantage will go to business which embody environmental performance in innovative products and services that protect and renew the environment and that reduce the costs and liabilities associated with diminishing natural resources and the ecosystems that produce them. Companies employing sustainable business practices in operations, management, products and/or services will typically enjoy lower costs, greater margins and/or higher market share over the long term as compared with those that do not employ such practices.
We believe that sustainable companies compete in the most rapidly growing sectors of the largest industries – food, power, shelter, water, waste, transportation – in the U.S. and the world economies. We believe that continued growth of sustainable business practices is supported by ongoing profit and performance improvements in these industries. They are largely in response to a mixture of financial, competitive, regulatory, societal, environmental, and technological pressures. Many companies with compelling business prospects have emerged and are migrating value away from their non-sustainable competitors.