Doing Good to Do Well. B Corps: Firms with benefits. HE likes to do things differently. Yvon Chouinard changed his favourite sport, mountaineering, by introducing reusable pitons (the metal spikes you bang into the rock face and attach a rope to). Climbers often used to leave pitons in the cliff, which is environmentally messy, another of Mr Chouinard's peeves. In business, Mr Chouinard, the founder of Patagonia, an outdoor-clothing firm, says he believes that well-treated employees perform better. (He wrote a book called: “Let My People Go Surfing”.) Before it was fashionable, Mr Chouinard preached a philosophy of sustainability and long-term profitability that he calls “the slow company”. On January 3rd Patagonia was anything but slow in becoming the first firm to take advantage of a new California law designed to give businesses greater freedom to pursue strategies which they believe benefit society as a whole rather than having to concentrate on maximising profits for the next financial quarter.
The Dollar Payoff from CSR and Sustainability. Title: The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance (PDF) Authors: Robert G. Eccles (Harvard Business School), Ioannis Ioannou (London Business School), and George Serafeim (Harvard Business School) Publisher: Harvard Business School Working Paper No. 12-035 Date Published: November 2011 As the number of companies implementing sustainability and other corporate social responsibility (CSR) policies has grown, an increasingly important question is how embracing these policies affects financial performance.
Are environmental and social initiatives essentially efforts in public relations — and costly ones at that? This paper’s analysis of 18 years of data in the United States finds strong evidence that firms emphasizing these practices significantly outperform similar firms that do not, as measured by both financial and stock market returns. Natural disasters: Counting the cost of calamities. Global marketing: Local heroes. Eva momentum ranking by industry q3 2011. The limping economy and last year’s lackluster stock market have masked a stunning fact about corporate profitability: It is the best it has been in at least 15 years, and possibly the best ever.
The aggregate EVA margin (economic profit as a percentage of sales) of the 1,702 companies in the CFO EVA Momentum Ranking was more than 3% during the four fiscal quarters ended last September. That was up from just under 2.5% a year earlier, and less than 2% back in the four quarters ended in September 2006, near the peak of the last business cycle.
For most of the time since 1995, the aggregate EVA margin was 2% or less, sometimes much less. The CFO ranking covers all nonfinancial companies in the Russell 3000 Index (other than oil and gas companies) with sales of more than $100 million and stock prices above $5. A record-high EVA profit margin is a great achievement, of course, but one that presents a special challenge going forward. The drugs industry: Battling borderless bugs. TO GET an idea of where the world's pharmaceutical industry is heading, a leafy complex tucked off a hectic road in Mumbai provides a clue. In one part of the building, Abbott, an American firm, is developing generic drugs—a privilege it won when it bought the copycat business of Piramal, an Indian firm, for $3.7 billion in 2010. In the other part of the building Piramal is developing new drugs.
The American firm wants to sell cheap generics in India; the Indian firm plans to sell original drugs in America. One might think that they were having an identity crisis, if each were not so excited by the switch. The world's drug industry is in flux. In the past, Western drugmakers thrived on innovation while firms in emerging markets made cheap copies of their products. It is no surprise that Western drugmakers are looking further afield.
Western companies are keen to tap this growth. Blockbuster bets Many generics firms are keen to become more innovative. Research requires cash. Patagonia's "Buy Less" Campaign May Lead to More Revenue - Eric Lowitt. By Eric Lowitt | 11:50 AM October 3, 2011 This post is part of the HBR Insight Center Growing the Top Line. Patagonia has always behaved as a maverick company, and its concern for sustainability has led it to pursue a new initiative: it’s now actively encouraging consumers to buy less of Patagonia’s new apparel. The company intends to influence consumer behavior in order to lower the environmental strain from ever-growing consumption levels. But could a message of “buy less” actually lead to growth for the company? If so, could other companies follow a similarly counterintuitive approach to growth? The answers are “yes” and “maybe.”
To put its buy-less idea into action, Patagonia recently partnered with eBay to enable consumers to resell their used Patagonia apparel via the Common Threads Initiative within eBay. Patagonia’s campaign appears both genuine and borderline heroic. Expand into New Categories Patagonia could seek to sell both upstream and downstream. The oil business: Big Oil’s bigger brothers. Climate finance: He who pays the paupers…