It's official: Sustainability strategies boost revenue

The U.S. Department of the Treasury in Washington, D.C.

U.S. firms are using sustainability strategies to boost revenues, cut operating costs and achieve better borrowing rates, according to new research that underscores the business benefits of going green.

The findings were released last week by Dutch banking giant ING and were based on the results of a survey, carried out by Longitude, of 210 finance executives from U.S.-based companies with annual revenues of between $500 million and $20 billion.

The survey found the potential to expand revenues was the most important factor when deciding to implement sustainability strategies, with 39 percent of respondents citing revenue growth as a priority. Cutting costs was identified as the main driver for sustainability initiatives by 35 percent of respondents, while 30 percent said they primarily were seeking to boost brand reputation.

Among those firms with a well-established sustainability framework already in place, the chance to secure a more competitive borrowing rate than their peers also was commonly cited as a driver of green strategies, ING said.

"We are witnessing an important shift in how companies in the United States view sustainability," Gerald Walker, CEO of ING Americas, said. "Our research shows that it is no longer just about cutting costs or creating positive brand awareness ­ sustainability strategies are being deployed as true revenue drivers."

The paper also revealed how sustainability strategies are starting to play an integral part in overall growth strategies, with 48 percent of executives reporting that sustainability concerns have at least some influence over a business's growth strategy.

It also suggested the business appetite for green bonds could be filtering down from the largest corporates to smaller players in the market.

To date, appetite for green bonds has been greatest among firms with more than $10 billion in annual revenue, but 37 percent of smaller firms said they were planning to issue green bonds in the next two years.

"The increasing demand for green financing marks an inflection point," said ING's Global Head of Sustainable Finance Leonie Schreve. "Our survey found larger firms have attracted a new breed of investors focused on meeting socially responsible investment mandates. We expect this trend to now expand to organizations of all sizes, as respondents across the board reported an increased appetite to both issue green bonds and undertake green loans."

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