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May 02, 2014

Corporations Lagging in Sustainability Efforts
    by Robert Kropp

In a follow-up to their 2012 report on corporate sustainability, Ceres and Sustainalytics reiterate that major US corporations are failing to keep pace with urgent environmental and social challenges.

SocialFunds.com -- In a 2012 report entitled The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability, Ceres and Sustainalytics surveyed the sustainability efforts of 600 major corporations and concluded, “More companies should be taking stronger action now.”

“Sustainability has yet to gain traction at anywhere near the scale and speed required given the global threats we face,” Ceres president Mindy Lubber said at the time.

Two years later, ignorance of the effects of climate change and resource scarcity is even harder to justify. Yet according to an update to the 2012 report, major corporations are not doing much more incorporating of sustainability measures today.

The new report, entitled Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability, measures the sustainability performances of more than 600 US corporations according to a set of key metrics. Especially in the setting of greenhouse gas (GHG) emissions reduction targets, improvement over 2012 has been minimal.

“More than two-thirds of the companies evaluated (438) are taking steps to reduce GHG emissions, but only 35 percent (212 companies) have established time-bound targets for such reductions,” the report states. Furthermore, the report continues, “only six percent have quantitative targets to increase renewable energy sourcing.”

What gets measured gets managed; that being the case, the findings of the new report support the position that corporations are not doing enough to address urgent environmental and social challenges, while the externalization of environmental and social costs continues. The disconnect between corporate activity and sustainability is especially stark when the issue of water scarcity is considered. The percentage of water-intensive companies addressing water-related risks actually declined slightly since 2012.

“Given the acceleration of environmental and social challenges globally – floods, droughts, and workplace tragedies – most US corporations are not keeping pace with the level of change,” Ceres president Mindy Lubber said.

On at least two significant issues, however, corporate performance has improved somewhat. The percentage of companies with codes of conduct addressing human rights in supply chains increased from 43% in 2012 to 58%. Improvement in this important area may be linked to the fact that there has been improvement in investor engagement as well; 52% of companies are engaging with in investors on sustainability issues, compared to just 40% in 2012.

“Leading companies are looking to gain recognition from investors for their sustainability actions, inspire their workforces by integrating sustainability into the company culture, and incorporate the insights of external stakeholders into decision-making processes,” the report states. The top performers “are using multiple tactics to engage investors including the integration of sustainability information into mainstream investor communications, highlighting sustainability performance and innovations at annual meetings, and directly engaging with shareholders on sustainability topics.”

Also, while the number of companies doing so remains relatively small, a growing percentage is incorporating sustainability performance into executive compensation packages.

Overall, however, improvement can be described as incremental at best; and, as the report states, “Incremental progress in tackling global climate change and other sustainability threats is simply not enough.”

“The findings of this report should inspire companies to examine their own progress and identify where they stand on the path to sustainability,” said Michael Jantzi, CEO and Founder of Sustainalytics. “This is about more than how companies stack up against their peers – it’s about how innovation is driving performance from the corporate boardroom throughout the entire supply chain.”

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