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The sustainability report may go out of style at some point. But sustainability reporting is probably here to stay.
Each year, thousands of companies issue sustainability reports. They can be comprehensive, data-driven labors of love designed to highlight successes, measure progress, engage stakeholders, and respond to skeptics. Unfortunately, many are too long, too complicated, not timely, overwhelming, underwhelming, or whatever. They can be expensive – financially and environmentally – to design, print and ship. All that effort and cost, and many go unused and underappreciated.
The search for the right tool to report on sustainability is ongoing – with the annual report, Web portals, and factsheets and “dashboards” all growing as viable options. One interesting iteration is the new McDonald’s 2011 Global Sustainability Scorecard, a 16-page pamphlet covering Nutrition & Well-Being, Sustainable Supply Chain, Environmental Responsibility, Employee Experience, and Community. Yes, all that in 16 pages, with a QR code for smart phones to link to the sustainability section of AboutMcDonalds.com.
McDonald’s has scrapped the full-fledged printed report in favor of this scorecard format. They say it’s a matter of “less is more,” and I don’t see anything wrong with that. In more ways than one, it sounds like a sustainable solution to me.
I’m not sure what to think or who to believe about the risks and challenges associated with extracting natural gas from shale.
The controversy and the emotions over hydraulic fracturing (“fracking”) are hot and show no signs of cooling off, especially in Ohio and other shale-rich states that are just beginning to explore their natural gas reserves. Even as projects are moving forward, regulators are scrambling and communities are living in the moment, it seems that neither the proponents nor opponents have exactly figured out their “story,” let alone know how to communicate it clearly and consistently.
And the technical folks aren’t much help either. Look at what’s happening at Cornell University in Ithaca, New York. One group of Cornell researchers, led by Professor Robert Howarth, believes that the greenhouse gas footprint of shale gas is “perhaps more than twice as great” as coal over a 20-year timeframe. Their theory is that methane, which can leak at the well, is a more potent greenhouse gas than carbon dioxide (assuming you believe in climate change at all, which, of course, is a totally different discussion).
On the other hand, Professor Larry Cathles is arguing that natural gas is cleaner than coal because it doesn’t produce by-products such as sulfur, mercury, ash and particulates.
This January 19, 2012 Associated Press article summarizes the “house divided” situation at Cornell. Although technically focused, both groups seem to recognize the significance of the public relations and communications challenges associated with their findings, rebuttals and ongoing debate. (Read one of Cathles’ latest rebuttals to check out the tone of the PR battle.) Naturally, the two researchers' funding is coming from opposite sides of the debate.
This may be a fascinating case study in academic inquiry and interest group-sponsored research, but it’s mostly frustrating for the rest of us. Whom do you believe? What’s the real story? What do we do next?
The inbox fills up much faster than just about anyone's ability to keep up with it. A lot of it is junk - I'm sure glad it doesn't come to me in paper form! But some of it is really useful, eye-opening and thought-provoking. Here is some recommended reading from a wide variety of sources since the beginning of the year:
Ohio fracking: A balanced Reuters story (January 13, 2012) about the use of fracking in shale drilling in Ohio. Another good versus evil story – earthquakes and the environment versus jobs and domestic energy production.
Megatrends: Bill Roth, The Triple Pundit guest blogger for January 3, 2012, highlights "five megatrends creating 2012's trillion dollar global sustainable economy." The list consists of energy efficiency, greening of the supply chain, local food, the rise of the "smart" consumer that won't be swayed by greenwashing, and Hispanic green leadership. An unusual grouping, for sure.
News from Apple: Apple has released a list of its major suppliers for the first time and published its supplier responsibility progress report. The January 13, 2012 New York Times article is a complete read on this topic. The transparency is good for Apple, even though some of its suppliers' business practices are going to come under fire. For that reason, the January 17, 2012 “cry for help” follow-up by The Triple Pundit guest blogger Tina Casey is also interesting.
Redefining the triple bottom line: In a January 13, 2012 CSRwire Talkback post, David Wilcox laments only incremental improvements in corporate responsibility. He argues that companies need to do more to scale from "do less harm" to "do more good." He also says they should work toward a "license to grow," not just a "license to operate."
Socially responsible investing: A January 10, 2012 post by Rory Sullivan for London-based Ethical Corporation speaks to the “uncomfortable truths” about socially responsible investing (SRI). In the wake of Henderson Global Investors’ decision to close it its highly regarded socially responsible investing team, Sullivan wonders whether SRI incentives and drivers are really as strong and real as proponents say they are. Or are they just rhetoric?
Walmart’s sustainability blog, The Green Room, is less than a week old. And the conversation is in full swing. The January 3 announcement of the blog drew more than 70 comments – mostly positive, but, as far as I can tell, even the not-so-flattering comments are being accepted and responded to.
Some might say that the creation of the blog and the regular postings by Andrea Thomas, Walmart’s SVP of sustainability, already show leadership. But that’s just the beginning – the outbound communication.
The openness to incoming communication, respond to the comments and eventually act, where appropriate, on the feedback, are, and will be, the bigger issues. Early indications are that this blog is not just about communication, but conversation. And transparency. And ideas that can be put into action. Good luck to The Green Room.
SustainableBusiness.com reported recently that a record 109 shareholder resolutions were filed during this year’s proxy season to urge U.S. and Canadian companies to address climate change, fossil fuel usage and related sustainability issues. An additional 48 resolutions were withdrawn after the companies made voluntary commitments to address these issues, according to the report on research conducted by the Interfaith Center on Corporate Responsibility.
The most common sustainability-related topics were natural gas fracking, fossil fuel usage for electric power, water scarcity, oil refinery safety, and sustainability reporting (including climate or greenhouse gas reduction strategies).
Among the examples cited in the report was Walden Asset Management re-filing a resolution with Layne Christensen to push the company to issue a sustainability report. Last year’s resolution on the same topic produced a 60.3 percent vote in favor. This year, Layne Christensen of Mission Woods, Kansas, which provides drilling services for water infrastructure, mineral exploitation and energy, recommended a “FOR” vote on Walden’s resolution, which led to a 92.8 percent vote in favor. The company also published its first sustainability report.
Many so-called experts believe the success of such resolutions, and companies’ willingness to at least entertain the possibility of additional sustainability measures, will embolden the activists to be ever more aggressive. But I’m not convinced. I actually think there is an opportunity here for many well-intentioned, communications-savvy companies to get ahead of the activists, who certainly have other, potentially more contentious issues that they are pursuing through shareholder resolutions.
My sense is that even many mid-sized companies are now acknowledging the potential “shared value” (see this Harvard Business Review article for a discussion of this concept) in proactively addressing sustainability issues at the Board and senior management level without being under the high-profile pressure of a pending shareholder resolution or other “hammer.” Implementation will be smoother and the results will be better.
This is the kind of headline that gets my attention: “Does the solar industry have a PR problem?” (from June 13 on CNBC.com and later on usatoday.com).
I thought the technical challenges alone were plenty: off-peak storage, transmission, cost effectiveness, availability of raw materials, production scale, etc.
The article calls solar power “the greenest of green technologies.” Nonetheless, the article cites a recent survey by solar industry advocate SolarTech and San Jose State University, which found that even among Silicon Valley residents solar power has serious problems. Only 39 percent said solar power was reliable and only 11 percent said it was affordable.
The problem, according to even supporters of the industry, is that current solar technology is not nearly advanced enough, and that government subsidies, while encouraging early adopters, discourage the long-term development of more cost-effective and efficient technology. Thus, the technology under-performs and the perception is that it will never be a viable solution.
So, in answer to the article’s question, yes, the solar industry has a PR problem. But….. it’s always easy to blame, and pin your hopes on, PR. First and foremost, the industry has significant technical problems that no amount of PR can overcome.
Ironically, even environmental groups cannot agree on how to proceed with solar power development: Some groups are upset over the siting of large solar farms on hundreds of acres of previously undeveloped land (and Native American archaeological sites), rather than using brownfield locations.
Finally, there’s a rising tide of people who don’t want to see large solar farms, or their noisy, higher-profile cousins (wind farms), become part of their neighborhood landscape. Yes, solar and wind have significant “not in my backyard” (NIMBY) opposition – just like chemical plants, power plants and nuclear facilities.
As the PR battles heat up, the Natural Resources Defense Council (quoted by usatoday.com on June 2) has pointed out “there’s no free lunch when it comes to meeting our energy needs. To get energy, we need to do things that will have impacts.” Get used to that idea – and the accompanying technical and PR challenges.
The vast majority of transnational companies do not report on their sustainability/corporate social responsibility efforts. Sure, some are inactive and really have nothing to talk about – and they should want to “walk the walk” before they “talk the talk.”
But there are a lot of others who are active and moving forward, and still not communicative. How and when will they ever get over their “greenblushing”?
Here’s a suggestion: For public companies, there are already a format and schedule in place just waiting to be tapped for sustainability/CSR reporting. It’s the annual report.
I hope you will read “All Together Now: Why sustainability reporting and the annual report should be combined,” an article from the March/April issue of Corporate Responsibility Magazine. I am pleased to have the opportunity to co-author this article with Don McGrath of Eaton Corporation, which is a pioneer in using the annual report to communicate its sustainability efforts. This article has just been added to our website for you to download.
In a nutshell, there are four big reasons for integrating sustainability/CSR reporting into the annual report:
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Transparency – just like financial results, sustainability is becoming an important measure of corporate performance
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Socially responsibility investing – $3.07 trillion and counting
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Business strategy – sustainability, energy efficiency and serving the energy industry are part of the growth story for many companies
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Efficiency and cost effectiveness – one book, one project is better than two
It works for Eaton and it will work for many other companies that are looking for a way to report on their sustainability/CSR efforts. We look forward to your comments.
At tomorrow’s annual meeting, JPMorgan Chase shareholders are being asked to vote on a genocide-free investing proposal, put forth by the Massachusetts-based nonprofit Investors Against Genocide (IAG).
The group is using the proposal in the proxy to call attention to JPMorgan Chase’s investment in PetroChina, a company that IAG claims provides Sudan’s government with revenue that has been helping fund genocide in Darfur. IAG claims that JPMorgan Chase owns a billion-dollar stake in PetroChina. The proposal states, “Reasonable people may disagree about what constitutes socially responsible investing, but few people want their savings connected to genocide.”
JPMorgan Chase said the firm’s existing policies and procedures, including its Human Rights Statement, appropriately address these issues. JPMorgan Chase asked the Securities and Exchange Commission to allow the firm to exclude the genocide-free investing proposal from the proxy ballot, but the SEC denied the request.
IAG apparently has no delusions about winning the vote, noting that its similar proposals submitted in previous years to a variety of mutual fund companies have earned as much as 31 percent of the votes. But they’re going ahead nonetheless, and the long-term strategy seems to be to force companies to act, even if the vast majority of shareholders do not support the specifics of the proposals.
And IAG isn’t stopping with investors. IAG’s communications campaign also includes Facebook ads asking JPMorgan Chase credit card and banking customers, “Genocide in your wallet?” The ads link to an online petition which generates an email message to JPMorgan Chase’s CEO urging him to avoid investments in companies tied to genocide.
Shareholder activists are already mobilized. What might consumers and consumer activists do?
Supporters of Earth Day have called for people around the world to pledge to commit “a billion acts of green” today, April 22, Earth Day 2011.
Small, individual acts are welcome – so mine is to do this blog post, after several weeks of not having time to add to this site. Sure, it’s symbolic, but, in the end, I suspect most of the acts will be.
For example, I see that green lifestyle expert, journalist and TV host Candice Batista, through Twitter @candicebatista, has pledged that she is “buying NOTHING….NADA….zip….give a try too.” Probably just symbolic – I’m sure she either stocked up or will wait until the weekend to buy what she would have bought on Friday.
And that’s the best-case scenario: If she actually decided not to make up for her spend-free day, and millions or billions of people followed her lead, April 22, 2011 would go down in history as one of the worst economic meltdowns in history. It may be green, but it sure isn’t sustainable (People, Planet, Profit).
Businesses all around the world are marking Earth Day by announcing major new initiatives. In fact, the announcements of new sustainability initiatives are so utterly overwhelming that Environmental Leader noted today that “this Earth Week we got far more news suggestions than we could possibly use. So reduce wasted press releases – email us at other times of year!” In other words, many sustainability efforts are going to go under-recognized because they are being announced on Earth Day.
Cheer up if you’re unclear about the impact of your sustainability initiatives. Even Earth Day isn’t sure what to do with sustainability.
The convergence between sustainability/corporate social responsibility and investing appears to be accelerating. And, by most indications, it appears investors are more ready for the trend than the vast majority of investable companies are.
The latest fuel comes from a major new study by the consulting firm Mercer, which recommends that institutional investors shift up to 40 percent of their assets into “climate-sensitive” assets. The rationale is to mitigate environmental costs, which Mercer says could contribute as much as 10 percent to portfolio risk over the next 20 years.
The report noted that the traditional way of managing risk, via a shift to a more conservative asset allocation, “may do little to offset climate risks.” Instead, it suggested increasing exposure to certain “climate-sensitive” asset types, including infrastructure, real estate, private equity, agriculture, timberland and sustainable assets – even though many of these have been traditionally deemed as more risky on a standalone basis.
According to the study, over the next 20 years, investment opportunities in low carbon technologies could reach $5 trillion, and climate change-related policy changes could increase the cost of carbon emissions by as much as $8 trillion.
Mercer recommended that investors begin taking the following measures:
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Introduce a climate risk assessment into ongoing strategic reviews
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Increase asset allocation to climate-sensitive assets as a climate “hedge”
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Use sustainability-themed indices in passive portfolios
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Encourage fund managers to proactively consider and manage climate risks
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Engage with companies to request improved disclosure on climate risks
Of course, it remains to be seen how many companies are really ready for the trend, given that less than 10 percent of multinational companies currently report on sustainability/CSR efforts. And, of those, only a very few make it part of the primary tool for investor communications, the annual report.
The study was based on a survey of 14 leading global institutional investment firms with approximately $2 trillion in assets. The free public report, Climate Change Scenarios – Implications for Strategic Asset Allocation, is available for download on Mercer’s website.
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