The Importance of Sustainability

We must live in new and exciting times when consumers and investors send the same powerful message to big business… Go green or go home! In short, Sustainability has become the new Manhattan, undeniably “The Most Exciting Place To Be”, while the financial world has regarded Sustainability as the smartest investment strategy. Go figure.

Recently, New York’s top business critic, Geoff Colvin – the Senior Editor-at-large at Fortune Magazine, attempted to make the direct correlation between Sustainability and The Great CEO Reemergence phenomena. Colvin’s April cover story, “Business Is Back”, depicts a Huge Fist punching through a paper barrier to emphasize “The Return”, which is followed by the following commentary:

” No CEO dares say it, yet it must be said: The shaming is over. The 5 1/2-year humiliation of American business following the tech bubble’s burst and the Lay-Skilling-Fastow-Ebbers-Kozlowski-Scrushy perp walks that will forever define an era has run its course. After the pounding and the ridicule, penance has finally been done. No longer despised by the public, increasingly speaking up and taking stands, beloved again by investors, chastened and much changed…”

In the article, Colvin attempts to be neutral on the subject of big business regaining public trust and makes the statement that this “historic shift can’t be seen in any single event”. However, the following examples given in his article illustrate the CEO’s commitments to Sustainability and/ or Social Responsibility:

“General Electric (Charts, Fortune 500) chief Jeff Immelt on the environment, Starbucks (Charts, Fortune 500) chairman Howard Schultz on employee benefits, FedEx (Charts, Fortune 500) CEO Fred Smith on energy security, or DuPont chief Chad Holliday on renewable resources”.

Colvin indirectly implies that real estate isn’t “where its at”, as he boasts the popularity of CEO’s and hot stocks have re-emerged. He paints the picture of “corporate bigwigs eagerly stepping out before the cameras” and reveals that it’s “a stunning change from just a few years ago”.

What Colvin fails to acknowledge is the fact that a few years ago, companies were not focusing on “green” initiatives as they are today. (In fact, it seems as though anyone who has a green angle or position makes the front page regardless of their level of commitment to being green.)¬†Furthermore, Colvin¬†only¬†referenced Fortune 500 companies in his article, which doesn’t shed light on the fact that the Real Estate sector continues to be one of the leading Sustainable Investment strategies for investors to consider.

In May, one month after Colvin’s article was published, PR Newswire (www.prnewswire.com) highlighted a groundbreaking survey of U.S. Real Estate Executives and their considerable interest in responsible property investing. The survey (conducted between November 2006 and January 2007), co-sponsored by the Urban Land Institute and the University of Arizona, highlights a willingness within the investment and development industry to adopt a “triple bottom line” business approach that measures success in terms of economic, social and environmental value. In other words, this perceived value, this single investment strategy, is revolutionizing investing; it doesn’t get any smarter than that.

The Criteria for a Sustainable Investment

The definition is actually not as complicated as it sounds, as far as the investor is concerned. The root of all sustainable investments is a genuine commitment to address many different moral and ethical issues (beginning with the company’s factual core practices, i.e. the reduction and/ or elimination of toxic chemicals, commitments to energy efficiency, responsible waste management, land preservation, renewable resource initiatives, etc., and then how these core practices transfer to the company’s products and services) primarily targeting “Climate Change”. Thus, determining whether or not the company is “Greenwashing” is critical.