“High sustainability” businesses significantly outperform “low sustainability” companies in two ways: lower volatility on the stock market and by a six percent higher return on equity. That’s the finding of a study by Professor Ioannis Ioannou, Assistant Professor of Strategy and Entrepreneurship at the London Business School. His report examined two groups of public U.S. companies that were almost identical except for their commitments to sustainability. The research tracked practices and strategies from 1993 to 2011 to arrive at its conclusion of stock market success for the “high sustainability” group. How did this happen? The bottom line answer is that the board in a high performing sustainable company answers to the organisation itself, not only shareholders. Dr. Ioannou reviewed his study as part of the Guardian and The Observer’s second annual sustainability day.
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