Companies now have another market for their eco-friendly efforts: the investment community

By: Vicki Powers

As the idea of green marketing goes mainstream, it’s no surprise that Wall Street is taking notice. In fact, assets from mutual funds designed to meet socially responsible investing criteria jumped from $12 billion in 1995 to $179 billion in 2005, according to the most recent trend report from the Social Investment Forum.

But how much greenery will curry investor favor? And where should such efforts be aimed? Whether it originates from investor relations or the corporate responsibility group, the marketing message to the investment community must promote companies with transparency and balance.

Green investing isn’t new – for 20 years some analysts have regarded socially responsible investing as a proxy for good management – but it has recently gone mainstream. Along with consumers and suppliers, investors also need to know a company’s green initiatives.

But investors aren’t necessarily looking for a totally rosy picture, says Jennifer Woofter, president of Strategic Sustainability Consulting, a Maryland-based firm that helps organizations manage their social and environmental impacts. If anything, she says, reports about a company’s eco-footprint that are too sunny are bound to raise suspicions. Instead, she says, investors just want consistent evidence that the company is committed to gauging and addressing its key social and environmental impacts.

“That means the company is probably doing some good things but also recognizing and dealing with bad things,” Woofter says. Admitting a company’s weaknesses is more effective in sustainability reports than “greenwashing.”

Taking the message on the road

Annual sustainability reports are just one way to tout a company’s relationship with the environment. California-based Intel discovered years ago the importance of communicating directly with audiences that care. About eight years ago, the company introduced an annual series of social-analyst briefings around the country – a.k.a. a “road show” – to share corporate responsibility results, programs and goals with investors. The intent is to make them comfortable with
Intel as a long-term investment, says Dave Stangis, Intel’s director of corporate responsibility.

This transparency builds trust and credibility, says Stangis. The organization also reaches audiences through its annual corporate responsibility report, newsletters and a blog.

Woofter says analysts look for publicly available information regarding companies’ social responsibility efforts and hope to find environmental management info or a sustainability report online. If companies aren’t publicizing these efforts, obviously there’s no way for investors to know about them. Companies need to be thought of as good corporate citizens without appearing to “spin” good works.

“We work hard to make sure analysts hear what they need to and get their questions answered from us,” Stangis says. “We’re the only company I know of where investor relations is managed from the corporate responsibility function. That’s why it’s worked so well.” Indeed, Intel has been ranked as the technology market sector leader by the Dow Jones Sustainability Index for six years running, and its corporate responsibility quotient is better than 87 percent of the S&P 500 companies and 98 percent of its peers.