Sustainability TALK

Vol. 1 No. 1                                                                                                  January 2013

Welcome to the first edition of Sustainability TALK, The Conference Board Initiative on Sustainability newsletter. This quarterly will provide insights and information to help you improve the quality of your thinking and decision making on management issues related to sustainability. Our information will be drawn from the business world and other areas of influence in this expanding field. Sources will be from the United States and other parts of the world and from the research of The Conference Board and the broader sustainability community. Because the vast flow of information on sustainability is frequently overwhelming, our approach will be selective. Above all, we want to provide readers with a sense of comfort in understanding both the short-term and long-term business challenges and opportunities of sustainability. Perspectives of different corporate functions and disciplines will be addressed, as well as company, sector, and systemic aspects. In sum, our aim is to provide you with meaningful information that you can use. The format and contents of the newsletter will reflect this approach by including a number of regular sections:

Initiative on Sustainability Highlights will spotlight activities, events, and research from The Conference Board (e.g., council and research reports, webcasts, conferences and meeting topics, agendas or questions) that are relevant to sustainability programs and activities.

Sustainability around the World will offer updates on issues and events in key sustainability markets outside the United States. In this issue, we feature updates on events in Brazil, South Korea, and Sweden.

Research to Know will highlight research from outside The Conference Board that we think is informative and useful.

Keeping Up with Sustainability Movers Movers will feature profiles of activists, NGOs, and other stakeholders who are trendsetters in the field.

Keeping Up with Sustainability Thinkers will provide perspectives from individuals who are shaping new mindsets and innovative paradigms in sustainability.

We want to be as responsive to change as the practice of sustainability requires, and we invite readers to suggest additional themes or issues of broad interest that we should address or follow up with on your behalf. Kindly send your comments or ideas to david.vidal@conferenceboard.org or call 1-212-339-0445.

David J. Vidal

Senior Fellow and Chair of the Advisory Board

Initiative on Sustainability

 

Initiative on Sustainability Highlights

• An advisory board to the Initiative on Sustainability held its first meeting on December 3, 2012 at The Conference Board office in New York. The purpose of the meeting was to discuss the direction of the Initiative on Sustainability and the content it will produce. The desired end result is a programmatic response that is timely and relevant to the sustainability issues, interests, and needs of member companies. The 20 members of the advisory board were invited to share insights as a community of practitioners. The next meeting of the advisory board will be February 21, 2013.

Additional information on the advisory board is available on the sustainability pages of The Conference Board website.

• The Conference Board Summit on Sustainability is taking place June 4–5, 2013, in New York City. The summit brings together sustainability experts, practitioners, and institutional investors to share perspectives on how corporations are transforming their global operations by integrating sustainability into a long-term return-on-investment strategy. For speaking and sponsorship opportunities, please contact Dave Hoffman (d.hoffman@conference-board.org).

• The new Chart of the Week features highlights from Sustainability Practices: 2012 Edition,
  a report on the disclosures of environmental and social practices of 3,000 global companies.

The full report covers 72 metrics, including atmospheric emissions, water consumption, biodiversity policies, labor standards, human right practices, and political contributions. For each metric, the report illustrates the percentage of companies disclosing on the metric as well as median values reported for the metric where applicable. In some cases, both median and average (mean) values are shown. Benchmarking comparisons are made across three indexes: the Bloomberg ESG 3000, the S&P 500, and the Russell 1000.

The Chart of the Week series will provide data on a major sustainability practice, segmented by index, market sector, and revenue group, as well as insights on why the practice matters to your organization and the global business community. Download Sustainability Practices: 2012 Edition here or contact Matteo Tonello (matteo.tonello@conferenceboard.org) for additional information.

 

Recent Publications

Director Notes

• Communication Patterns of Corporate Social Responsibility within and across Industries (April 2012) An examination of how American corporations collectively describe their corporate social responsibility (CSR) activities based on an analysis of data collected from 103 Fortune 500 websites.
• Global Supply Chain Labor Standards (May 2012) Among other topics, this release examines the adoption of supplier codes of conduct and supply chain labor policies, offers a framework for companies that wish to implement supply chain sustainability programs, and provides an overview of media coverage, proxy voting guidelines, and shareholder resolutions related to this topic.
• Linking Executive Compensation to Sustainability Performance (May 2012) A discussion of progress toward a notion of performance assessment that incorporates nonfinancial elements, and companies’ efforts to explain how they link incentive awards to sustainability targets.
• Collaboration between Multi-Stakeholder Standards: A Governance Perspective (July 2012) This release examines the nature, benefits, and shortcomings of existing multi-stakeholder CR standards, and how businesses can better coordinate their participation in a variety of initiatives.

• Stakeholder Dialogue in Germany, Italy, and the United States (July 2012). This Director Notes describes the results of an international survey on 249 SD initiatives undertaken by firms in Germany, Italy, and the United States.

Research Report

• The 2012 Sustainability Practices Report (July 2012)
  This report, which examines the sustainability disclosures of 3,000 global business corporations, is the first release in what will be an annual collaboration between The Conference Board and Bloomberg Data Solutions (Bloomberg).

Planned Research and Initiatives

• A series of monthly energy and commodity price charts on key commodities, with analytical inputs from member companies.
• Development of an energy and sustainability index (or scoreboard), reflecting supply and demand factors in energy and commodity markets affecting price and use of those inputs.
• A new Sustainability Matters report that discusses issues of sustainability reporting and the effort by leading organizations such as the International Integrated Reporting Council (IRRC) to blend material financial and extra-financial information into an integrated report for a broad audience of stakeholders.
• Philanthropy Matters: 2013 Edition, a collection of Director Notes designed to individually address such issues as:
• Aligning corporate giving and business activities
• Clarifying the oversight role that the board of directors should perform, while establishing standards of independence for board members
• Measuring financial and social performance
• Enhancing disclosure on corporate giving and developing a communication plan to engage stakeholders

For additional information, visit the sustainability pages on our website.

 

Sustainability around the World

Brazil
If Morning Joe or the Evening News are your main sources of knowledge for what is going on in the world, then the world conference on sustainability that took place in Rio de Janeiro in June and was attended by 40,000 people from governments, businesses, and civil society organizations and NGOs may have escaped your notice.

The Rio +20 United Nations Conference on Sustainable Development was named after a 1992 Earth Summit in Rio whose legacy included putting “sustainable development” and “sustainability” on the global agenda. If a legacy is left this time around, it will be to move from the concept to its implementation in the form of The Future We Want, the name of the outcome document adopted by participating governments. The outcome document covers how the green economy can be used as a tool to achieve sustainable development, ways to strengthen the UN Environment Program (UNEP), the promotion of corporate sustainability reporting measures, steps to go beyond gross domestic product to assess the well-being of a country, developing a strategy for sustainable development financing, and adopting a framework for tackling sustainable consumption and production.

South Korea: If Mesopotamia gave rise to civilization and England gave birth to the Industrial Revolution, then South Korea wants to be the place from which “green growth” originated.

South Korea was one of the first countries in the world to weave a green growth purpose into its own national economic development policies and write this requirement into its plans. These initial efforts led to the creation of the Global Green Growth Institute (GGGI) in 2010. Now, under an agreement signed in 2012, South Korea is promoting the Green Growth Knowledge Platform (GGKP), a government initiative that brings together its Global Green Growth Institute, the Organisation for Economic Co-operation and Development (OECD), the United Nations Environment Program (UNEP), and the World Bank. The World Economic Forum is also one of several other partners and supporters involved. Directors of the GGGI include Sir Nicholas Stern, author the Stern Review on the Economics of Climate Change; Lars Rasmussen, the former Prime Minister of Denmark; Dr. Izabella Teixeira, the environment minister of Brazil; and other directors from Australia, Gambia, Guyana, India, Korea,  South Africa, Singapore, the United Arab Emirates, and Kazakhstan. The U.S. based directors are Professors Jeffrey Sachs of Columbia University and Thomas Heller of Stanford University. The Seoul-based executive director of the GGGI is Rich Samans, an American formerly on the staff of Vice President Gore who most recently ran the World Economic Forum’s partnership, governance, and sustainability program in Geneva.

 The GGKP, which is an outgrowth of the GGGI, was established to help countries—and specifically those in the developing world—design and implement policies to move toward a green economy. The GGKP definition of green growth “entails avoiding the convention of ‘grow first, clean up later’ and discourages investment decisions that entrench communities and countries in environmentally damaging, carbon-intensive systems. Rather, it seeks to catalyze investment and innovation in ways that give rise to new, more sustainable sources of growth and development.” And what does this have to do with companies? Much of the global economic growth over the next few decades is projected to come from the nations of the global “south” in Asia, Africa, and Latin America. To be sustainable, this growth will require massive infrastructure investments that will be subject to governmental rules and procedures the GGGI hopes will be informed by sustainable concerns.

 

Sweden: Since 2005, about 400 invitees from all over the world have gathered each summer for the Tällberg Forum, a four-day event named after the village where it is held. The forum is run by a former top executive of the Swedish carmaker Volvo.

The general theme of the June 2012 forum was “How on Earth Can We Live Together,” which included a focus on the role of technology. The forum attracts people from all walks of life and ages. Social entrepreneurs from the United States, Africa, Latin America, Europe, and Asia joined business leaders, government officials, scientists, historians, musicians, and the occasional king, queen, prime minister, or president from the Middle East or Europe. The forum favors systems thinking, humanistic values, and respect for nature, as well as the significance of dialogue and reflection across cultures, professions, and mindsets to achieve common understanding for desired change. Here are some of the insights shared during this year's event:

• According to American historian Adam Hochschild, the abolition of slavery in the 1800s and society’s recognition today of the need to address climate change have something in common. Hochschild said that “a great leap of empathy” turned people’s minds against slavery after it flourished for 300 years. He said a similar leap is needed today with regard to future generations in terms of demonstrating that we care as much about their comforts as our own. "We've done this before," he said, "but we don't have time."
• The phenomenon of big data represents a "step change" in society. According to a speaker from the SAS Institute, 90 percent of the data in the world today have been gathered in just the past two years.

 

Sustainability Research to Know

A study from the Doughty Centre on Corporate Responsibility of the Cranfield University School of Management in the United Kingdom addresses the topic of “How to Identify a Company’s Major Impacts—and Manage Them.” This question of measuring company impacts was also one of the critical questions discussed at the meeting of the Initiative on Sustainability advisory board that is referenced earlier. The June 2012 report is by Mandy Cormack, a former vice president of corporate responsibility for Unilever who helped the company become recognized as an innovator in the field.

During Cormack’s tenure at Unilever, the company produced Unilever in Indonesia, a Case Study, which was produced as part of a joint project with the U.K. and Dutch branches of the charity Oxfam. That 2006 study addressed the interconnection of wealth creation and poverty reduction by mapping specific company impacts and identifying where the company could make a positive contribution by engaging poorer people in business networks. For example, the study found that 55 percent of the estimated 300,000+ full time jobs in Unilever’s value chain in Indonesia were not in the supply chain but in “downstream” retail operations. To this day, the Indonesia study remains one of the few to assess how a global company can affect a specific country. This backdrop is why the new Doughty Centre study commands our attention and the reason we commend it to yours.

The Doughty Centre report argues that the responsibility that a company has for its social, environmental, and economic (SEE) impacts has been a problematic to track because:

• scoping and managing impacts was not seen as the responsibility of business;
• the tools and processes for identifying those impacts barely existed; and
• only a few managers in some pioneer businesses knew how and why to use the tools that do exist.

Companies still need to take steps to avoid reputational and operational risks and know how to improve their performance in these areas. The guidebook, which is intended for both beginners and others who are well along the path of sustainability management, has five sections:

Section 1 addresses definitions, terms, drivers for change, and management mindset issues.

Section 2 describes five essential steps to identifying and managing impacts: self-assessment, interpretation, contextualization of company activities, capturing “good housekeeping” (which is described as a U.K. term meaning “good effective internal operational practices”), and building a shared understanding of the company’s footprint.

Section 3 offers five more steps for “Upping Your Game” toward better performance through stakeholder awareness, trend, risk and opportunity evaluation, materiality assessment, and developing action plans for internal and external communication.

Section 4 maintains the “five” theme in naming five challenges along with tools and techniques for confronting them. The techniques discussed include open stakeholder engagement, moving from SEE impact management to corporate strategic planning, and doing more internal and external communication.

Section 5 is focused on challenges for the future. Among them are the challenge of macro versus micro impacts, the CR manager’s roles and responsibilities, implementing CR strategy in times of change and potential game changers, as well as dealing with “pretender” theories such as checkbook philanthropy.

For additional information, visit the Cranfield School of Management Website.

To access the Unilever report, visit the company’s website.

Keeping Up with Sustainability Movers

Since going into partnership with the Dow Jones Indexes in 1999, the Zurich-based SAM has become one of the definers of what constitutes sustainability performance for large global companies. Many companies aspire to earn a spot on its annual Dow Jones Sustainability Indexes review.

The 2012/2013 DJSI World Index review was released on September 13, 2012. It contained good news for some U.S. companies and less good news for others. The good news is obvious. The less good stems from the fact that companies are not only named to the list, but can also be deleted from it. These conclusions are made on the basis of a corporate sustainability assessment performed by SAM. This year, SAM announced prominent U.S. based additions to their list that included Microsoft and Target. Deletions included IBM and United Technologies. The DJSI approach is to invite the world’s 2,500 largest companies in terms of market capitalization to report on their sustainability performance according to the metrics created. There is regular turnover on the list, which is based on comparisons of company performance against select standards. The most coveted position is the title of top performer in one of the 19 business “supersectors” drawn from the 58 business sectors. No U.S. company tops any of those supersectors in the 2012/2013 results. Companies from France, Germany, the Netherlands, Spain, and Switzerland are present on more than one sector on the list. DJSI, which is now the S&P Dow Jones Index, also issues regional world indexes, including one specific to North America. Companies involved in the Initiative on Sustainability such as Altria and Abbott are present on the North American list.

For additional information, visit http://www.sustainability-indexes.com/review/annual-review-2012.jsp

Keeping Up with Sustainability Thinkers

Any listing of world-class sustainability thinkers would have to include Britain’s John Elkington. To cite just one reason, he coined the term “triple bottom line” and established it as a common reference in corporate citizenship and sustainability discussions around the world. I recently caught up with Elkington at the annual June conference of Brazil’s Instituto Ethos in Sao Paulo.

Ethos is the leading sustainability NGO in Brazil and also happens to be one of a couple of organizations on whose advisory boards John and I serve together. The heavily attended Ethos conference draws hundreds of participants and speakers from throughout Latin America and the rest of the world. This year’s conference took place on the eve of the UN’s Rio +20 meeting. Even in Brazil, not much was expected to come out of Rio +20. But even with this skeptical backdrop, John’s message was unusually upbeat. In fact, in my experience it was more optimistic than anything I had experienced in the nearly 15 years I have been hearing him speak and reading his work. The reason? “Zeronauts,” a term he uses to describe the radically innovative entrepreneurs who are developing enterprises focused on generating zero of everything: zero waste, zero toxics, zero carbon and, eventually, zero poverty. These creative capitalists are the focus of his new book The Zeronauts: Breaking the Sustainability
Barrier, which highlights 50 pioneers addressing five critical challenges: population growth, pandemics, poverty, pollution, and the proliferation of weapons of mass destruction. Elkington’s premise is that in a world that will soon need to support 9 billion people, there will be a need for fundamental changes in mindsets, paradigms, behaviors, and cultures. The challenge for existing companies is that incumbent industries and firms are less likely to be sources of the disruptive change that is needed.

For additional information: http://thezeronauts.com/

About The Conference Board Initiative on Sustainability

This organization-wide initiative is designed to more fully leverage all of the work The Conference Board does globally on the topic of sustainability across all our areas of research, dialogue and learning. It replaces and succeeds the previous Center for Sustainability at The Conference Board. The Initiative is being guided by an Advisory Board in formation of industry leaders, independent thought leaders, and the leaders of the research team at The Conference Board.