Study: Sustainable Practices Account for 11% of Companies Value

According to a recent study released by Project ROI, a company’s reputation and name accounts for 33% of a company’s value, and 33% of a company’s reputation is determined by its responsible, sustainable practices. The study looked at larger, publicly traded companies. The findings are well demonstrated by Volkswagen stocks, which dropped recently after a scandal broke that the company had been altering its cars to cheat on emissions tests. The U.S. Environmental Protection Agency reported that 482,000 cars be recalled. Not only did this affect Volkswagen’s stock price, but it also resulted in the first quarterly loss for Volkswagen in 15 years.

However, better stock prices weren’t the only thing companies gained from sustainable practices. Consumers have shown willingness to pay 20% more to companies that have a reputation for being a leader in sustainability. As a result, studies have shown that these companies make 20% greater revenue. Additionally, working for a sustainable company affects employees significantly. Sustainable companies have better job satisfaction, higher productivity, and lower employee turnover. One study showed that almost half of employees wouldn’t leave their current company for one with a worse reputation, and those that would said it would take on average a 57% increase in salary to convince them to move. As a result, companies with good reputations have an easier time maintaining their workforce, all while paying less for their experienced, highly-productive employees. Consumers, employees, and investors all appear to put significant weight on sustainability. The result is that up to 11% of a company’s value can be attributed to their reputation of sustainability. More and more companies are devoting resources to increasing their sustainability, and using their sustainable practices as tools for public relations as executives realize the real value of being sustainable.

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