In the past two years, we’ve watched the concept of green business go from a fledgling, niche idea, to an international phenomenon. Entrepreneurs the world over have embraced the battle for green supremacy, bringing ideas and products to the market which will shape the future of investment while improving the prospects of our future. 

But as easy as it is to hop onto the green bandwagon, new research suggests that sustainability practices in larger corporations has an acute, direct relationship to profitability. 

R. Paul Herman, founder of HIP Investor Inc., has developed a way to measure the effect of sustainable practices on a given company’s bottom line. While there are many other experts devoted to this trend, Herman has created a system which represents “the first professional analysis that links the adoption of sustainability with creating increased stockholder value,” according to Entrepreneur.com. The HIP 100IndexSm within the S&P 100 stock index is the first of its kind. 

As examples of larger corporations adopting a green strategy for profit, Clorox, Coca-Cola, Colgate-Palmolive, “make it clear that sustainability is emerging as a huge opportunity for entrepreneurs seeking to grow a business and then sell it for a premium to a larger company.” They have essentially bought out companies who have come to prominence in or before the natural/organic movement reached a fever pitch. Coca-Cola purchased both Odwalla and Republic Tea; Clorox purchased Burt’s Bees; Colgate-Palmolive purchased Tom’s of Maine. As a result of these purchases, the larger corporations have seen their share prices increase due to a rise in desirability. 

Look for the HIP index to become a major factor in the stock markets in the coming years. It’s safe to say that right now a company who turns a blind eye to sustainable practices will more likely than not become completely obsolete in the broader picture of investment. 

[image via Epicharmus]