Billionaire Buffett argues that companies and investors will need to focus on renewable and environmentally friendly investments if they want to be profitable from now on. It will be railway lines and renewable energy where Buffett bets his dollars. Taking shortcuts is not the pathway to achieving sustainable competitive advantage, nor is it an avenue toward satisfying customers, he states.
Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc. (BRK/A). said companies won’t last if they fail to consider the impact of their businesses on the environment.
“Taking shortcuts is not the pathway to achieving sustainable competitive advantage, nor is it an avenue toward satisfying customers,” Buffett, 81, said in a report published today on the website of Omaha, Nebraska-based Berkshire’s Johns Manville building products subsidiary. “A company must invest in the key ingredients of profitability: its people, communities and the environment.”
Berkshire has bet on railroads and renewable energy as Buffett said demand will climb for products or services that are less harmful to the planet. After announcing the acquisition of railroad Burlington Northern Santa Fe, he told Charlie Rose in 2009 that that trains were the “most environmentally friendly way of moving goods” around the U.S., an advantage that would help ensure that the business lasts for a century or more.
Ceres, a Boston-based advocacy organization for investors and public interest groups, listed Buffett’s firm last year among the largest insurers that could more fully disclose how climate change threatens their business. And while Berkshire has wagered on electric vehicles with the purchase of a stake in China’s BYD Co., Buffett has also bet on oil producer (2FA)ConocoPhillips. (COP) (COP)
Johns Manville, once the largest asbestos maker in the U.S., has shifted its business practices since claims from victims of the cancer-causing product forced the firm into bankruptcy in 1982. Berkshire bought the company in 2001.
“We take the lessons learned from these historical events very seriously,” Johns Manville said in the report, which details the company’s efforts at sustainability last year.
Buffett uses his name and reputation to support Berkshire operating units. In a video message in 2010 he said that agricultural products maker CTB was on the farming“superhighway.” That same year, he autographed a five-pound, oversized ice-cream spoon to be auctioned at a charity event sponsored by Berkshire’s Dairy Queen unit.
The billionaire has lent his name to an effort by President Barack Obama to raise taxes on the wealthiest. Buffett has also highlighted what he calls the social compact between Berkshire’s regulators and his businesses, said Jeff Matthews, a Berkshire shareholder and author of “Secrets in Plain Sight: Business & Investing Secrets of Warren Buffett.”
“He’s just laying it on more thickly now that he’s in the public eye,” said Matthews, in an e-mail.