Model Management: Eco-business warriors

A recent poll of leading CEOs in the UK on key business challenges put social responsibility as second only to staff recruitment and retention. But if it's a challenge, is it also an opportunity? Everyone wants to help the environment (another poll says 86 per cent of UK adults believe the environment to be one of the key issues in social responsibility) but can companies actually improve their performance by doing so? UK charity Business in the Environment (BiE), who next month launches its fifth annual index of "corporate environmental engagement", believes so.

The facts of environmental depletion are uncontested. It is estimated that half the earth's forests are gone, water use has tripled over the past 50 years, carbon dioxide emissions have more than quadrupled over the same period and on average nine tonnes of raw materials are used to make one tonne of product

But is it true that companies that manage corporate social responsibility well are also better at delivering improved shareholder value, as BiE contends?

It certainly makes a good financial case for better environmental practices. It argues that companies can reduce their annual energy and waste costs by 10 per cent without capital investment - a saving of £2.6bn a year by businesses in the UK alone. It also contends that profitability could be doubled through improved resource productivity and that environmental issues have an impact on cost of capital for businesses of all types and sizes - from environmental risk, to pollution and contaminated land and regulation on producer responsibility and waste.

BiE concludes: "Environmental management and performance is increasingly regarded as an indicator of the quality and aptitude of management in general."

No doubt they are right. Many leading companies such as BP Amoco and Shell have invested considerable time, effort, and resources into improving their record both on the environment and social issues (not before time, some may argue). But for smaller companies the response has not been so great, even though it is in this sector that the most important progress could probably be made.

The last decade of booming economies has not seen too much attention being paid to social issues, notably the environment, in an era when stock price has been the main criterion of business success. It isn't pleasant to see California of all places suffering "brown outs" as dilapidated, and no doubt polluting, utilities struggle to meet demand.

If all companies can be convinced that greater social responsibility really is a key business indicator, both business and the environment will be the winners.