Sustainability Pays

In recent years, many U.S. companies have found that a commitment to sustainability can boost the bottom line. It's a finding that has surprised critics, who have long claimed that when a business considers any goals other than pure financial returns, profits fall. Now, a recent study published in Harvard Business Review shows that sustainability pays off, even for companies in the developing world. Sustainability pays, even though environmental standards are minimal, and most consumers don't have the luxury of buying high-end organic groceries and other lifestyle goods.

Developed sustainability. Several different kinds of business models have been proven to work for sustainable businesses in the United States and other developed countries. Some companies succeed by targeting sophisticated consumers who prefer to pay more for a product that is organic, healthier, produced in cleaner and safer way, or produced in a way that provides more benefit to the workers involved. Fair trade coffee is an example. Other companies succeed by driving their costs down as a result of rethinking their product and process design through the lens of sustainability. For example, a winery sets out to reduce its carbon output, and that leads them to change their tilling practices and redesign their facility to need less pumping and chilling, both of which are very energy intensive. As a result, the winery achieves substantial cost savings while at the same time taking action to protect the climate. Still other companies succeed because the pursuit of sustainability leads to a higher quality product, with fewer defects and rejects. Customers pay more for quality and predictability, even if they are not motivated to be "green" consumers.

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