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Is Sustainability good for business?

Yes.

But where are the facts to back this claim up?

Here.

Sustainable Business consultancy Natural Capital Solutions has created an annotated report of studies that prove the business case for Sustainability.

Via NatCapSolutions.org:

“This document is a resource to help you understand how business leaders can profit by integrating sustainability into their strategy and value-chain while securing a competitive advantage.

This annotated list describes the ever-growing number of studies, most by conventional management consulting houses, academic institutions and similar establishment entities that prove this assertion.”

Sustainability Pays: Studies That Prove the Business Case for Sustainability

Many thanks to Natural Capital Solutions for a useful reference tool for Sustainability practitioners and students.

Integrated Reporting is putting all your cards on the table.

Integrated reporting is the practice of including all the important financial and non-financial factors, such as environmental impact and community actions,  in one report.

It provides a fuller, clearer accounting picture of a company’s overall performance and future plans for success.

Harvard professor Robert G. Eccles has written extensively on the science and practice of integrated reporting.

Read his Summer 2011 Stanford Social Innovation Review article (co-authored by Daniela Saltzman) for a comprehensive introduction to the topic.

Achieving Sustainability Through Integrated Reporting

Numbers matter.

A new 2012 report from The Conference Board, Bloomberg and GRI, puts those numbers on the table.

Sustainability Practices: 2012 Edition

Sustainability is about improving how we work and live–profitably and responsibly–so that future generations can thrive.

Who is measuring their Corporate Social Responsibility efforts?

Where are they?

How are they measuring their actions and impacts against their business goals?

Thanks to Sustainable Business Forum contributor Elaine Cohen for her review of the report and for sharing key findings.

Via SustainableBusinessForum.com:

Sustainability: What the Numbers Tell You

[Report author] Thomas Singer rounds off with this perspective: “To a large extent, sustainability is about long-term risk management.

It’s about making sure that, if you are a company that is dependent on finite resources, you make sure that those resources are available, that they are clean and that you have access to them in the long haul.

That’s as good a description of why Sustainability actions matter as I’ve ever heard.

The rest of that quote is is right on point as well for connecting Sustainability to long-term business success.

However there is a very important second part to sustainability which is ensuring innovation and new products, new markets.

It is those companies that actually go beyond seeing sustainability as a risk strategy and more of an innovation strategy, those are the companies that really become sustainability leaders in the long term.”

Read The Conference Board’s July 25 press release.

Are we there yet?

Have we reached the point where businesses take the globe’s natural resources into account when making decisions?

An April 2012 report from sustainability group BSR lays out where the private sector stands on accounting for natural resource issues in  corporate strategy.

The report uses the framework of ecosystem services, which is the study of what humans receive from the natural world.

The “services” that ecosystems provide to humans are things like food, water, air, and carbon sequestration.

Once described, a value can be attached to that benefit, or service.

Like, what’s the value of a tree? What do you gain by cutting it down? What value do you retain long-term by leaving it in place?

Each of these values can be studied and quantified, and taken into account when making business  decisions.

The authors conclude that while a great deal of work is underway to understand how to measure  ecosystem services, there is only the beginnings of knowing what to do about it.

Via BSR.org:

The Quiet (R)Evolution in Expectations of Corporate Environmental Performance

This new report lays out the current state of play of the uptake of ecosystem services and describes the emerging activity within the private sector related to integrating ecosystem services into decisions.

So, are we there yet? No. But the way ahead is getting clearer.

You can’t manage what you don’t measure, right?

Cardinal rule of running an efficient, profitable business.

That means the rise of sustainability reporting among U.S. companies is good news for a cleaner, healthier world.

A sustainability report is like the company’s Annual Report, only it covers economic, environmental, social and governance performance instead of financial performance.

Most major U.S. brands issue sustainability reports, like Kraft for example.

(Increasingly, these two reports are combined to give investors a full picture of the company’s activities, like Pepsico does. That’s called integrated reporting.)

Via CRSwire.com:

Telling the Story of Your Sustainability Journey Through a CSR Report

The publication of corporate sustainability (or responsibility) reports by U.S. corporations (and U.S.-based subsidiaries of non-U.S. companies) is on the increase.  Our analysis for reports published in 2011 — include reports published in calendar year 2011 — is at 345 – and we’re half way through 2012 and expect many more reports to be added to our count for 2011.

It’s about time too, since the U.S. lags in reporting behind the rest of the world.

Via KPMG.com:

KPMG Corporate Sustainability study

Ninety-five percent of the 250 largest companies in the world (G250 companies) now report on their corporate responsibility (CR) activities, two-thirds of non-reporters are based in the U.S.

What’s driving sustainability reporting by U.S. companies?

I attended an EnvironmentalLeader.com webinar yesterday and this very question came up. Marjella Alma from GRI (Global Reporting Institute) gave the following explanations.

Sustainability reporting among U.S. companies is on the rise because of:

  1. Increasing stakeholder demand for this data
  2. Preparing for potential regulatory developments that will mandate reporting
  3. Growing positive interest from investor community
  4. Recognition that reporting Sustainability activities is a competitive advantage with sustainability-minded customers
  5. Opportunity to better identify risks and opportunities
  6. Reduced operating costs.

In other words, sustainability reporting is less about managing risk and more about taking a strategic position.

It’s coming down to the simple fact that running a business that’s good for the planet and people, is also good for business.

Homegrown renewable, clean energy.

Without fracking, drilling, stripmining, or pipelining.

I didn’t know that the U.S. government was planning solar sites on public lands:

Obama Administration Releases Roadmap for Solar Energy Development on Public Lands

More via renewableenergyworld.com:

Western Solar Zones to Streamline Development on Public Lands

The document, released by the Department of the Interior and the Department of Energy, is the culmination of two years of dialogue between regulators, environmentalists, industry advocates and the public at large. On Tuesday, the DOI unveiled the much-awaited Final Programmatic Environmental Impact Statement (PEIS), which sets a vision for development on public lands in six Western states — Arizona, California, Colorado, Nevada, New Mexico and Utah.

The Interior has approved 17 zones for utility-scale solar energy projects on about 285,000 acres of public land with combined resources of nearly 32,000 megawatts (MW). It also sets up a process to allow development of what the DOI calls “well-sited projects” on 19 million acres outside those zones. PEIS estimates that the zones and the variance areas will eventually lead to about 23,700 MW of development.

The plan is being well-received by environmental groups and local stakeholders.

Via SustainableBusiness.com:

DOI Issues Well-Received Solar Plan for US West

Leading environmental and solar industry groups issued a press release endorsing the plan, including Natural Resources Defense Council (NRDC), Audubon Society,  Defenders of Wildlife, Sierra Club, The Wilderness Society, Solar Energy Industries Association, Southern California Edison, Vote Solar, First Solar, and Brightsource Solar.

U.S. public lands are our Commons. Deciding how to use, maintain and preserve  our country’s resources is a shared responsibility among all of us.

So is NJ solar in better shape now, or not?

On July 23, Governor Christie signed a solar-saving bill that will prop up New Jersey’s solar industry.

Via NJSpotlight.com:

Christie Signs Bill to Help Stabilize Solar Sector

It took a lot longer than expected, but a much-debated bill to maintain and potentially enhance New Jersey’s efforts to develop solar energy in the state was signed into law yesterday by Gov. Chris Christie.

The bill (S-1925), a priority of the Christie administration with bipartisan support in the Legislature for more than six months, aims to ensure investments in solar do not dry up in New Jersey, which is second only to California in the number of solar arrays –with 16,000 systems installed here.

But in the same breath, the Christie administration announced plans to slash the funds that help businesses and NJ homeowners buy into the solar market.

Via NJSpotlight.com:

State May Slash Clean Energy Fund Almost by Half

The state is considering cutting its funding for new energy efficiency and renewable energy projects almost in half, a consequence of the Legislature’s and Christie administration’s decision to divert hundreds of millions of dollars from New Jersey’s clean energy program.

In a draft proposal circulated by the New Jersey Board of Public Utilities last week, the budget for the clean energy program would allocate $339 million in new spending, a sharp reduction from the $651 million proposed by the agency last December.

The cuts are a result of the diversion of money raised from gas and electric customers to help homeowners and businesses find ways to reduce their energy use, and promote the development of cleaner sources of producing electricity, primarily solar and wind.

The clean energy fund has helped propel New Jersey to be a leader in promoting clean energy, a status underscored by the fact that is second only to California in the number of solar installations.

The cuts aren’t certain. Michael Winka, director of NJ’s Clean Energy Program is requesting stakeholders and citizen comments on the proposal.

I expect he’ll be getting a lot of mail in coming weeks.

 

 

Shareholders talk, board of directors listen.

Via EnvironmentalLeader.com:

Apple, Colgate Among Companies Agreeing to 44 Shareholder Resolutions

Apple, Intel, Colgate, Smucker’s, Crocs, and Garmin are among the companies whose investors successfully used shareholder resolutions to spur corporate action on climate change, hydraulic fracturing, supply chain and water availability risks, among other sustainability issues, during the 2012 proxy voting season.

Advocacy group Ceres says of the some 110 resolutions is tracked in 2012, 44 proposals resulted in US companies making commitments to confront environmental and social risks in their operations and supply chains.

It’s important to note, however, that these shareholders are not individuals. More often, these resolutions are driven by powerful investment groups charged with managing public and institutional funds, such as:

The New York State Comptroller’s Office secured agreements from Apple, Dell, HP and Intel — firms representing more than 50 percent of the personal computer market, according to Gartner analysts — to encourage or require their major suppliers to issue sustainability reports that address environmental issues, Ceres says.

Also in 2012, Calvert Investments and the comptroller’s office won commitments from Colgate and Smucker’s, respectively, to source 100 percent certified sustainable palm oil for their products. Additionally, 37 percent of shareholders of Yum! Brands, the parent company of Taco Bell, KFC and Pizza Hut, voted in favor of a shareholder resolution filed by Trillium Asset Management, requesting that the company source 100 percent certified sustainable palm oil.

These resolutions will require corporations to take positive action on climate change, fracking, supply chain and natural resource availability risks.

There’s a fight brewing in Washington, D.C. over the new standards for LEED, the leading green building certification standards, run by the U.S. Green Building Council.

The new proposed LEED Version 4 standard will give credits for building teams that don’t use certain plastics and chemicals, such as polyvinyl chloride, or PVC, that are linked to health and environmental negative impacts.

Some members of the plastics and chemicals industry are not happy with these proposed changes.

So unhappy that they’ve set up their own council to counter LEED, called the American High-Performance Buildings Coalition.

Background on what’s at stake for capturing U.S. Government building dollars, via Greenbiz.com:

Will the Plastics Industry Kill LEED?

LEED is the most-used green building standards globally, as well as in the United States, where more than 400 cities and communities, 39 states and 14 federal agencies currently require builders to meet LEED standards. LEED is voluntary, but it has been adopted by the GSA and other government agencies as the required building standard for new construction. Government agencies have been critical to LEED’s success: roughly a third of LEED projects are government-owned.

In response, the USGBC staked its ground with the red, white and blue: LEED Is Private, Voluntary, Transparent and Democratic,

More coverage via treehugger.com:

July 18–Plastic People Set Up “American High-Performance Buildings Coalition” To Fight Restrictions on Plastics in Green Building

July 18–Update on The American High-Performance Buildings Coalition: Their Website is Live, and Here Are Their Members

July 19–What Are The Plastic People So Afraid Of That They Want To Kill LEED?

This promises to be a very interesting discussion.

Materiality is coming up a lot in the Sustainability conversation.

Including at last month’s Responsible Business Summit USA in New York City.  TriplePundit.com contributor Raz Godelnick just posted an article recapping some of the CSR executive conversations about reporting.

Let’s talk about this word “materiality.”

In the accounting and finance worlds, materiality means how important an amount, transaction, or discrepancy is to the business.

When you talk about materiality in financial statements, you are asking about all the things that have to go into the report that really, truly matter. Reporting on all material aspects gives you the best possible view of  what or how a business is doing.

Materiality is about measuring and accounting for all the actions that positively or negatively impact a business’ growth or success.

Even though most of us don’t produce 10-K forms and hold shareholder earnings calls, I’d hazard that anyone who has owned or operated a small business  intrinsically understands this evaluative process.

As a simple example, what’s material–most important–about investing in a dog boarding and walking business?  To properly evaluate the business, you need to know how much the business costs to run.  How much are employees paid? You’ll want to see records of how client dogs are fed, watered, and exercised on a specific schedule. You might also add other measures such as the age and experience of employees, specific training, or criminal background checks. These are the essential, or “material,” elements you measure to make a decision.

While it might not have mattered as much 10 years ago, today you might also want to know about the energy and environmental impacts related to the business. These might include gas consumption for getting to and from clients, or what chemicals are used to keep the facility clean and sanitary. How do these “green” issues positively or negatively impact the business’ success?

(In case you’re wondering, there are several “green” dog-walking and boarding businesses out there, including this one.)

That’s what’s happening large-scale in the business world. As the Sustainability field grows from a sidebar conversation to front-and-center discussions,  Sustainability practitioners are finding new opportunities to materially contribute to business success.

One way to make this happen is through collaboration with business colleagues to mesh corporate responsibility initiatives with strategic goals. Here’s a great article about how Dell’s Sustainability team is doing exactly that.

Via MIT Sloan Management Review:

How Dell Turned Bamboo and Mushrooms Into Environmental-Friendly Packaging

Sustainability as a domain is moving in the direction of “materiality” — information that is relevant or “material” from the point of view of stakeholders and investors. And Dell, the computer and technology company, is working to make itself well-positioned to make the link between its initiatives and outcomes.

How? Against the trend of Sustainability teams moving under the CFO, Dell’s Sustainability team resides in a surprising place:

“We report into the global marketing organization,” says John Pflueger, principal environmental strategist for Dell. “That may sound weird to some people, but I actually think it’s a fantastic place for a sustainability organization to sit.”

The rest of the article is well worth a read for how the Dell team leverages its organizational positioning to positively impact packaging innovation:

At Dell, the sustainability team, working with suppliers and recyclers, has developed new compostable packaging materials made from bamboo and mushrooms. As John Pflueger, Principal Environmental Strategist, says, “It’s absolutely amazing.”

They experimented with the material, and they actually found a way to use bamboo as a raw material for manufacturing packaging. Now, I don’t think we use it on any of our big systems, but right now, 70 percent of notebooks ship in bamboo. Its structural strength makes it great for shipping our high-tech products.

These creative solutions are easy to see as “green” or environmentally friends. But more importantly, they grew out of several material concerns that have to do with bottom-line costs and supply chain security:

This followed a few high-level principles that we wanted to put into place. One, he wanted packaging material to be sourced near the point of use because he didn’t want to spend a lot of time and effort or fuel moving cardboard or some other packaging material across the world. Two, he wanted a material that was easy to replace.

How much does it cost to make and ship packing materials?

What materials will be available today and for the foreseeable future?

And only then, as a third priority, does the outwardly “environmentally friendly” aspect of the solution show up to reduce waste and carbon impact at the end of the packing material’s life cycle:

And three, he wants something that’s recyclable and compostable.

By linking Sustainability initiatives to outcomes on the executive dashboard, Dell is proving the case for how environmental stewardship materially contributes to a company’s success.