European Companies Profit from Sustainability

Jun 15, 2015 6:30 PM ET

European Companies Profit from Sustainability

European commerce has always accepted a large degree of regulation as part of the cost of doing business, no matter how much of a surtax that might seem to be in a competitive global market. This is especially true in addressing climate change, from European Commission regulations that mandate specific decreases in GHG emissions to the establishment of a carbon trading system.

But the attitude of European business is changing. Sustainability regulation is now being viewed as producing increased profits. CDP, a research firm that collects environmental data on more than 5,000 companies worldwide, reports that companies with published targets for cutting their CO2 emissions are more profitable, delivering a return on invested capital of 9.9 percent, compared with 9.2 percent for those with no targets. And Euronext’s Low Carbon 100 Europe index, which includes those European firms with the lowest CO2 emissions in their respective industries, has risen by 60 percent since the end of 2010. That rise compares with a 45 percent lift in the same time period in the broader STOXX Europe 600 index, from which the Low Carbon 100 Europe list was selected. To update and paraphrase the infamous Wall Street conventional wisdom, it looks like green is good.

I’m John Howell for 3BL Media.

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