What’s the hit to the bottom line if a café chain starts buying fair-trade coffee? Can a manufacturer somehow recover the costs of switching to solar energy? How much would it cut into profits for a bank to go carbon neutral.
In fact, contrary to conventional business thinking, corporate social responsibility comes with consistent financial benefits, not costs.
Research by Western University’s Tima Bansal demonstrates how companies that invest in environmental and community initiatives become more financially competitive. Bansal’s rigorous data analysis provides inarguable evidence that sustainable business practices – from greenhouse gas reduction to corporate greening – are intimately connected to financial survival.
“Many people think there’s trade-off between environmental and financial responsibility,” she says. “But there’s an overlap where they’re consistent – particularly in the long haul.”
Firms with better environmental reputations, for example, have more desirable stock , which makes it easier to raise new capital.
Bansal works with government and business leaders to enable them to put her research into practice. As founder and executive director of the national Network for Business Sustainability, she helps Canadian companies integrate economic, environmental and social accountability in ways that make them more stable, competitive and prosperous.
“Sustainable development is the single biggest issue facing business and society,” she says. The world’s economic output has more than doubled over the past 20 years, but at tremendous ecological cost. Environmental degradation now threatens long-term economic viability.
“Our climate, water and soil systems are changing in irreversible ways and threatening economic development,” Bansal says.
Costs related to climate change in Canada, for example, are expected to rise to $5 billion annually by 2020, which will, in turn, slow the country’s economy.
“Business sustainability assumes that equal value is placed on both the future and the present,” Bansal says. “Yet, many businesses discount the future.”
Bansal’s research provides better understanding of both tensions and commonalities between environmental and economic concerns. In the process, she provides practical solutions for governments and businesses that are seeking policies and practices that ensure both environmental and financial viability.
**Major funders for this research include Social Sciences and Humanities Research Council of Canada.