The Guardian: A new Ceres report finds business progress on sustainability disappointing
As the world population soars beyond seven billion, human beings are putting unprecedented demands on natural resources, demanding more and more energy, generating ever-higher levels of greenhouse gases. Can our global economy, and the environment on which it depends, survive these stresses? How can businesses thrive given the physical, economic and social risks associated with climate change, water scarcity and increasingly extensive, vulnerable supply chains?
Two years ago, Ceres, whose mission is to drive corporate sustainability leadership and build a durable prosperity, created a virtual owner's manual for the 21st-century corporation, The Ceres Roadmap for Sustainability. The roadmap comprises of 20 specific expectations that companies must meet – in governance, disclosure, stakeholder engagement and actual performance – if they expect to prosper in a new world of risk and opportunity. Business-as-usual is a strategy for failure. Companies that embrace the sustainability challenges before them and have the strategies to meet them will succeed.
Today, in partnership with Sustainalytics, we are releasing The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability, a detailed evaluation of how well 600 major US corporations are meeting the roadmap's expectations.
The good news is that there are pockets of corporate sustainability leadership; companies that are making significant strides towards becoming truly sustainable enterprises. In the process they're not only laying the groundwork for their own success, they're making a real contribution to building a sustainable global economy for all. The bad news is that most companies have barely begun the journey towards sustainability and remain stuck in outmoded ways of doing business. The pace of change must accelerate because our major sustainability threats such as climate change and water scarcity are coming at us faster and harder than projected just a few years ago.
As optimists, we see the relative poor showing of many companies as an opportunity, and The Road to 2020 highlights dozens of company examples in the hope of inspiring others. For example, Intel is cited for linking executive and employee compensation to company environmental goals such as reducing energy use and greenhouse gas (GHG) emissions; in the two years since it started the program, the company has cut energy use by 8% and GHGs by 23%.
Alcoa and Xcel are also relative pacesetters for strong governance practices, while Baxter and Ford are setting a high standard for stakeholder engagement. On the performance side, Coca-Cola is credited for being on track to improve water efficiency by 20% by the end of this year (against a 2004 baseline). Other cutting-edge performance examples: Nike's new partnership to implement a water-free fabric dyeing process; Kohl's achievement of net-zero GHGs at its stores; Pinnacle West using recycled urban wastewater (about 75bn litres a year) to cool a nuclear plant; and EMC creating virtual data centres to replace physical, energy-sapping data centres, saving more than $20m (£12.4bn) in the process.
These companies aren't taking these steps just because they believe it's the right thing to do; they're realising great cost savings, making themselves more competitive, creating long-term shareholder value, enhancing their brand reputations and attracting new customers and dedicated employees. This isn't to say that these companies scored well on all of the expectations of the roadmap, but they are showing leadership in important ways.
Still, the overall results are disappointing. In the report's four-tier assessment system, just a quarter of all 600 companies surveyed were in the top two tiers for progress on governance, and only 24% have some degree of meaningful stakeholder engagement. On performance metrics, only 13% of the companies had human rights policies and programs ranked in the top two tiers, and only a third had time-bound targets for reducing GHGs in direct operations.
Simply put, we need to scale up the level and pace of change. Among those watching closely are leading investors.
Anne Stausboll, CEO of one of the world's largest institutional investors, the California Public Employees' Retirement System said: "The future will belong to innovative companies that understand that building long-term shareholder value and being an industry leader requires the integration of sustainability principles at every level, from the C-suite to operations and throughout supply chains."
The report is an important reality check. It tells us that many of the world's largest, savviest and best-known companies are taking sustainability issues such as climate change, water scarcity and human rights seriously. But it also tells us there is a long journey ahead for most companies if they are going to be positioned to thrive in an increasingly resource-constrained world.
There was a popular adage in the 1960s: "if you're not part of the solution, you're part of the problem." Many more companies need to step up and be part of the solution. Waiting is not an option.