Environmental sustainability is being recognised as an important business driver for competitiveness, National Business Initiative (NBI) programme manager Steve Nicholls said on Tuesday.

Business was no longer treating sustainability as a discretionary spend, he said at a pre-COP 17 summit, held by the WWF and the NBI, in Johannesburg.

In fact, environmental sustainability is increasingly prominent and mainstream among global investors, Nedbank senior transactor Jacoleen Simpson said.

She added that there was global evidence that indices based on carbon and climate change awareness were outperforming the market.

Citing PricewaterhouseCoopers, Simpson said companies in both the Carbon Disclosure Leadership Index and the Carbon Performance Leadership Index generated about double the average total return of the Global 500 Index between Jan 2005 and May 2011.

In fact, from June 2008 to the present, the Nedbank Green Index has outperformed the all share index by more than 30%.

“Being environmentally responsible does not have to come at a cost in performance,” she explained.

Local and international evidence suggested that companies that were more aware of climate change risks and related opportunities were outperforming their peers. Companies focused on sustainability outperformed their peers by 15% during the financial crisis.

“Investing in companies with strong environmental credentials incentivises companies to behave responsibly and allow investors to act on their environmental convictions,” Simpson explained.

Investors, as the allocators of capital, play a critical role in ensuring that the correct incentives are in place for corporations to change their behaviour to be more sustainable, she added.

“Incentives such as incorporating green selection criteria in investors' overall stock-picking process means those companies with climate change awareness and strategies will benefit in the form of a stronger share price, further encouraging investors to invest in these companies.”