Are we finally seeing true indication of a full market recovery? What impact does capital spending mean to business sustainability?
Beyond the speculation and consumer forecasts, recent reports indicated a significant increase in corporate spending as the eventual turning point. With more positive releases making headlines, this new information has our professional consulting examining the implications to long-term business sustainability.
The CFO.com accounting post, Capex, Inventory Spend Squeeze Cash: Study, details the latest trends in corporate spending. Focusing on capital investment and project spend, the article highlights the conversion of cash into tangibles. It is the conversion that is believed to have a huge impact to economic recovery. Our sustainability consulting interest lie in the manner in which and on what this money will be spent?
As any prudent business executive would automatically state, “we want to make sure they are committing capital to the right companies and business strategies”. However, the business environment has definitely changed over the past few years. The question then becomes: Have the ‘right’ investment opportunities and business strategies changed?
To aide in this discussion, the Financial Times expands upon five key factors investors traditionally consider when evaluating a company’s long-term potential. Coupling these basic measures with business sustainability concepts, today’s investors are developing a new perspective of sustainable business investment.
• Product or Service Offering: Are the company’s offerings responsibly sourced and produced using sustainable materials and business processes?
• Financial Track Record: Have the full measure of the company’s business sustainability risks been considered in the past and future reporting?
• Competitive Differentiation: Is the company on the leading or trailing edge of sustainable practice in its industry?
• Strategy: Are business sustainability concepts integrated throughout the company’s business plans or simply a subset of traditional planning?
• Credibility: Does the company’s strong business reputation inspire consumer eco awareness? Does it drive purchasing behavior toward a specific product or service?
With the current economic upswing, investors are expanding their assessment criteria to include ‘sustainable’ return on their investments. Both internal and external investments must now consider and be able to demonstrate a broader understanding of business sustainability risk.