Thursday, January 27, 2011

Sustainability a Key Competitive Driver in Natural Resources Sector

Jantzi Sustainalytics took advantage of the spotlight in Davos to offer a preview of their new report, Sustainability and Materiality in the Natural Resources Sector. The theme of this year’s Annual Meeting of the World Economic Forum is Shared Norms for the New Reality, reflecting the fact that we live in a world that is becoming increasingly complex and interconnected but also experiencing an erosion of common values and principles – a nice tie in with SRI.

The report identifies 8 business drivers common to companies in the natural resource sectors (oil and gas, mining and forestry) and nine categories of environmental performance. Analyzing existing literature, case studies and proprietary work with financial institutions and corporations, Sustainalytics answers two questions: how material is the correlation between the management of the environmental or social performance area and the business driver, and how strongly does the evidence support this link.

The research reveals five environmental/social categories that are strongly linked to competitiveness in the oil and gas sector, four links in the mining industry and two links in forestry.

‘The business case is strongest when multiple drivers of business success are considered. Some of the strongest linkages that were identified in our analysis cannot be captured in a simple payback or return on investment calculation. Links that support reputation are difficult to monetize. Links that mitigate risk are hard to quantify. It is interesting to note that the environmental and social areas that generate the most business value do so through their impact on multiple business drivers.’

Michael Jantzi, the CEO of Sustainalytics, comments “After 20 years of assessing corporate responsibility practices, I know that sustainabilty performance should be factored into valuations. The analysis in this report reveals the extent to which environmental and social factors can impact competitiveness.”

The full report will be released in March. Read the Executive Summary here.

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