THE BLOG
09/27/2012 03:18 pm ET Updated Nov 27, 2012

Chief Execs Say Future of Business Depends on Going Green

Chief executives of the world's biggest companies have long boasted about going green to help woo more consumers. But some now warn their businesses will only continue to grow if their operations become increasingly sustainable.

At the Clinton Global Initiative annual meeting, which former President Bill Clinton hosted this week for leaders of businesses, nonprofits and governments to address social challenges, some execs argued companies should invest more in enterprises and manufacturing processes that use less energy and water, and produce less waste.
"This is where the opportunities in the future are going to be," said Arif Naqvi, founder of Abraaj Capital, which is based in Dubai and invests in certain companies and funds that use sustainable practices. "When you have the opportunity to be able to bring tangible change in a corporation, potentially in the environment that it influences and operates in, you find there is a very tangible reason to invest," he added.

As food scarcity concerns continue to mount, major food manufacturing companies and restaurant conglomerates urged their industry to find new ways to boost crop production yields while curbing waste and saving on ingredient costs.

"We have to take the long view -- a longer view than many on Wall Street -- because, eventually, as we have supply shortages and our costs increase, Wall Street takes that into account," said Clarence Otis Jr., CEO of Darden Restaurants.

The restaurant conglomerate, which operates 2,000 eateries globally under brands that include Red Lobster and Olive Garden, is trying to find ways to fish more responsibly as it expands into new markets and sells more seafood than ever before.

Kraft Foods, meanwhile, says it is one of the biggest buyers of cocoa in the world and has worked on more sustainable farming techniques in Ghana, which is home to its largest suppliers. "We started to look out into the future, whereas in the past we had been only worried about price and quality and flavor," said Irene Rosenfeld, chief executive of Kraft Foods.

The company then studied the market in Ghana and discovered that fewer people from younger generations were going into cocoa farming because the profession was not providing a subsistence level of income. "It threatened our supply and it threatened the economy of the country, because it was one of the major exports, and it presented us with an opportunity to think about whether there was a new way to do business," said Rosenfeld.

Executives also said investors and financial services analysts are increasingly scrutinizing their businesses by relying on benchmarks such as the Dow Jones Sustainability Index, which tracks how stocks perform based, in part, on environmental and social criteria. Some even called for uncooperative peers to be forced into revealing how socially responsible their product manufacturing process is.

"We as businesses have to be transparent," said Jochen Zeitz, the executive chairman for the shoe manufacturer Puma. "And those that don't want to be transparent about it have to be made transparent -- meaning we need some regulations, and then we need to take the consumer on the journey."

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