Last year, we published Sustainability Excellence Brings Profits to Manufacturers — Linking Going Green with Financial Health. That document combined our knowledge of the quarterly financial performance of 800+ publicly traded global firms in the manufacturing and retail industries — our Global Performance Index (GPI) — with the manufacturing companies in the Dow Jones Sustainability Indexes (DJSI), global indexes tracking the financial performance of leading sustainability-driven co
In last year's results, our analysis clearly revealed that manufacturers in both our GPI and the DJSI demonstrated much stronger margins than the aggregate of all manufacturers in the GPI, but no significant gap between each group's revenue or inventories. In contrast, this year's results show gaps in all three categories — profit, revenue, and inventory.
Why the stronger performance in revenue and inventory management as well as profits? Does the weak economy have anything to do with it or is it that these companies have become even better managed over the year?
We're reminded of a recent conversation we had with folks at a professional services firm concerned by our initial description that "its sustainability services were all about the impact on the financial statements." From their perspective, enhancing the income statement and balance sheet is only one component of the work it does on performance improvement. The discussion reminded us that sustainability improvements may or may not be directly measured financially, at least not right away. There are important implications for brand and reputation, not to mention carbon emissions, which eventually impact the income statement — raising revenue. And maybe this is what we are starting to see in our data — that manufacturers that have invested in sustainability have considered the value of brand and reputation on their ability to sell more products and services.
What do you think? Do you agree or disagree with our analysis? Any suggestions on how to measure sustainability's impact on brand and reputation?
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