Fortune 500 companies are leaders in their respective industries, so it’s great news that these companies are embracing energy efficiency practices. A recent report showed that 48 percent of Fortune 500 companies have at least one climate or clean energy target, which represents a 5 percent increase since 2014. So why are so many of these companies going green? Let’s explore some of the many benefits energy efficiency brings Fortune 500 companies.
Research shows that companies with high ratings for environmental and social governance factors outperform the market, which means investors make more money. More money means more investors.
Allocate More Money to Innovation
Sustainable companies can reduce their operating costs by efficiently managing water, electricity, and waste. As a result, they have more money to allocate to other areas of the company. For many Fortune 500 companies, this means putting more money towards research and development to create innovative products and services.
Lower operating costs means more money to spend elsewhere. Many Fortune 500 companies choose to spend that money on higher salaries and bonuses to keep employees happy. This helps retain valuable employees and attract talent. It also motivates current employees to meet goals tied to financial compensation.
Because operating costs are lower, companies have more flexibility when it comes to product pricing. Less overhead means lower prices that appeal to a wider audience and attract new customers.
Companies that aren’t sustainable can’t adapt quickly to changing demands, which could result in lost market share. On the other hand, being able to adjust prices, attract new talent, and develop new products helps sustainable companies stay ahead in an increasingly competitive market.
Earn Public Respect
Sustainability is becoming more important to consumers, so by advertising efforts to go green, companies can earn the respect of their target audience. Businesses that don’t go green risk losing respect of those who’re passionate about energy efficiency.
Reduced Risk of Operational Disruption
Companies that rely on limited natural resources could face disruption in operations when those resources run dry. For example, Hershey’s chocolate relies heavily on the production of cocoa, and the company is worried about the future of cocoa farmers. In response to this concern, they began working with small cocoa farmers to increase sustainability. A more sustainable business model means abundant cocoa.
Energy efficient companies may see an increase in revenue for two reasons. First, more customers could be willing to purchase products or services from the company because of its energy efficiency efforts. Next, companies able to lower prices thanks to reduced operating costs might see the new prices attract more customers, and thus more revenue.
Reduced Environmental Impact
Sustainable companies reduce their carbon footprint and therefore the negative impact they have on the environment. Although this isn’t a quantifiable benefit, it’s still important to those that care about our planet.
Enter New Markets
By focusing on sustainability, companies can enter new markets they otherwise wouldn’t be a part of. For example, electric companies are developing programs that allow them to profit from teaching homeowners how to reduce energy use. By thinking about sustainability, the companies found their way into a form of education.
As you can see, becoming a sustainable company pays off. Now that so many Fortune 500 companies have demonstrated the benefits of sustainability, your own company should follow their lead.