How Important Is Corporate Sustainability to Investors?

Sustainability is one of the hottest issues in the business world today. We live in a society that is largely built on business, but we’re finding it more difficult with each passing day to reconcile the disparity between business concerns and environmental issues. For a long time, sustainability was something that businesses and investors didn’t even think about, much less discuss. In recent years, however, environmental pollution, wildlife endangerment, deforestation, dwindling resources and a number of other concerns have caused us to ask an important question: How long can this go on?

Reports indicate that CEO’s in businesses of all kinds are beginning to focus more on issues of sustainability than they have in the past. Customers in many parts of the world are beginning to push for more sustainable business practices, and the heads of businesses both big and small are feeling the strain. However, as strong as these winds of change may be blowing, what is truly important is the response of investors. Investors do not answer to customers’ demands–that is the responsibility of the CEO. In fact, CEO’s answer to both customers and investors. However, where customers are often impassioned about matters of ecology and sustainability, investors are not so concerned.

Up to now it has been the general consensus that, no, investors do not care about sustainability. Investors care about profits. This is a simple product of our capitalist society and the workings of businesses. Investors put money into businesses to help those businesses grow and achieve their goals. In return, the investor is usually guaranteed some equity stake in the company or continuously paying royalties. This is not a charity affair of course–it is a mutually beneficial arrangement from which the investor expects a return on his or her investment. Therefore, the average investor would rather a business cut corners to increase sales and profits than invest in sustainability.

However, it cannot be said that all investors are concerned only with sales and profits. There has always been a growing trend of socially responsible investing in America that dates back over two hundred years. One of the founders of the Methodist Church, John Wesley, made a practice of preaching responsible investing to his congregation. He taught that companies that deal in alcohol, tobacco, guns, and other harmful industries should not be supported. Many modern day investors are following this tradition, putting their money toward businesses that align with their own moral values, and pressuring CEO’s to move toward sustainable business practices.

Ultimately, sustainability is still not the primary concern of most investors in the world today, but that trend is changing. As more and more average peopleĀ buy shares online and push for sustainable business practices, investors and CEO’s will have to come around. In truth, every investor should be concerned with sustainability. A business that is run on non-sustainable practices will not last much longer in today’s world. Sustainability itself is an investment in a secure future–what remains to be seen is whether those who hold the capital will put this on their agendas.

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