Corporate 'greening' good for the soul, but is it good for the bottom line? The demands of a changing marketplace and the promise of tighter regulation make corporate greening an imperative and no longer simply an intriguing concept.

• Author: Ladd, Scott
• Position: COVER STORY

It's not easy being "green"--on Sesame Street, Main Street or Wall Street. No one appreciates that more than corporate executives striving to balance environmental demands with a healthy revenue stream while also building investor interest. For many in corporate leadership, achieving that kind of equilibrium over the years has often been a vexing task.

Along the way, however, the business community is learning a valuable lesson. Greening offices, production plants, manufacturing processes and supply chains is beginning to translate into a greener bottom line. The business case for environmental responsibility, experts say, is no longer in dispute.

Greening has matured well beyond its early concentration on saving paper, cutting electric bills and reducing corporate travel. Not that these practices have stopped. In fact, documented savings from these practices serve as the impetus for moving forward.

Increasingly, financial executives are weaving environmentally sound and cost-cutting operating procedures into their overall business plans--not only for their own employees, products and facilities, but insisting that suppliers and trade partners meet the same eco-standards they are imposing at home.

They represent the companies most willing to dive into the deep end of the sustainability pool, confident they'll come out in better shape. Certainly many executives, especially those in industries where going green is a much harder road, are finding the transition more difficult. But doing the so-call "right thing" and making it work financially is an idea whose time, most would agree, has arrived. And it is reshaping the business community.

Is 'Greening' a Revolution Or Evolution?

Sustainability initiatives have been a work in progress for a decade or so, marked initially by corporate resistance, lack of applicable data and concern from investors as to its long-term value. Some would characterize it as a revolution in the way businesses operate; others aren't quite that convinced, preferring to describe it as an evolutionary process. But one thing is certain: The economic meltdown of the past two years has refocused the energies of investors and the companies they support.

For occupants of the C-suite, regardless of company size and scope, the issue inevitably comes down to two questions: Does greening work for their businesses? And, what impact does it have on enterprise profitability?

Most American businesses have embraced social and environmental responsibility as intrinsically valuable to their budgetary considerations--in many cases because the original concerns and trepidation about adapting such measures while continuing to work to maintain a strong revenue stream has eased.

"A lot of it is people perceiving barriers that aren't there," says Todd Larsen, director of corporate responsibility programs for Green America, an organization that provides economic strategies and tools to businesses that seek outside counsel in helping them go green. "It's not always a question of whether it is too costly to go green. The burden of proof of doing something new can be a challenge to any company."

Michael Muyot, the founder and president of CRD Analytics, which maintains the Global Sustainability 50 Index that highlights best environmental, social and governance practices, says the growth in eco-friendly businesses was inevitable. "A lot of these companies came kicking and screaming to it, but they had to," he says. "Since they've gotten through that process, they've found it a benefit. They've all found ways to make money from it."

Jeffrey Hollender, the chief executive of Seventh Generation--an environmentally friendly cleaning and personal-care products company with sales of more than $100 million annually--says a growing corporate reliance on meaningful environmental standards is good sense.

"You generally make more money when you do the right thing. Pollution is waste, waste represents inefficiency and inefficiency is simply not profitable. It's that simple," Hollender said in an interview on Kleercut.net, a Web site for environmental activists.

Muyot says he believes the recent "Great Recession" is compelling investors to ask more questions and be more careful about their investments. "The overall crisis had a massive impact," he says. "Investors started saying 'we want more transparency, how did we miss these risks?' It became clear we need to go beyond the balance sheet."

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That attitude pervades much of the discussion about greening and financial investment, internally and externally. Despite pressures to...