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Kudos to KFC.

I generally have a bone to pick with fast food brands on sustainability issues, on everything from workers’ rights and marketing to kids, to health concerns, agriculture practices, and animal welfare.

Not this time.

Check out this surprisingly candid interview by 2Degrees’ Tom Idle with Ian Hagg, who is KFC’s head of corporate and social responsibility in the UK.

How can KFC be a responsible business when you are fuelling child obesity?’ The chicken business responds

Refreshing in its acknowledgement that there is still a long way to go – “we’ve only been managing our CSR in a joined-up way for the last four years” – the UK and Ireland arm of the company has just issued its very first CSR update. Inside the swanky offices of its London PR agency, I caught up with head of CSR, Ian Hagg to find out what the chicken business is actually doing to make a difference – and why it is so far behind the likes of McDonald’s in communicating its efforts to the masses.

KFC exec Ian Hagg hits every single one of these topics without flinching.

Admittedly, my bar for what constitutes honest communication from fast food brands is pretty low, but he really surprised me by saying that “KFC is a treat.”

A treat! Not for every day, or more than once a day.

Based on what we know about fast food and junk food business strategy, I simply can’t imagine a U.S. exec saying anything like that.

 

Do investors care about CSR issues? 

Thanks to Capital Link for hosting their first annual CSR Forum called “CSR & IR – Maximizing Shareholder Value” yesterday in NYC at the astonishingly gilded Metropolitan Club.

I attended to hear first-hand from the investor community about how they make decisions, and whether CSR issues carry weight.

The answer, writ large? No.

What I heard is that Sustainability, CSR, resilience, whatever you want to call it, is still, still, not front and center.

It’s something that’s on the list, but not at the core of the decision-making process.

Maximizing shareholder value. That’s the core.

As one panelist put it, “When my CEO talks to investors, ESG factors aren’t part of the conversation.”

There’s a U.S. bias, too. Another shared that, “When my CEO talketo U.S. investors, I move the SRI slides to the back of the deck.”

The status quo. It’s powerful.

The highlight of the day for me was hearing Bennett Freeman from Calvert Investments finally mention Climate Change.

He, along with representatives from the Socially Responsible Investment world, were a welcome counterpoint to the traditional investor community perspective.

The status quo. It’s powerful.

For a flavor of the day, read what I and others tweeted live:

Tweet Story: March 13, 2013 Capital Link CSR Forum

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.

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.

David Roberts has some great news.

Via Grist.org:

We [the U.S.] have cut our carbon emissions more than any other country in the world in recent years — 7.7 percent since 2006. U.S. emissions fell 1.9 percent last year and are projected to fall 1.9 percent again this year, which will put us back at 1996 levels. It will not be easy to achieve the reductions Obama promised in Copenhagen — 17 percent (from 2005 levels) by 2020 — but that goal no longer looks out of reach, even in the absence of comprehensive legislation.

And a ponder. If we are doing so well, why aren’t we talking about it?

The answer, according to Roberts, lies in the political landscape that will shape conversations now until November.

President Obama has some wins to claim, but not all of them lead to good places.

Say, for instance, that electricity use has fallen.That’s all well and good, except for that this dip was caused by the Great Recession whalloping production and consumption.

See the tarnished lining inside this silver news?

This good news-bad news is nothing new to anyone who has spend time in a public affairs, investor relations or marketing communications position. Don’t say things that lead to questions you don’t want to answer.

As a Sustainability writer and practitioner, I’m fascinated by what I can learn from these real-world conversations. I’m interested in talking more persuasively, honestly and accurately about how climate change and environmental issues impact our businesses and communities.

Read the full article.

Full day, full brain.

I spent today listening to and tweeting about Sustainability progress from leaders representing FedEx, Patagonia, Intel, Lockheed Martin, Campbell Soup, Abbott, Human Rights Watch and others at Ethical Corporation’s Responsible Business Summit USA conference in New York City.

We talked about the approaches and actions organizations are taking to measure their impact on the earth: tipping points and pressures, risks and opportunities, and thinking long-term in a quarterly dividend world.

A highlight for me today was hearing Bennett Freeman of Calvert Investments say, “Integrated reporting is coming.” Not today or tomorrow, he said to me, but his team has a “solid toehold” on models to integrate corporate responsibility measures with financial reports. So now the challenge shifts to scaling up and creating an environment where integrated reporting becomes pro forma. Investors will expect corporations to provide this richer, more complete picture of their company’s performance in the regular course of business.

Cristina Amorim from Life Technologies gave a tremendous presentation on the results her team has achieved with an all-in aggressive effort to streamline her company’s environmental footprint. The biotech tools company has transformed the traditional linear “take-make-waste” paradigm into a circular lifecycle of reduce, reuse, reclaim, recycle and recreate. Go steal ideas from Life Technologies’ award-winning Sustainability initiatives.

Considering her program’s emphasis on exact measurement and quantifiable results, it caught me off guard when Christina said that Zero Waste  doesn’t mean “no waste at all.” Rather than an absolute, Zero Waste is an aspirational goal that is generally accepted by her industry peers as 90 percent diversion from the waste stream.

In this case, ninety percent represents the very best that can be done without creating new problems.

That’s a truth worth keeping in mind.

Considering the overwhelming environmental, social and economic challenges facing the world,  we can’t afford to let the perfect be the enemy of the good.

After all, doing the very best possible for all concerned is what drives Sustainable Business.

As Ray Anderson put it, “Doing well by doing good.”