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What Should the Stock Market Make of Environmental Concerns?

21 August 2007 - Features - Editor

Has ‘green’ become a bad word in the stock market? Certainly, executives and analysts display rare unity when it is time to heap scorn on non governmental organizations and assorted activists, for their persistent environmental concerns. Are these people really adversaries of stock market culture, and should we continue to treat them with scant respect?

It is now over a decade since the venerated Michael Porter of the Harvard Business School joined a compatriot from across the Atlantic in the picturesque St Gallen, to espouse the cause of environmental conservation as a means of competitive advantage. This path-breaking though largely unread paper put an entirely new spin on the whole story of pollution. It is never too late for anyone on a stock market to wake up, and turn to these insightful pages of the Harvard Business Review.

Business stewardship is a durable way of building profitable market share. It sheds the short term mentality to forge lasting stock market values. Regulations are not considered as obstacles, but rather as technological challenges for the innovative. Companies with the right attitude can turn environmental obstacles to leap frog over their competitors. Community support for such initiatives is only a bonus, though it is always welcome.

Environmental concerns can spawn entirely new lines of business. Sheikhs in the Middle East may one day have reason to regret their obduracy on pricing fossil fuels, because hydrogen fuel cells and bio-fuels, as well as other alternate energy forms may never have otherwise seen the light of day! It is the same for new sectors involved in recycling of expensive components, and the production of substitutes which do not harm the ozone layer.

Companies which ignore environmental issues, or bluff their ways around them, are only short term stock market opportunities. The best securities are the ones which are able to control their emissions, wastage levels, and hazards for consumers, in order to provide better and more stable values for society at large. These sorts of developments call for top management commitments, with action programs that stretch to the furthest branches of organizational structures.

 


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