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Make Sustainability a Part of IPOs

Make Sustainability a Part of IPOs

The health and wellness industry is full of growth and activity, and despite the economic pall elsewhere, manufacturers of natural, organic and sustainable products are faring pretty well as the end of 2011 comes into view.

wind_turbine.jpgIndustry analysts focus on the Hain Celestials, the Whole Foods Markets and the United Natural Foods-size operators to gauge the business climate, and gain insights into future growth. But it’s the myriad start-ups and independent small manufacturers that are percolating underneath the big guys that keep the whole movement alive and interesting.

Today’s small companies could be tomorrow’s industry leaders, and it pays to think ahead. Of course, they’re thinking more about finding a distributor or another retailer to take their products, not IPOs or sustainability measures. But as these companies grow — think Burt’s Bees or Bear Naked — they need to consider factors that once weren’t so important. In doing so, they can take steps to ensure their own security and protect their growth going forward.

That’s why I mentioned IPOs and sustainability. An interesting report out from PricewaterhouseCoopers provides key insights on how incorporating sustainability concepts early in the due diligence process can result in a successful IPO.

PwC studied more than 120 recent SEC S-1 filings from 2010 and early 2011 across eight industry sectors and found that companies are increasingly addressing sustainability issues to meet the demand for corporate transparency and accountability, according to the firm. Among the key findings:

• More than 84% of the IPO filings in the study reflected some level of disclosure relating to sustainability.

• 68% of sustainability disclosures in IPO filings were non-regulatory.

• 29% of companies included sustainability in their business description.

• Nearly 1 out of every 8 dollars under professional management in the U.S. today is involved in some strategy of socially responsible investing.

The report makes one important point: In considering sustainability and related measures, and building them into an IPO, they are poised to “spark innovation, create new products, cuts costs, grow capital and increase revenues and market share,” the report stated.

Continuing to ignore the challenges associated with sustainability puts companies at risk or falling behind, the authors state. It seems as if sustainability is quickly becoming part of the cost of doing business — as it should be.

[Photo credit: Frankenzan]