Companies won't last if they fail to consider the impact of their businesses on the environment, according to Warren E. Buffett, the billionaire chairman and chief executive of Berkshire Hathaway Inc.
“Taking shortcuts is not the pathway to achieving sustainable competitive advantage, nor is it an avenue toward satisfying customers,” Mr. Buffett, 81, said in a report published April 2 on the website of 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 on the forecast that demand will climb for products or services that are less harmful to the planet. After announcing the acquisition of railroad Burlington Northern Santa Fe, Mr. Buffett said on “Charlie Rose” in 2009 that trains were the “most environmentally friendly way of moving goods” around the U.S., an advantage that would make the business last for a century or more.
Ceres, an advocacy organization for investors and public interest groups, last year listed Mr. Buffett's firm 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., Mr. Buffett has also bet on oil producer ConocoPhillips Co.
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.
LESSONS LEARNED
“We take the lessons learned from these historical events very seriously,” according to the Johns Manville report, which details the company's efforts at sustainability last year.
Mr. Buffett uses his name and reputation to support Berkshire operating units. In a video message in 2010, he said that agricultural products maker CTB Inc. 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 Corp. unit.
The billionaire has lent his name to an effort by President Barack Obama to raise taxes on the wealthiest. Mr. Buffett also has 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 and Investing Secrets of Warren Buffett.”
“He's just laying it on more thickly now that he's in the public eye,” Mr. Matthews wrote in an e-mail.
