Are we talking sustainability reporting or sustainability performance?

A reader recently inquired about whether or not I had seen any ranking or indexing scheme that rates companies on their actual sustainability performance - not just the quality of their reporting. My answer: surprisingly hard to come by!

The professional indicies such as the Dow Jones Sustainability Index and the FTSE4GOOD use sustainability reports and other data provided by companies on the list (or competing to get on the list) to make a valuation of their performance from a risk exposure and future value perspective. Often times the methodology is not made public because these of course are proprietary products. (Note: I am not sure if the two above-mentioned products make their methodologies public or not).

The only other performance evaluations I can think of are award schemes. There are publications like the former Business Ethics Magazine (now the CRO)that rank the 100 Best Corporate Citizens. Many industry associations also award their members or companies in the industry for performance. In the UK, the membership association Business in the Community (BiTC) runs a very high profile and competitive Corporate Responsibility Index annually.

Quality of reports often act as a proxy for performance. Take for example the bi-annual Global Reporter's survey done by SustainAbility, UNEP, and Standard & Poor's which ranks report quality. Check also the Roberts-McKenna Pacific Sustainability Index which ranks companies reports on a system that awards companies for the breadth and depth of issues they cover.

Why is it easier to find rankings of report quality than it is to find rankings of performance quality?

GRI Book Club: The Wal-Mart Effect

The Financial Times ran a news story yesterday with the headline "Wal-Mart postpones its green report." Seems that a draft circulated to its main stakeholders "was rejected as inadequate" according to the journalist. The world's largest company had originally promised a sustainability report by mid-2007 - a promise made back in 2005 when shareholders and advocacy groups put Wal-Mart under fire on their sustainability practices.

I see a real opportunity for Wal-Mart here - they have the chance to revolutionize the practice of reporting and make real strides towards understanding their sustainability footprint and reinforcing the global movement toward a common language for reporting. Fingers crossed they also see it that way.

No one really knows how Wal-Mart sees such things claims Charles Fishman - author of "The Wal-Mart Effect". Its an easy-to-read book which I am about 3/4ths of the way through. Mainly it's about the economic impact that Wal-Mart has on communities and its suppliers, but just last evening I came across a case study on the Chilean Salmon industry which highlights the power Wal-Mart could weild on workplace and environmental conditions if it so desired.

Fishman outlines the boggling growth in aquaculture in Chile, and the fact that about 1/3rd of that country's total output is bought by Wal-Mart. The problem is that this intensive fish farming is causing coastline damage and is polluting the sea beds underlying hundreds of pens jammed with millions of Atlantic Salmon (incidentially - the species is not native to Chile). Processing factories have sprung up and replaced subsistence agriculture as the main form of employement for people in the region. For the price to remain as low as $4.85 per pound of Salmon at Wal-Mart you can imagine that rehabilitating the environment or providing up-to-code working conditions for factory laborers are not on the priority list for these suppliers.

All I know is less than $5 a pound for Salmon sounds a bit fishy :-)

But imagine if Wal-Mart demanded low priced fish but produced via adherence to basic environmenal and labor rights codes? Fishman points out that "the result could be a completely new kind of Wal-Mart effect - Wal-Mart using its enormous purchasing power not just to raise the standard of living for its customers, but also for its suppliers."

Sustainability reporting: niche or mainstream?

The Global Reporting Initiative was founded on a simple premise: That greater transparency on the part of organizations about their economic, environmental, and social performance would result in a shift towards better performance in these areas over time. It is still too early to tell whether or not this premise which seems strong in theory is actually panning out in practice.

Since we don't yet have proof, this reporting-changing-behaviour question is the topic of much conversation and speculation in GRI circles. Just yesterday we had some guests in from ACCA (accounting association) and KPMG (accounting services) and sure enough, the conversation creeped in this direction.

It started when someone at the table said that there were an estimated 80,000 multinational enterprises in the world (UNCTAD estimates) and that only about 2000 at most had started with reporting. Hence, even if reporting did change behaviour we were looking at a drop in the bucket.

But someone else countered with a very different perspective. He claimed that the 500 largest companies on earth were responsible for generating 70% of the volume of the global economy. 75% produce some sort of sustainability report, and nearly all of the largest 100 do extensive reporting. If reporting is resulting in changed behaviour at these organiztions it can be said that reporting has already had an impact on sustainability due to the high volume of economic power they pack.

What is your perspective?

UN World Refugee Day

Today the United Nations brought the plight of the world's 40 million estimated refugees. I tuned into the UN High Commissioner for Refugees, Mr. António Guterres,web video statement to see what he had to say.

As a person that lives away from my home country I found one of his statements particularily poignent in explaining the difference between people like me and refugees: "In an age of increasing globalization, when more and more people are on the move, refugees are not unique because they are away from home. What sets them apart is that they cannot return there."

Today people do not just flee persecution and war but also injustice, exclusion, environmental pressures, competition for scarce resources and all the miserable human consequences of dysfunctional states.

The task facing the international community in this new environment is to find ways to unlock the potential of refugees who have so much to offer if they are given the opportunity to regain control over their lives.

So many companies are scrambling today to innovate 'base of the pyrimid' strategies - that is to figure out how to engage with the worlds fastest growing markets - those in developing countries. I have yet to hear of any company that has devised strategies for engaging with refugee communities. Any out there?

Sustainability of Olympic proportions

Guest blogger: Debbie Dickinson

George Monbiot, environmentalist, journalist and one of my fave- gurus, wrote a damming piece in a major UK (quality) newspaper on the legacy left by Olympics in the cities that host them.

He says:

“The Games are supposed to encourage us to play sport; they are meant to produce resounding economic benefits and to help the poor and needy. It’s all untrue. As the evictions in London begin, a new report shows that the only certain Olympic legacy is a transfer of wealth from the poor to the rich.”

He then cites a record of environmental and social disruption failures in city after city that hosts the games. As a big fan of the Olympics, I am also not naïve to their negative implications. Sadly, I couldn’t help but nod in agreement at almost each of Monbiot’s claims. So there’s room for improvement – and who will act?

It’s thus with optimism and eager anticipation that we at the GRI learnt this week that the Vancouver Winter Olympics (2010) released their first sustainability report. It’s the first sustainability report ever issued by an Olympic Organizing Committee, so it’s pretty significant news. Their website says:

"VANOC is the first Games Organising Committee to integrate not only environmental but also social and economic responsibility. The report outlines VANOC’s six areas of direct decision-making and actionable authority, including accountability; environmental stewardship and impact reduction; social inclusion and responsibility; Aboriginal participation and collaboration; economic benefits from sustainable practices; and sport for sustainable living. VANOC is using Global Reporting Initiative (GRI) guidelines, a credible international standard in corporate sustainability reporting."

Whilst other Organizing Committees have considered environmental implications, Vancouver (and London 2012) are the first to have a broader sustainability lens that covers environmental, social and economic implications.

Congratulations to Vancouver 2010 and London 2012 in this high-profile step in planning for a more sustainable Olympics.

Let’s hope Monbiot’s future discussions on the Games reminisce a more positive legacy…

A tale of two motor companies

Guest blogger: Debbie Dickinson

I noticed in passing last week that Toyota triumphantly announced sales of their innovative hybrid car – the Toyota Prius – is excess of 1 million. Moreover, they’re aiming for sales of 1000 per year within the next few years.

Largely branded as the world’s first mass-produced eco-friendly car, the Toyota Prius has moved from the marginal into an ever increasing mainstream, both in terms of sales, and also in broad social currency: the idea that a hybrid car is a realistic option has made a significant (perhaps intangible) influence on the market.

In parallel news, today I saw that Ford are expected to make some anticipated “official announcements” on the fate of two British models, Jaguar and Land Rover. Over here in the UK (where I’m based) this has generated a fair bit of media interest. Ideas around factory closures, asset stripping, Britain’s manufacturing industry, and off-shore production are dominating the opinions of those most affected by the expected sell-offs. Employing around 20,000 people in Britain’s midlands, the alleged closure will certainly impact many.

But I also wonder about comparisons between the two motor companies. One is well positioned for the future, whilst the other is at a tipping point of uncertainty. Rewind 5 years or so and both Toyota and Ford were waking up to the urgency of sustainability and corporate responsibility. Ford focused on internal sustainability impacts and went about implementing operational changes – green rating offices and the like – whilst Toyota looked towards their biggest sustainability impact and attempted to improve the impact of their cars.

Take us back to today, and we see the success stories of a company that took the risk and tackled its biggest sustainability issue head on. Toyota are now standing well positioned to future carbon-constrained climates and have the brand reputation of innovative eco-solutions.

I wonder if tales of factory closures, brand sell-off and social disruption through job loss (a-la Land Rover and Jaguar) are the continuing evidence of a changing business climate, and perhaps a tale of what happens by failing to incorporate material sustainability risks into core business. Looking for a business case? Seems Toyota found one.

From G3 to G8

Guest blogger: Debbie Dickinson

There’s been quite a buzz throughout the GRI network over the past two days, as the GRI was mentioned yesterday in the official results from the G8 summit in Germany.

You really can’t help but feel the momentum gaining when eight of the world’s most influential leaders join together and formally encourage organizations to use the GRI framework.

The organizing principle of this year’s G8 summit in Germany is “Growth and responsibility”. Yesterday afternoon featured a session on corporate responsibility and transparency and sustainable growth, in which the reference to GRI was made:

“The development of a consolidated set of principles and guidelines… would help ensue that the [mining] sector contributes to development while at the same time providing a clear and more predictable set of expectations for investors.” The G8 said. As a means to achieve such goals the G8 members said “We encourage mining sector companies to undertake regular reporting using inter alia the Global Reporting Initiative (GRI) framework.”

As well as highlighting mining companies, G8 members also referenced GRI in relation to SMEs, investors and the contribution of transparency and good governance to sustainable development, especially in emerging economies. The GRI network has been something of a buzz since this G8 reference was made.

It strikes me how fast the agenda is changing. A few years ago, we were aiming for mainstream acceptance of sustainability reporting. Whilst challenges still lie ahead it’s nonetheless hugely encouraging to receive political backing and leverage from an international event of as significant as the G8 Summit. To imagine that corporate responsibility and transparent reporting is being linked with good investment and strong development outcomes in as high-profile arena as the G8 summit is a pretty strong indicator that the “old” ways of doing business really are fast becoming outdated. These ideas are some that the network has spent years evidencing – and sometimes on unresponsive ears.

That corporate responsibility and the GRI is amongst the G8 agenda of hard-hitting issues like climate change and African development (two of the major themes of the Summit) is also hopefully a strong signpost for the seriousness with which governments, companies, civil society and others respond to the issue now and in the future.

Perhaps the scale of momentum is causing the buzz through the network at the moment…

Check out the press release, and news story on this event. All the latest happening from the Summit can be found on the G8 2007 website.

Assessing futures: where is globalization leading us?

Many people think that globalization in a new phenomena, but I would say it has been simmering under the surface for centuries since the times of early traders and explorers. Technology, for the most part, has lead to an unprecedented acceleration of interconnectivity between people and goods in the last decade or so. Most experts agree that "globalization" is HERE rather than HAPPENING now that 20% of the world's GDP is made up of global trade - and this is only set to grow.

The consultancy SustainAbility has put out an innovative report looking at four different scenarios for how the future might unfold. It's a complex report and the scenarios are all somewhat rattling - even the most optimisitc which results in a world where demography, politics, economics and sustainability all gel - but only after a terrible pandemic nearly paralyzes the world but yet shakes us into accepting a new way of living and working together.

I have found in my career thus far that it is wise to heed SustainAbility's recommendations, as they are usually on target. Here are the seven recommendations for business they come up with after playing out four very different potential scenarios:

-plan for the unexpected
-engage in the South
-Don't expect "nice" companies to come first
-co-evolve Earth's eco systems
-think opportunity and innovation
-reach beyond comfort zones to find new models
-take a stand and exercise vision, leadership and courage

It's long, but it's worth a read!

Assessing futures: Where is globalization leading us?

Many people think that globalization is a new phenomena, but I would say that its been simmering under the surface for centuries since the times of early traders and explorers. Technology, for the most part, has lead to an unprecidented accleration of interconnectivity between people and goods in the last decade or two. Most experts agree that "globalization" is HERE rather than HAPPENING now that 20% of the worlds GDP is made up by global trade - and this is only set to grow.

The consultancy SustainAbility has put out an innovative report looking at four different scenarios for how the future might unfold. Its a complex report, and the scenarios are all somewhat rattling - even the most optimistic which results in in a world where demography, politics, economics, and sustainability all gel - but only after a terrible pandemic nearly paralyzes the world but yet shakes us into accepting a new way of living and working together.

I have found in my career thus far that it is wise to heed SustainAbility's recommendations, as they are usually on target. Here are the seven recommendations for business they came up with after playing out four very different potential future scenarios:
-plan for the unexpected
-engage in the South
-Dont expect "nice" companies to come first
-co-evolve Earth's ecosystem
-think opportunity and innovation
-reach beyond comfort zones to find new models
-take a stand and exercise vision, leadership and courage

It's long, but it's worth a read!

Sustainability in Amsterdam

Welcome to 209 Keizersgracht in central Amsterdam. This is sustainability week here in Amsterdam, and one of the events organized by the municipality is a series of "Open Houses" around town that feature sustainability oriented organizations, initiatives, or activities happening here in Amsterdam.

We opened the doors of our office for any visitor interested in spending some time with us today. We had a steady stream of passers-by drop in and chat with our staff. There were lots of students from the local universities, staff from the companies and other organizations headquartered here, some press, and some folks that have always admired the historical building from the outside and wanted to take the opportunity to have a peek inside!

An official from the City of Amsterdam was on hand in the morning for a presentation about why the City decided to do a sustainability report based on the GRI Guidelines. In the afternoon there was a workshop on reporting and supply chain management put on by a local consultancy. For the rest of the day we just enjoyed the opportunity to talk about sustainability issues with a diverse group of parties from all walks of life.

In my daily job I am so focused on international outreach and communication that it was a pleasure to meet with neighbours and colleagues also pursuing sustainability in their daily lives and jobs.

Inside scoop: GRI Board meeting

GRI's full board is together today and has been diving into the beginnings of a strategic plan for the organization spanning the next five years. As the person responsible for writing up the strategic plan, its been a pleasure to be invited to be a fly on the wall during these deliberations.

Its such a facinating group, and their rich interactions will benefit the future of the Global Reporting Initiative and the Sustainability Reporting Guidelines as we enter into this new era.

Just to give you a snapshot for the different perspectives the group brings - there is Kumi Naidoo (CIVICUS), Judy Henderson (World Commission on Dams) and Ignaci Carraras (former Oxfam) with major international non-profit leadership experience always providing a 'reality check' about capacity and complexity, fundraising techniques, and importance of network. Then there is Jacqueline Aloisi (former UNEP) an expert in the workings of multi-laterals, governments and local authorities. John Evans (TUAC-OECD) along with Sean Harrigan (former CalPERS) both bring the labor perspective but from two very different sides of the coin. They are complimented by titans of industry such as Kishor Chaukor (Tata), Sir Mark Moody Stuart (Anglo American), and Bjorn Stigson (WBCSD) who lend both their expertise in how to manage sustainability in a company - but also how to manage an organization well. Roger Adams (ACCA) is unprecidented in knowlege about the reporting framework and how it can be implemented.

As their meetings draw to a close the secretariat has its work cut out as they have given us direction on technical development of the GRI reporting framework, learning and services development, brand management, relationship management, fundraising, and network expansion. All of these decisions will help us forge a plan and a path for the future. I will share things along the way over the next months as things evolve.