Ethical Business May Have Natural Advantages
By Steve Schueth
A study in the MIT Sloan Management Review finds that consumers punish unethical business practices and reward ethical practices.
Remi Trudel and June Cotte, both of the University of Western Ontario, focused their experiments on common consumer goods with a story: coffee and cotton t-shirts. They discovered that “consumers were willing to pay a slight premium for the ethically made goods,” and that they “would buy unethically made products only at a steep discount.”
Separately, an analysis by management consulting firm A.T. Kearney found that companies with a strong commitment to sustainability outperformed averages by 15% in 16 out of 18 industries from May through November 2008, a dismal period for many businesses.
Green Winners: The Performance of Sustainability-focused Companies in the Financial Crisis defined sustainable practice as those that are “geared toward protecting the environment and promoting social well-being while achieving shareholder value.”
The study found that some corporations demonstrate characteristics that position them to more effectively weather crises, including:
- Long-term planning in the development of sustainability practices,
- Strong corporate governance oversight,
- Transparency regarding the sustainability efforts of supply chains,
- Sharing of carbon emissions data,
- Membership in the United Nations Global Compact, and
- Sound risk management practices and such green innovations as reducing waste and emissions, using alternative energy sources, and producing natural products.
“The most sustainability-focused may well emerge from the current crisis stronger than ever,” the report concluded.
Affirmative Thinking Spring 2009, Volume 11, Issue 2
Posted: April 13, 2009