5 Reputational Risks to Revenue without Sustainability Strategies

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If a company decides to take a pass on sustainability strategies, it behooves sustainability champions to forewarn them that they may be jeopardizing their reputation with their customers. That reputational risk can quickly translate into lost revenue if customers decide they are more comfortable doing business with competitors.

It helps to size the potential revenue at risk by estimating its impact and factoring it by the probability of it occurring within the next three to five years. Assuming the company’s current revenue is $500 million, let’s look at a methodology for sizing five reputational risks to revenue: Read more

7 Risks to Revenue without Sustainability Strategies

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“Thanks, but no thanks. Maybe later.”Those words are like the kiss of death to a sustainability champion. Usually the rebuff follows a presentation to a busy executive who is surprisingly unexcited about the financial opportunities the company can capture if it embraces sustainability strategies. Now what?
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4 Contributors to Revenue from Services and Leasing

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In my last two blogs, we looked at how company sustainability efforts can help generate more revenue because of its enhanced brand image as a responsible corporate citizen, as well as more revenue from new products and new markets. This week, we will look at additional revenue from selling services and leasing products.

There are four new revenue streams that companies exploit when they focus on selling services instead of producing goods that deplete natural capital. Read more

New Revenue from New Products and New Markets

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In my last blog, we outlined how companies can gain more Business-to-consumer (B2C) and business-to-business (B2B) revenue from a more responsible company brand. This week we will look at a second way that sustainability strategies bolster revenue: the green attributes of the company’s products and services become differentiators.

The payoff for differentiation is increased market share as customers who seek “green” solutions are attracted to the company’s products and services over its competitors’. That is, the sustainability attributes of a company’s products are differentiators to B2C and B2B customers who seek “green” solutions. Read more

More B2C and B2B Revenue From a More Sustainable Brand

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People buy from companies they trust. More and more, customers prefer to do business with companies that are doing good things and are responsible. The responsible image of the company builds loyalty with customers who identify with the values of the company – their loyalty is more to the company than to its products.

Even when buying green products, consumers may gravitate more towards buying from companies that best walk-the-talk on sustainability at a corporate level. Read more

3 Sustainable Ways to Rev-Up Revenue

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A powerful rationale for sustainable development is enlightened self-interest, fed by the prospect of increased revenue, markets, and profits. Savings are good; revenue growth is exciting. Business strategy is often driven by bolstering revenue more than by cutting costs. Over time, societal expectations change. Companies should anticipate those changes and develop new practices, new products, new services, and new markets in advance. Doing this before competitors do is the key to revenue growth and to profits.
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4 ESG-Friendly Findings about Borrowing Rates

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In my last blog, I outlined three concerns that lending institutions have about companies with poor environmental, social, and governance (ESG) track records. First, environmental practices may expose borrowers to expensive legal, reputational, and regulatory risks that could jeopardize their solvency. Second, lenders want to ensure they are not stuck with the borrower’s current and past environmental liabilities if the borrower defaults on the loan. Third, lenders are wary of risks to their own reputations if the public perceives they are abetting the borrower’s irresponsible corporate behavior.

For these three reasons, laggard companies with poor ESG track records may find they pay a higher rate for their borrowed capital. The Social Investment Forum’s 2010 Moskowitz Prize for scholarly research on socially responsible investing was awarded to Rob Bauer and Daniel Hann for their paper, “Corporate Environmental Management and Credit Risk.” In it, they analyzed 1996 to 2006 data on the environmental profiles of 582 U.S. public companies and their associated cost of debt. They found: Read more

3 Reasons Banks Fear ESG Laggards

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How lenders respond to a company’s request for financial assistance is somewhat driven by the applicant’s environmental, social, and governance (ESG) track record. Borrowers require financial capital in order to purchase equipment or new premises in which to produce its goods or services. Some of these capital improvements may be for pollution prevention equipment to comply with tougher environmental regulations, with energy-saving retrofits, for water conservation and treatment, or for new green production lines. Some of the loans may have nothing to do with green projects. Regardless, one cold reality applies to any loan request: Your ESG track record can be a stumbling block. Read more

Aligning ESG Benefits with the Standard 2-Part Business Case

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There are only two reasons a company changes: to avoid risks and / or to capture opportunities. They go for the upside, and / or run from the downside. They are attracted to the carrot, and / or want to duck the stick; the yin and / or the yang. Trying to convince a company to fully embed sustainability into its strategies and operations requires a very compelling business case. The standard business case is made up of these same two parts, shown in the figure below.
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Aligning ESG Benefits with the Value Chain

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Executives are continuously looking for ways to make the company’s value chain more robust and resilient. Smart environmental, social, and governance (ESG) strategies and programs can help.
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