THIS is What "Serious About Sustainability" Looks Like

If you are a company who wants to do business with the big guys, you often to have do it their way. Today, that can mean doing business sustainably.  Large companies are held accountable for the impact of their suppliers.  So, those suppliers must play by the new rules of the game. 

In other words, it just got serious.

As a sustainable investor, you may feel good knowing that your portfolio companies are moving the needle on environmental issues.  But have you considered the risk that your small cap investments may become increasingly uncompetitive if they can't meet these increasingly higher standards? 

There is a real risk that the measurement and documentation of these issues may render some firms "out of the loop" when it comes to earning the business of a Procter and Gamble or a Microsoft.



While not yet geared toward external suppliers, this week Microsoft created its own internal "carbon market", charging each of its business units an internal cost for emissions.  Money drives innovation and efficiency, and it will be interesting to see how successful this program will be. One thing is certain: Microsoft has put everyone on notice that it is serious about sustainability and being carbon neutral.  (And, yes, that green "Save Planet" picture above is from Microsoft's own website.)

Procter and Gamble has also made its commitments clear with its Sustainability Scorecard for suppliers.  This tool leaves no stone unturned:  water, hazardous and non-hazardous waste, energy use, greenhouse gas emissions...  And the assessment is like your worst HR nightmare, making your performance clear, relative to expectations. 

The good news is that companies like P and G made this tool public, allowing other companies to drive sustainability more deeply into their own organizations.  Furthermore, P and G is using its suppliers' ideas and ingenuity to develop new "best practices" for themselves.

Not every supplier will survive.  Some will see their best ideas copied and competitive advantages eroded.  But in the end, it is this exchange of best methods, building on others' successes, that has driven a continuous advancement of societies through the ages.  It will work here, too.