Sustainability and Recession in 2023
This news story was released at the end of 2022. Because the prospects of a recession in 2023 appear to be more certain now than at that time, we have updated this news item and are reposting it here on LinkedIn.
More and more economic prognosticators predict a recession in 2023. While in agreement, they disagree as to how bad it might be.
But for those of us focused on sustainability, a recession in 2023 raises another question: How will companies managed with a focus on sustainability be impacted by a recession?
“We only have a few studies that have looked into this question,” says Steve Ashkin, the professional cleaning industry’s leading advocate for sustainability. “But those studies indicate [sustainability-focused companies] will likely outperform their less sustainable competitors.”
Ashkin says this is based on a study published by BlackRock, an investment company, along with investment research firm Morningstar.
According to the study:
Companies with strong profiles on material sustainability issues have [the] potential to outperform those with poor profiles. In particular, we believe companies managed with a focus on sustainability should be better positioned versus their less sustainable peers to weather adverse conditions.
Morningstar also reported that during the first quarter of 2020, when the economy started taking a downturn, 51 out of 57 companies they were following “outperformed their … market counterparts.”
“While this is a short period, it aligns with studies conducted during longer downturns such as those in 2016 and 2018,” says Ashkin. “They all concluded sustainability-focused companies do better in [economic] downturns.”
So, why do sustainability-focused companies do better during a recession?
According to the BlackRock study, among the reasons are the following:
Employee job satisfaction tends to be higher in sustainable companies, resulting in enhanced customer relations.
Organizations practicing sustainability have a more robust corporate culture.
Investors are more willing to invest in companies that practice sustainability. They see companies practicing sustainability as leaner and more adaptable to economic changes, risks, and climate change.
Because they are leaner and more adaptable, sustainably focused companies are better able to pivot, make necessary changes faster than their competitors.
Companies practicing sustainability tend to have more effective boards, making them better equipped to deal with market turbulence and economic uncertainty.
Companies practicing sustainability overall have greater resilience during downturns.
“This last point, I believe, is the most impactful,” adds Ashkin. “Sustainable companies are leaner, less wasteful, and operate more efficiently. This is what makes them so resilient.”
About The Ashkin Group and Stephen Ashkin
The Ashkin Group, LLC, is an internationally recognized consulting firm working to Green the professional cleaning industry. Their expertise is utilized by governments, policy makers, advocates, building owners, property management companies, labor unions, trade and professional associations, manufacturers, service providers, and janitorial product distributors worldwide.
Stephen P. Ashkin, founder of The Ashkin Group, is known as the Father of Green Cleaning. An author and a frequent public speaker, Steve’s commitment to Green Cleaning is more than a business: it is a passion, a calling, a mission in life—to transform the professional cleaning industry.
Contact Information
Stephen Ashkin
Email: Steve@AshkinGroup.com
