Does the Draft EU Directive for Mandatory Sustainability Reporting Apply to US Companies? AND – Stock Exchanges Move One Big Step Closer Towards GLOBAL Mandatory Reporting As Well

By Louis D Coppola @ G&A Institute..

I received an overwhelming response to the post on March 17, 2014 concerning the European Unions moves to make Sustainability / CSR reporting mandatory.  For those of you that have not read my original post you can take a look here:

http://ga-institute.com/Sustainability-Update/2014/03/17/european-union-moves-closer-to-make-sustainability-csr-reporting-mandatory-in-all-28-member-countries/

A question that came up a lot was whether or not this would apply to US companies operating in the European Union with more than 500 employees.  This is a great question and although I had heard through the grapevine that it would apply, I did not feel certain enough to state that fact because I could not find an official statement or clause that I had found in draft directives.  I had only heard this from other practitioners, in other articles etc that it would impact US companies.

Then I received an email from Carly Greenberg and Tim Smith at Boston Trust thanking me for the post, and calling my post “informative”.  I am very fond of Tim Smith and a real fan of his tremendous work in driving SRI over his entire 40+ year career with ICCR and now with Walden Asset Management – I sometimes refer to him as one of the Godfathers (Hey – I’m Italian and from NY so.. forgive me )  of SRI so I was very humbled to get this email and I knew that I had to find the answer to this question.  I consider myself lucky that over my relatively short career in Sustainability (14 years) Tim and I have crossed paths, shared panels, and discussed issues in some depth.  He has truly impacted the field more than almost anyone (and continues to today), and has impacted my career / thoughts etc dramatically.  (Thanks Tim!)

EUREKA! – I did find the copy of the draft directive itself and after reading through it with a fine toothed comb I came across a clause which I believe to be the smoking gun which was under section 3 “LEGAL ELEMENTS OF THE PROPOSAL” (the bold part is the important part):

The Accounting Directives regulate the information provided in the financial statements of all limited liability companies which are incorporated under the law of a Member State or European Economic Area (EEA). As Article 4(5) of the Transparency Directive refers to Article 46 of the Fourth Directive and to Article 36 of the Seventh Directive, the amendements proposed to these provisions will also cover companies listed on EU regulated markets even if they are registered in a third country.

Based on this clause, any company that trades on at least one of the many stock exchanges in the European Union (most global companies) which you can see in this list taken from a Wikipedia article number over 100+:

Economy Exchange Location Founded Listings Link
European Union European Union Euronext Amsterdam 2000 1154 Euronext
GXG Markets Horsens 1998 GXG
Albania Albania Tirana Stock Exchange Tirana 1996 TSE
Armenia Armenia Armenian Stock Exchange Yerevan 2001 12 NASDAQ OMX Armenia
Austria Austria Vienna Stock Exchange Vienna 1771 99 WB
Azerbaijan Azerbaijan Baku Stock Exchange Baku 2000 BFB
Belarus Belarus Belarus Currency and Stock Exchange Minsk 1998 BVFB
Belgium Belgium Euronext Brussels Brussels 1801 213
Bosnia and Herzegovina Bosnia and Herzegovina
Bosnia and HerzegovinaFederation of Bosnia and Herzegovina Sarajevo Stock Exchange Sarajevo 2001 SASE
Republika Srpska Republika Srpska Banja Luka Stock Exchange Banja Luka 2001 BB
Bulgaria Bulgaria Bulgarian Stock Exchange Sofia 1914 BFB
GuernseyJerseyChannel Islands Channel Islands Stock Exchange Guernsey 1987 1000 CISX
Croatia Croatia Zagreb Stock Exchange Zagreb 1991 ZB
Cyprus Cyprus Cyprus Stock Exchange Nicosia 1996 HAK
Czech Republic Czech Republic Prague Stock Exchange Prague 1861 29 PX
Denmark Denmark Copenhagen Stock Exchange Copenhagen 1620 172 OMX Nordic Market
GXG Markets Horsens 1998 GXG Markets
Estonia Estonia Tallinn Stock Exchange Tallinn 1920 OMX Baltic Market
Faroe Islands Faroe Islands Faroese Securities Market Tórshavn 2004 VMF
Finland Finland Helsinki Stock Exchange Helsinki 1912 130 OMX Nordic Market
France France Euronext Paris Paris 1724 1301 Euronext Paris
MATIF Paris 1986 MATIF (Euronext)
Georgia (country) Georgia Georgian Stock Exchange Tbilisi 1999 261 SSB
Germany Germany Berliner Börse Berlin 1685 Börse Berlin
Börsen Hamburg und Hannover Hamburg/Hanover BÖAG
Börse München München 1830 Börse München
Börse Stuttgart Stuttgart 1861 Börse Stuttgart
Deutsche Börse Group Frankfurt Deutsche Börse Group
Eurex Frankfurt 1998 EUREX
Frankfurt Stock Exchange Frankfurt 1585 FWB
Gibraltar Gibraltar Gibraltar Stock Exchange Gibraltar 2006 GibEX
Greece Greece Athens Stock Exchange Athens 1876 ATHEX
Hungary Hungary Budapest Stock Exchange Budapest 1864 52 BET
Iceland Iceland Iceland Stock Exchange Reykjavík 1985 11 OMX Nordic Market
ICEX
Republic of Ireland Ireland Irish Stock Exchange Dublin 1793 ISE or ISEQ
Irish Enterprise Exchange Dublin 2005 IEX
Italy Italy Borsa Italiana Milan 1808 BIt
Kazakhstan Kazakhstan Kazakhstan Stock Exchange Almaty 1993 KASE
Latvia Latvia Riga Stock Exchange Riga 1816 OMX Baltic Market
Lithuania Lithuania Vilnius Stock Exchange Vilnius 1993 OMXV
Luxembourg Luxembourg Luxembourg Stock Exchange Luxembourg (city) 1927 Bourse de Luxembourg
Republic of Macedonia Macedonia Macedonia Stock Exchange Skopje 1995 MSE
Malta Malta Malta Stock Exchange Valletta 1992 Borza Malta
Moldova Moldova Moldova Stock Exchange Chişinău 1994 BVM
Montenegro Montenegro Montenegro Stock Exchange Podgorica 1993 MNSE
Netherlands Netherlands Euronext Amsterdam Amsterdam 1602 Euronext Amsterdam
Norway Norway Oslo Stock Exchange Oslo 1819 Oslo Børs
Poland Poland Warsaw Stock Exchange Warsaw 1817 439 WSE
Portugal Portugal Euronext Lisbon Lisbon 1769 66 Euronext Lisbon
OPEX Lisbon 2003 OPEX
Romania Romania Bucharest Stock Exchange Bucharest 1882 70 BVB
RASDAQ Bucharest 1996 1486 BVB
Sibiu Stock Exchange (futures) Sibiu 1997 BMFMS
Russia Russia Moscow Interbank Currency Exchange Moscow 1992 MICEX
Russian Trading System Moscow 1995 RTS
Saint Petersburg Stock Exchange Saint Petersburg 1811 SPBEX
Serbia Serbia Belgrade Stock Exchange Belgrade 1894 BELEX
Slovakia Slovakia Bratislava Stock Exchange Bratislava 1991 BSSE
Slovenia Slovenia Ljubljana Stock Exchange Ljubljana 1989 61 LJSE
Spain Spain Bolsa de Valores de Barcelona Barcelona Bolsa de Barcelona
Bolsa de Valores de Bilbao Bilbao Bolsa de Bilbao
Madrid Stock Exchange Madrid 1831 Bolsa de Madrid
Mercado Oficial Español de Futuros y Opciones Madrid 1989 MEFF
Bolsa de Valores de Valencia Valencia Bolsa de Valencia
Sweden Sweden Nordic Growth Market Stockholm 2003 NGM
Stockholm Stock Exchange Stockholm 1863 289 OMX Nordic Market
Switzerland Switzerland SIX Swiss Exchange Zürich 1850 SIX Swiss Exchange
Bern eXchange Bern 1888 BX
Turkey Turkey Borsa Istanbul Istanbul 1985 417 BIST
Ukraine Ukraine PFTS Ukraine Stock Exchange Kiev 2002 PFTS Stock Exchange
Ukrainian Exchange Kiev 2008 UX
United Kingdom United Kingdom London Stock Exchange London 1801 2800 LSE
PLUS Markets London 2004 [N 1] PLUS Markets

 

If you are a publicly traded company and trade on any of the exchanges above you will be affected by this directive.

Also, it is interesting to see that NYSE and NASDAQ both are represented in some ways on this list above. For example NYSE and Euronext are owned by the same parent company – The IntercontinentalExchange Group (ICE).  Euronext has connections to the markets in Belgium, France, the Netherlands, Portugal, and the UK.

The NASDAQ OMX seems to have its name (both OMX and NASDAQ) associated with several exchanges above including Armenia, Denmark, Estonia, Finland, Iceland, Sweden etc.

I’m not sure how these connections tie into this directive, but I think its interesting to point them out as the world becomes more global and exchanges become truly global how do regulations like the EU directive, with the clause above effect these global exchanges?  And what does that mean going forward?

It gets even more interesting when you look at the fact that the NYSE and the NASDAQ are both signatories of the Sustainable Stock Exchanges Initiative (SSEI): http://www.sseinitiative.org/.

The initiative comes from a collaboration between PRI, UNEP, UNCTAD, and UNGC and many of the partners in the initiative already have listing requirements for Sustainability reporting (ex, JSE , BM&F Bovespa).

To become a partner exchange SSEI asks that the exchange publicly endorses the following statement:

We voluntarily commit, through dialogue with investors, companies and regulators, to promoting long term sustainable investment and improved environmental, social and corporate governance disclosure and performance among companies listed on our exchange.

They have also both done their own GRI Sustainability Reports:

NASDAQ: http://www.nasdaqomx.com/digitalAssets/84/84295_2012nasdaqomxsustainabilityreportv2.pdf

NYSE: https://www.nyx.com/sites/www.nyx.com/files/14977_2012_cr_report_130803.pdf

AND

BREAKING NEWS out of Boston (Mar 26th, 2014) – as I write this article CERES, BlackRock (the largest asset manager in the world) and other major institutional investors released their recommendations for listing requirements on exchanges titled:

Investor Listing Standards Proposal: Recommendations for Stock Exchange Requirements on Corporate Sustainability Reporting

These standards will be sent directly to the World Federation of Exchanges (WFE – the trade group for exchanges) who has launched a Sustainability Working Group to discuss and debate sustainability disclosure issues with member exchanges (virtually all global exchanges in the world).

Here’s what NASDAQ had to say:

“We need a joint solution that will help bring more consistent and comparable information to all markets, and will not leave any one exchange at a competitive disadvantage for taking leadership in this space,” NASDAQ OMX CEO Robert Greifeld said, speaking of the sustainability disclosure engagement process. NASDAQ OMX and Ceres have been working together for almost two years on this issue. 

NASDAQ OMX Vice Chairman Meyer “Sandy” Frucher stressed, “What we hope comes out of this process is strong support by exchanges around the globe to move together to create a more uniform approach to sustainability reporting.

“We committed last year, at the urging of institutional investors within Ceres’ Investor Network on Climate Risk, to provide thought leadership for our listed companies on sustainability reporting guidance,” Frucher continued. “To provide us with greater clarity on what investors want in such guidance, INCR, with support from the Principles for Responsible Investment, launched a global consultation among investors, and presented us with a proposal that we are now discussing with other exchanges.”

Here’s what BlackRock had to say:

“Cross border collaboration by stock exchanges will help shift public companies towards more comparable and meaningful disclosure of ESG (environmental, social and governance) risk factors,” said Gwen Le Berre, Vice President of Corporate Governance and Responsible Investment at BlackRock, the world’s largest asset manager with $4.3 trillion in assets under management. “This will enable investors to more accurately value companies and make better informed investment decisions.”

 

Here is the full release which has many other quotes from very important people in very important places demonstrating their commitment to moving this forward:

http://www.ceres.org/press/press-releases/world2019s-largest-investors-launch-effort-to-engage-global-stock-exchanges-on-sustainability-reporting-standard-for-companies

To read the release on the WFE launching its Sustainability Working Group, visit: http://www.businesswire.com/news/home/20140325006381/en/World-Federation-Exchanges-WFE-Launches-Sustainability-Working#.UzL2styt-_Y

The following exchanges came together to initially launch the WG:

  • BM&FBOVESPA
  • Borsa Istanbul
  • Borsa Malaysia
  • CBOE
  • CME
  • Deutsche Börse
  • InterContinental Exchange/NYSE
  • Johannesburg Stock Exchange
  • NASDAQ OMX
  • National Stock Exchange of India
  • Shenzhen Stock Exchange

So when you take all of this into account, why are you still reading this article, and why haven’t you already started working with me to get started on Sustainability reporting? ;)

That was a joke of course, but seriously – one way or another you will be affected – so get in front of these coming regulations/mandates because if you are not, you will be scrambling to get in compliance, and in a position of weakness compared to any competitors that are already doing it.  If you are already reporting, kudos to you, and you will be in a position of strength against your competitors – you have strategically positioned yourself well in the new global environment.   Just make sure you are covering all your bases and your reporting is in-line with whats expected and global standards.

This is not to mention the additional pressures for disclosure and transparency coming from:

  • Key Customers
  • Employees
  • Suppliers
  • NGOs
  • Investors
  • Government
  • Community
  • and other Stakeholders

Which I could write a whole additional book about.

I think its clear to see that the question is not SHOULD you start reporting, its HOW will you get started as quickly as possible.  Your window of opportunity to be prepared is closing, and the time is now to move on this if you have been questioning whether or not to get started.

At G&A we continue to watch these trends shaping the global markets.  We position ourselves at the intersection of corporations and the capital market.  We monitor the groups that shaping corporate valuation and reputation in today’s modern global marketplace.  If you have any questions or would like to talk more about these topics please reach out to me at lcoppola@ga-institute.com.

Best,

Louis D Coppola

For your reference here is a copy of the EU draft directive in full:
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52013PC0207

And Here is the EU portal for non-financial disclosures:
http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm

 

 

“The Girl Effect”: Empowering Girls in the Developing World

By: Selene Lawrence
GRI Data Partner Report Analyst, Governance & Accountability Institute

 

Selene Lawrence Headshot

In 2008, the Nike Foundation channeled their foundation’s experience in the developing world to take part in a new empowerment and education initiative called “The Girl Effect”. The project was created in partnership between Nike and the NoVo Foundation, which searches for sustainable, bottom-up approaches to promote social and economic development. It is co-chaired by Jennifer and Peter Buffet, as well as the United Nations Foundation and Coalition for Adolescent Girls.

The Girl Effect targets vulnerable adolescent girls in the developing world by using funding, awareness and volunteer work to address and uproot the stem of poverty and inequality. The Girl Effect focuses on education, healthcare, and policy to change the lives of millions of young girls threatened by adolescent pregnancy and the debilitating effects poverty. The approach is multi-faceted; the initiative operates by reaching out to NGO’s, volunteers, policy makers, donors and community activists to spread awareness and attract the necessary partners they need to make a difference.

Monetary donations to The Girl Effect from corporations or individuals can be designated to a variety of projects that they either support or have created. To encourage donations the foundation suggests: “Send a girl to school”, “Help her fight a legal case”, “Give her a microloan” or “Start the Girl Effect”. The organization has protocols in place to start the process.

The Nike Foundation’s projects are impressive in their range of approaches. Examples of their twelve innovative, girl-focused projects include programs for Uganda’s adolescent girls which a US$ 30 donation provides 3 washable feminine hygiene kits that girls can utilize for up to 3 years, and a US$ 50 donation provides 250 health and education manuals to girls participating in Teen Girls Workshops throughout the year.

In Zimbabwe, US$ 60 will provide 10 orphaned girls training about their legal rights. In Cambodia, a program has been established that empowers girls rescued from sex slavery where a range of donation levels gives girls their own jewelry making kit to provide income and the capital to provide medical examinations. A US$ 140 dollar donation covers tuition, housing, and medical care for two months.

The Teen Mother Empowerment Program in Cameroon will use a US$ 100 donation to cover the materials and logistics for one group of teen mothers to obtain a microloan. Not only are young girls extremely vulnerable, but they also represent the future and their programs in early education, such as providing pre-schooling for girls’ children in Ghana, foster awareness and education at an early age.

These examples are just a fraction of their donation-based programs which are extremely impressive in the scale, variety and organization of programs that are at the forefront in tackling girls’ issues in the developing world.

Although The Girl Effect is Nike’s biggest initiative with the widest array of partners and networks, the Nike Foundation also created “Girl Hub” in collaboration with the U.K. Department for International Development (DFID) in 2010. Girl Hub actively engage adolescents in Ethiopia, Nigeria and Rwanda in encouraging participation in family planning, outreach, and resource planning. This work, along with The Girl Effect is setting-up the empowerment of young girls on a local level with the resources essential for development.

Through Girl Hub they have created a radio-drama program in Ethiopia called Yenga (ours). The broadcast has a program with characters that reflect the lives of so many of its listeners, young girls dealing with and overcoming violence, teenage marriage and pregnancy, staying in school etc. Immediately following Yenga is a talk show that hosts recognized journalists and artists who address the issues presented in the drama. This is an exciting, actively engaging way for young, isolated and impoverished girls to gain confidence and foster independent ideas.

Yenga has produced a music video for a song in the show called “Abet”, which translated means: We Are Here. This video has been viewed 500,000 times in Ethiopia, which The Girl Effect proudly states is the fifth most watched video in the country. Permeating the minds of young girls as well as providing the resources and outlets to gain resources is the spark towards change.

In 2013 The Girl Effect produced the official “Girl Declaration” in collaboration with the development organizations with whom they partner. This declaration incorporated the input of 508 impoverished girl voices from around the world. The declaration has goals, targets, and principles as well as individual stories that map out the goals of The Girl Effect and provide a framework for The United Nations and other organizations to address the problem. UN secretary-general Ban Ki Moon publicly backed the declaration stating: “To achieve meaningful results, we need fresh solutions to girls’ education challenges and we must heed the voices of young people.” The Girl Declaration has demanded and received attention from the political world to aid the change that the Nike Foundation and their global partners seek to achieve.

In October 2013 The Girl Effect, as well as multiple foundations that work alongside Nike, promoted the second annual International Day of the Girl (IDG). This special event emphasized the continued need for prioritizing young girls in the development agenda.

Targeting communities and individuals though education, culturally relevant and engaging economic initiatives has been the breakthrough in modern sustainable development theory, and Nike has used their advantages to make headway in the field. Nike is putting young girls as a priority on the path towards a healthier and independent sustainable global community.

About the Author: Selene Lawrence is a GRI Data Partner Report Analyst at Governance & Accountability Institute (the exclusive GRI data partner in the US, UK, and Ireland).  While analyzing Nike’s sustainable business report, a GRI-G3 Application Level B report, she came across this wonderful program. She is also an Undergraduate student at Hunter College, City University of New York, and expects to graduate in Fall 2014. Selene is using her experience at Governance & Accountability Institute to gain insight in applying sustainability to the corporate world and improving transparency.

Visit http://www.girleffect.org/ to explore their programs, watch videos and find ways to get involved.

Watch “Abet” here: https://www.youtube.com/watch?v=DjqCEZO04yc

Climate Change? Global Warming? This is About Science…What Are Scientists Thinking?

by Hank Boerner, Chairman, G&A Institute

Climate change.  Real or not?  Global warming. Really?  The argument goes back and forth — is Mother Earth warming? Or perhaps cooling? (Skeptic: Look at this winter weather. What warming?) Is climate change the result of human activities over the past century and longer back than that as individuals and industry and governments pumped ton after ton of emissions up into the atmosphere?

Are the results reversible if human caused?

Today, the prestigious American Association for the Advancement of Science (AAAS) released an important report — What We Know, its assessment of current climate science “that emphasizes the need to understand and recognize possible high-risk scenarios…”

What most of us know as Average Joe’s and Jane’s is that we are experiencing — severe droughts. More severe storms. Melting icebergs. Rising seas. Heat waves. Serious drought. More wildfires than usual in wilderness areas.

Scientists tuned in to climate change have been warning about the gases emitted – the Greenhouse Gasses – that have been poking holes in or dissolving the very important ozone layer that protects humankind and all life from the dangerous ultraviolet rays our wonderful sun sends forth.

The statement from the 120,000-member association is that scientists have developed a solid understanding of how the climate is responding how the climate is responding to the build up of GhG emission and also the uncertainty that exists about the long0term impacts of same.  But many scientists and climate experts agree with the view that we are most likely at a dangerous tipping point in the human experience.

Highlights of the “What We Know” effort as voiced by an AAAS panel and associated scientists: :

–There is (or should be) little issue about climate change in our modern society. It is happening here and now.
–On this, a clear majority of climate scientists agree.
–We are at risk of pushing our climate system toward abrupt, unpredictable, and potentially irreversible changes…with very damaging impacts.
–The sooner we are the lower the risk / and cost / and just how much we human can do.
–Scientists may recognize the build up of Greenhouse Gasses (GhGs), but they also recognize the [considerable] uncertainty about the long-run results.

And so, on the last point, the AAAS is embarking on a new initiative to expand the public dialogue about the risks of climate change.

With the brand and reputation behind the campaign (AAAS is the largest general scientific society in the world), the general public and especially policy makers will be hearing more from the scientific community about the issues going forward.

Nobel laureates, academics, scientists, other experts will be speaking out and encouraging all Americans to think about climate change as a risk management issue…one of the most important in our lives even with many other personal and societal issues usually going on around us..

You can do your part. Read the AAAS report. Help spread the word on What We Know. Don’t brush off or ignore the naysayers and climate change deniers. Engage in the discussion. Share available scientific knowledge with them. If you are an investor in a fossil fuel company, press board and management on what the corporate leadership is doing to address the climate change issues (risk management is part of the board’s job).  Ask about the risks for the company (you are an owner– entitled to ask!). Ask political candidates in this 2014 election year where they stand on global warming…or if that makes them or you uncomfortable, on climate change issues. .

The AAAS will be making a new web site available to help in the knowledge-sharing mission. We’ll let you know when we know the URL. Information is available at the association’s web site: www.aaas.org

What are your thoughts on climate change? Global warming? How we can address the issues? Share those thoughts!

Closing thought from this writer:  On this small blue marble hanging out in space, when it comes to climate change, we are all in this together, the scientists are saying today. I recall that over the years, looking down from space, the astronauts would remark how fragile (and beautiful) our Spaceship Mother Earth is. . We have to all work all together to keep it that way!  (Isn’t that what the sustainability movement is about?)

European Union Moves Closer To Make Sustainability / CSR Reporting Mandatory in All 28 Member Countries

Council of the European Union

By Louis D Coppola @ G&A Institute..

We have been closely tracking the European Union’s draft directive for the disclosure of non-financial and diversity information by certain large companies.  A major hurdle has just been cleared to adopt this directive,  it has cleared an important stage in the EU legislative process.

On February 26th, 2014 the Council of the European Union’s Committee of Permanent Representatives endorsed an agreement on the draft directive.  The agreement still needs to be formalized by the European Parliament and the Council, this is expected to take place on April 15th, 2014 which is now less than a month away.

This regulation will apply to all companies with over 500 employees in any of the 28 European Union member countries – which represent the largest economic area in the world.  It is estimated that some 6,000 companies will fall under the scope of the directive.  To put this in perspective there are currently ~2500 global organizations Sustainability reports in the GRI Global Database, whichrepresents one of the most comprehensive databases of sustainability reporting.  Full disclosure:  G&A Institute is the exclusive data partner for the US, UK, and Ireland and is responsible for analyzing all reports of organizations HQ in these countries, and feeding that data into the global GRI database.  You can find out more about the Institute’s important data partner role here:  http://www.ga-institute.com/gri-reporting-data-partner.html

Companies will be required to report annually on:

  1. Environmental Matters
  2. Social Matters
  3. Employee-Related Matters
  4. Respect for Human Rights
  5. Anti-Corruption Matters
  6. Bribery Matters
  7. Diversity Policy

The report will need to include a description of the policies, outcomes and the risks related to these matters.

Directly from the EU Council press release:

The new measures are aimed at strengthening the company’s transparency and accountability, while limiting any undue administrative burden, and ensuring a level playing field across the EU. They will be incorporated into the directive on the annual financial statements and reports of certain types of undertakings, which was adopted on 26
June 20132

This regulation is modeled after the Global Reporting Initiative (GRI) approach of “Report or Explain”.  Any company that does not pursue policies in the area of these matters, will have to publicly and thoroughly explain/state why it has chosen not to do so.

The GRI is one of the frameworks that is referenced in the introductory part of the legislative proposal and the new G4 covers all of the matters in the proposal from environmental to bribery.

Additional Background from the release:

The necessity to improve undertakings’ disclosure of social and environmental information is a part of the EU strategy to promote corporate social responsibility adopted in October 2011, which acknowledged the importance of businesses divulging certain information with a view to identifying risks and increasing investor and consumer trust.

Non-financial reporting is vital for managing change towards a sustainable global economy by combining long-term profitability with social justice and environmental protection. It also helps monitoring undertakings’ performance and their impact on society.

The European Union sees this as a matter of competitiveness in the global marketplace.  As such, the person heading this initiative is the president of the EU Competitiveness Council, Kostas Hatzidakis.  In the official press release Kostas has this to say:

“this decision provides the European Union with the first legislation on non-financial information reporting. Corporate Social Responsibility is an enabling tool for business productivity and contributes to a smart and sustainable growth. It is not only for shareholders but also for stakeholders and citizens that it adds value”.

And the GRI Deputy Chief Executive Teresa Fogelberg commented on the new steps taken by the Europena Union Committee of Permanent Representatives (COREPER) of the governments of the EU member states:

 “This is a great step towards establishing a more robust EU policy framework for reporting and transparency. I praise the determination and cooperation of the EU institutions, particularly the Greek Presidency and the European Parliament Rapporteur Mr Baldassarre, as well as the other actors involved, for such a positive and encouraging achievement. I am confident that, if adopted, this policy would have a great impact on making progress towards smart, inclusive and sustainable growth in Europe and beyond.”

 

Carrots & Sticks III (2013 Edition)

The Governance & Accountability Institute continues to watch this regulation, and many other global regulations as part of its monitoring and research.  G&A contributed the United States portion of the bi-annual GRI research report “Carrots and Sticks” which deep dives into Sustainability reporting policies worldwide, this 2013 report covering 45 countries and regions.

If you’d like to learn more about global regulations you can download the 2013 Carrots and Sticks research publication from our website here:
http://www.ga-institute.com/research-reports/ga-institute-contributes-to-carrots-sticks-iii-2013-edition.html

 

 

The official press release from the Council of the European Union can be seen here: http://gr2014.eu/sites/default/files/Hatzidakis%20COREPER.pdf

 

 

1914 to 1964 to 2014 – Models for U.S. Companies

by Hank Boerner – G&A Institute

Let’s start in January 1914 — entrepreneur extraordinaire Henry Ford, founder of Ford Motor Company (his third company try at auto manufacturing) announced that workers would receive the outstanding sum of $5.00 per day – in effect, doubling their salary. That way, he reasoned, those assembling Ford cars could own one! And buy they did — there were soon millions of the famed Tin Lizzie (Model T) on the expanding road network of the United States.

The American society would be shaped by the rolling out of tens of millions of cars and trucks that followed the decision.  The very landscape of the country would be re-shaped from rural, dusty dirt roads to sprawling super highways and “sub-urbs” exploding in growth around the city centers – all made possible by the automobile.

Virtually all of American manufacturing would be shaped by the dramatic decision of Henry Ford. The “social contract” between large company and society, large company and worker, would evolve into an important mutual dependence and shared prosperity. Many boats would rise in the U.S. economy of the new Industrial Age.

For a time. We had a serious interruption when the wild speculation on Wall Street brought Main Street America to its knees in October 1929 (sound familiar?). The years of the Great Depression would drive millions of families to despair. The Second World War saved our economy and perhaps even our democracy from internal stress.

The post WW-II industrial prosperity would revive industrial and private prospects. Millions of Americans moved into the middle class (the broad middle, between lower and higher rungs of the economic ladder).

Much of the industrial productivity gains were shared; the economic prosperity was shared. Then 50 years on from the Ford decision important changes began in American business life.

The social contract — company/worker — began to fray with evolving onslaughts from the private sector. September 13, 1970 was a watershed – Dr. Milton Friedman, University of Chicago economist, published an essay in The New York Times magazine. CSR? Rubbish, he said (paraphrasing), Corporate leaders had the responsibility to produce the best return for stockholders. If they wanted, the stockholders could dispense money to charities, etc.

I was at American Airlines managing system corporate responsibility (“citizenship”) programs at the time. I could see the changing attitude on the part of business leaders — Friedman’s jeremiad hit home with many leaders. Soon “Neutron Jack” Welch would take the helm at General Electric and begin to set new tone to the social contract.  (Neutron – 1960s term for people would vanish as when a neutron bomb would go off.)

Pioneering CSR efforts quickly wound down at AA and many other large companies.  The few CSR pioneering managers moved on to other functions.  It would be a long time before CSR was back in the manager’s lexicon.  But happily, it is back!

So now we are 100 years forward in time from when Henry Ford had his brilliant insight and shared the fruits of greater productivity with his workforce. And by extension all of American society.

January 2014 — the good news is that CSR is again front and center with American companies and companies around the world. The pendulum has swung from Henry Ford (progressive thinker) to Milton Friedman (conservative thinker) to….What in 2014?

I’d like to think to more enlightened, progressive thought leadership. Time will tell. Henry’s revolution was far reaching and sent dramatic waves of change through industry and society.

So did Dr. Friedman’s views - his views were reflected in the Reagan Revolution and the political swing to much more conservative trends in the American society; this began in earnest in 1964 (with Senator Barry Goldwater’s bid for the presidency). Fifty years on from Henry Ford and the $5 per day we experienced the swing to the political right, and here we are again 50 years later (and 100 years from 1914 and the $5 wage) with what looks like either a swing back to progressive or a very divided national view on these things. With continuing divide along economic, political, philosophic, and management theory lines.

Quo vadis — where are we heading? — is a very important question for all of us but especially the young men and women who will be moving into leadership positions over the coming years. Good news:  I’m impressed with what I see in their enlightened views on the dynamics of the business-society relationship. The Millennial Generation has some very good ideas about how to make our society more sustainable, and our institutions more responsible in their actions.  The social contract may be coming back in style (but in different ways, of course).

I think old Henry would be pleased with what he would see as we re-think the frayed social contract. What are your views?

Chicago Publishes GRI G3.1 Application Level C Report – Competition Heats Up Between Cities

G&A Institute as the exclusive GRI data partner in the United States just recently received the registration for a new GRI report coming from the City of Chicago.  This report is a GRI G3.1 Application Level C report.   This trend has been accelerating recently as more and more cities and municipalities scramble to position themselves as the most sustainable cities, to draw more professionals seeking a better quality of life, and to make themselves the next home for sustainable corporations.

You can view the full Chicago report here:  http://www.cityofchicago.org/content/dam/city/progs/env/SCYear1Report.pdf

This report is an update on the Sustainable Chicago 2015 program.

“A sustainable Chicago is a city that spends less on energy use with each passing year, creates good-paying jobs in up-and-coming industries, responsibly maintains and upgrades its infrastructure, and ensures every Chicagoan has the opportunity to live a healthy and active lifestyle.” — Mayor Emanuel

Sustainable Chicago is organized into seven categories critical to the sustainability of the city. It sets twenty-four specific goals and identifies key actions to take to reach those goals by 2015. It is a clear commitment of what government needs to and will do. It is also a roadmap for how Chicagoans, at home and at work, can get involved.

The seven categories are related and reinforce each other – success in one can lead to or amplify success in another.

  1. Economic Development and Job Creation
  2. Energy Efficiency and Clean Energy
  3. Transportation Options
  4. Water and Wastewater
  5. Parks, Open Space and Healthy Food
  6. Waste and Recycling
  7. Climate Change

Recently other cities and municipalities have issued reports as well.   Many cities are competing on Sustainability now.

Here are just a few examples:

In my own hometown of NYC we have the large and ambitious PlaNYC program which was launched in 2007: http://www.nyc.gov/html/planyc2030/html/home/home.shtml.

In PlaNYC, we sought to address numerous challenges to our city’s growth: How will we enable up to one million new residents to live, work, and play in a city already congested and brimming with activity? In a city with over 520 miles of coastline, how will we adapt to, and mitigate, the growing risks of climate change?

PlaNYC has changed our city dramatically since 2007, achieving the cleanest air quality levels in 50 years, more New Yorkers recycling rigid plastics and biking throughout New York City, planting over 750,000 new trees and counting, and passing the halfway mark of reducing citywide greenhouse gas emissions by 30 percent by 2030. We will continue to achieve major milestones as we accelerate our efforts.

Our city faces renewed challenges today as we recover from the damage and disruption caused by Hurricane Sandy. We can’t know that the future will not repeat the past, so we much prepare on all fronts. However, we can say this with confidence: we will mobilize the same spirit, ingenuity, and accountability to make New York a greener, greater, more resilient city.

PlaNYC has a wealth of reports on the progress, the plan, and other studies:
http://www.nyc.gov/html/planyc2030/html/publications/publications.shtml

As the growing number of corporations focus on their Sustainability initiatives these often feature goals that are tied to their facilities and office space.  They also tie goals to another important stakeholder, their employees, and many of these tie to the cities they live, work, play and raise families in.

Could cities be positioning themselves to take advantage of this trend, and draw big business to locate in cities with the most sustainable infrastructures and initiatives themselves?  Will cities be in a new competition to draw residents, and economic development by competing on the Sustainability playing field?  I think so.. and the smart ones have a head start.

As corporations look at their 2015, 2020, 2050 etc sustainability goals, how will they make sure they tie their long term planning to meet these objectives.  They will need to make sure that their new or re-located facilities, factories, and offices spaces are located in world class sustainable cities like Chicago, New York, San Francisco and the many other cities that are attempting as public policy to position themselves as “the most sustainable.”   The Governance & Accountability Institute is tracking this position and its heating up.

A quick google search for “Most Sustainable Cities” will show the enormous amount of awards, lists, etc that are being generated around this topic.   The competition is on, the game has begun, the horses have left their gates —

Will your city be considered Sustainable enough to survive?