Making profits from sustainable industry - Worksheet 1

00 billion in annual revenue. Not only that, they do so with profit margins that are generally wider than the industry averages.

That's why these companies thrive even though their ethical and humane raw ingredients are more expensive. Their whole cost structure has been built to accommodate these higher prices, so they still command healthy profit margins nearly three times the industry average.

So if a product targets only a consumer niche, it's hard to make any significant revenue; there simply aren't enough people who take green values seriously enough to get you there. Green giants, however, appeal to mainstream customers or consumers.

But while these perceived notions of it being an exercise in saving rather than making money are still widespread, they are not actually supported by the overwhelming bulk of evidence. Several green giants are actually growing faster than conventional business lines.

There are now, however, at least nine companies globally that generate a billion dollars or more in annual revenue from products or services that have sustainability or social good at their core. They perhaps provide the evidence needed to convince even the hardest of these cynics.

This fact is confirmed by numerous conversations I've had with professionals who promote the cause of the sustainable industry. Some are still struggling to persuade many of their business colleagues of the case for change.

Green companies have succeeded in doing what few thought possible – making sustainability profitable. Over the nine years I've spent trying to persuade business leaders to embrace sustainability, the question I've most often been asked is, 'What's the business case for sustainability?' This question is always delivered in a sceptical tone, carrying the unspoken suggestion that there is no business case, or at least not a very compelling one. And, for those nine years, I'd always wished I had a better answer.

These so-called green giants – which include electric car maker Tesla – manufacture a stunning array of goods, including burritos and beauty cream, sports shoes and organic baby food. In the process, they have succeeded in doing what the market long thought impossible: they've made sustainability profitable.

Despite this, it's not hard to see why so many people are surprised by the idea that a sustainable business could be profitable. In his 1970 essay, 'The Social Responsibility of Business is to Increase its Profits', American economist Milton Friedman dismissed any business with a 'social conscience' as 'unadulterated socialism'. In the following years, the notion that sustainability, or social good generally, and profit are fundamentally opposing forces hardened into fact in the minds of most business leaders.

For years, the conventional wisdom had been that sustainability is likely to lose a company money. Many still think that, at best, it's a strategy to reduce costs, through things like energy and water efficiency.

This phenomenon is also evident in companies which have diversified to produce sustainable as well as conventional brands. Many businesses, perhaps sensing a change in people's attitudes, now market environmentally-friendly products alongside their more well-established cousins. The greener products are outselling their more traditional equivalents.

Such a demonstration of acceptance by the capitalist establishment is profoundly important. It represents a fundamental shift and evidence that this sector of the market has long-term viability. For the green giants, sustainability is not about how they save money, but about how they make it. No longer are sustainability and profit at odds; on the contrary, rather than being a drag on profit, sustainability can drive it. In many companies, sustainability is a department, but for the green giants, it's a value that is fully integrated into how their business is organised.

Together, the green giants have proven that businesses based on sustainability and social good are an extremely viable alternative to business as usual. With global climate change being taken increasingly seriously in many places around the world, close your eyes, and the pace of change will have only accelerated by the time you open them again. Ignore the green giants' example at your peril.

Green companies have succeeded in doing what few thought possible – making sustainability profitable. Over the nine years I've spent trying to persuade business leaders to embrace sustainability, the question I've most often been asked is, 'What's the business case for sustainability?' This question is always delivered in a sceptical tone, carrying the unspoken suggestion that there is no business case, or at least not a very compelling one. And, for those nine years, I'd always wished I had a better answer. ___ These so-called green giants – which include electric car maker Tesla – manufacture a stunning array of goods, including burritos and beauty cream, sports shoes and organic baby food. In the process, they have succeeded in doing what the market long thought impossible: they've made sustainability profitable. ___ Despite this, it's not hard to see why so many people are surprised by the idea that a sustainable business could be profitable. In his 1970 essay, 'The Social Responsibility of Business is to Increase its Profits', American economist Milton Friedman dismissed any business with a 'social conscience' as 'unadulterated socialism'. In the following years, the notion that sustainability, or social good generally, and profit are fundamentally opposing forces hardened into fact in the minds of most business leaders. ___ For years, the conventional wisdom had been that sustainability is likely to lose a company money. Many still think that, at best, it's a strategy to reduce costs, through things like energy and water efficiency. ___ This phenomenon is also evident in companies which have diversified to produce sustainable as well as conventional brands. Many businesses, perhaps sensing a change in people's attitudes, now market environmentally-friendly products alongside their more well-established cousins. The greener products are outselling their more traditional equivalents. ___ Such a demonstration of acceptance by the capitalist establishment is profoundly important. It represents a fundamental shift and evidence that this sector of the market has long-term viability. For the green giants, sustainability is not about how they save money, but about how they make it. No longer are sustainability and profit at odds; on the contrary, rather than being a drag on profit, sustainability can drive it. In many companies, sustainability is a department, but for the green giants, it's a value that is fully integrated into how their business is organised. ___ Together, the green giants have proven that businesses based on sustainability and social good are an extremely viable alternative to business as usual. With global climate change being taken increasingly seriously in many places around the world, close your eyes, and the pace of change will have only accelerated by the time you open them again. Ignore the green giants' example at your peril.

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