A University of Guelph study found companies prioritizing sustainability in their business practices are better off in times of crisis and have economic growth.
Researchers looked at sustainability practices during the pandemic and before and after the 2007-2008 financial collapse, also known as the global financial crisis. These crises are "the most significant economic collapses since the Great Depression," noted the study.
"If you think environmental damage isn't going to impact economic growth, you're mistaken," said study co-author Kathleen Rodenburg, a professor in the School of Hospitality, Food and Tourism Management.
Previously, profitability and sustainability were considered to conflict with each other. Companies thought investments in sustainability would compromise profitability, said Rodenburg.
Companies are recognizing sustainability helps with long-term performance, she said.
"What we found was that companies that were investing in ESG (environmental, social and governance) actually did worse during the financial crisis and that poor-performing ESG companies did well during the financial crisis," said Rodenburg.
During the pandemic companies with poor performance in sustainability did far worse than companies with good performance in sustainability, she said.
The difference in outcomes from both crises in the last 12 years could indicate a change in business perspectives and consumer behaviour she explained.
The study's findings come from over 20,000 observations by 2,885 companies in G7 countries.
Gen Z, the next generation of consumers, is much more conscious of sustainability and ethics when using their purchasing power, said co-author Ann Pegoraro, professor and Lang chair in sport management.
Industries that have been brought under scrutiny for sustainability practices such as oil and gas had stronger scores, the study found. During the pandemic, oil and gas products were used less often than they had been. “We stayed home, we didn’t drive our cars,” said Pegoraro. “We helped the environment, but the companies the pandemic would have hurt didn’t suffer as much as other firms.”
“We’re only going to be facing more crises that are environmentally amassed," said Rodenburg. The hope is companies start to think about how social, environmental and economic priorities are interconnected, she said, calling it the “triple bottom line.”
