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“I’m off to see the nuns down south, see you in a couple of days,” said my colleague at a giant industrial multinational. His day job involved designing executive compensation, but he was assigned a curious add-on role: charming an order of nuns that served as advisors to investors seeking environmentally conscious investments. In this case, he’d have to show the upside to staying invested in a company viewed widely as a rust-belt fixture, with all the associated environmental baggage. Even that partial attention to green matters counted as forward-thinking circa 1999. It’s a lot different now.

These days, environmental matters are upending business in ways that weren’t considered half a decade ago, and the changes are pervasive. That’s even as many corporations have embraced ways to cut pollution. “The greening of industry is hitting every ecosystem,” says Joe Brusuelas, chief economist at the professional services company RSM.

Of course, not everyone agrees that environmental matters are dire enough to warrant radical changes, and some who willingly fight climate change say there can be overkill. However, studies show that rising global temperatures caused by pollution are making weather increasingly dangerous across the world. Texas, which became blighted by killer floods in 2019, is a case in point.

In reaction to increased flooding, savvy home builders have adapted, says Brusuelas. Once a mainstay of luxury Texas housing, hardwood flooring has given way to manufactured composites, he says. The reason is that the increased risk of flooding and the associated costs of repair are now significant. “People will sue if the floor gets messed up,” he says.

Business is also finding it cheaper to go green due to the plummeting prices of technology. State-of-the-art heating, ventilation, and air-conditioning systems pay for themselves because not only do they reduce pollution, they are more efficient to run. On top of that, savvy companies can sell carbon credits based on reduced energy use. “The return on investment is huge,” Brusuelas says.

Wall Street’s getting in on the green business too. In the past, lenders wanted to know whether the borrower could pay back the loan. Increasingly, being green matters just as much. Six years ago, raising money for environmentally sound projects was a nonevent on Wall Street. In 2013, sales of so-called green bonds totaled a paltry $4.2 billion. By 2019, it had grown around sixtyfold to $250 billion.

While money managers continue to push companies to grow green to attract more investors, there’s also the threat of more government intervention. Car companies must meet statutory targets for vehicle emissions or face hefty fines in the European Union, says James Leaton, a vice president and senior credit officer at the rating agency Moody’s. He looks at how companies mitigate those risks and avoid heavy fines, which can also hurt credit ratings.

Switching to green won’t be financially comfortable, either. The good news is that power-generation companies are quickly finding that ditching coal and other carbon-based fuels is a viable alternative. “It’s just economics; even the US is using renewables because it’s cheaper,” Leaton says. Still, there’s a problem. When a coal-fired power plant becomes obsolete, the corporation must mark down the value of the assets, Leaton says. Put another way, the balance sheet immediately takes a financial hit because the old assets become near-worthless.

And yet what counts as green is still a little fuzzy in the financial world. Terrible environmental stewardship is often apparent, such as dumping toxic chemicals into a water table. But what’s in between green and not green isn’t clear. “There is a gray area in the middle,” Leaton says.

That gray area is made fuzzier by the lack of a single set of metrics to evaluate what counts as best practice in being green. “There are 160 frameworks regularly used,” says Martina Macpherson, senior vice president for strategic partnerships and engagement at Moody’s. While there is financial-industry talk of a single agreed-upon approach, so far that hasn’t happened. “There needs to be more consistency,” she says.