Public perception of a firm as sustainable can have big impact on its revenue.
It is often perceived that companies who incorporate sustainability into their business model are more innovative, spot emerging issues sooner, more easily find opportunities for growth and improved efficiencies, and are well prepared to handle unpredictable market forces.
But let’s cut to the chase — no one is going green unless it makes economic sense. Protecting the planet is one thing, but if you are losing greenbacks, you can’t afford to be green for very long. What may surprise you is that, according to recent research, your company’s perceived level of sustainability can actually impact your bottom line.
When companies consider sustainability initiatives, they often focus on such tasks as minimizing wastes, increasing efficiency, mitigating environmental risks and reducing greenhouse gas emissions. These types of goals are relatively straightforward in terms of their integration within existing operations strategies, and their effect on the bottom line often can be directly measured.
But what about public perception? The effect of the public’s perception of a company’s sustainability initiatives often is overlooked, perhaps because it is thought to be one of the least tangible factors.
However, in their book “Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage,” authors Daniel Esty and Andrew Winston note that public perception can have a huge impact. They cite Hewlett-Packard (HP) as an example, noting that of the $112 billion the company takes in, in annual revenue, roughly $12 billion — approximately 10 percent of total revenue — was attributed to the public’s positive reaction to HP’s responses to environmental sustainability questions. Although the numbers can be debated, the take home message is clear: public perception is an important part of the equation if one seeks to maximize revenue.
However, this raises a key question related to real versus perceived sustainability actions. Does it matter if any real action has been taken yet? According to a recent study by consulting firm Maddock Douglas, the answer is a resounding “no.”
The results of the study, which was not limited to the waste sector, indicated that public perception of a company’s “greenness” was, in some cases, 20 percent higher than those companies’ actual sustainability actions. The study evaluated actual sustainability actions using 22 criteria (e.g., reduced emissions, supporting progressive climate legislation) and used surveys to evaluate public perceptions of.
This shows that a well-run public relations campaign highlighting a company’s green initiatives can enhance corporate image considerably. This idea is further supported by a 2009 report in The Economist on corporate growth that indicated the leading motivation for implementing sustainability initiatives was brand enhancement. This suggests that while real actions are being taken on the sustainability front, perception is very important, and can be interchangeable with reality in the eyes of the customer.
This could very well create an advantage for waste service firms and waste generators that embrace sustainability as a corporate mantra. Being green is only half the battle. You also have to let people know about it.