Hiring? Most Likely The Newbies Will Be Millennials — Is Your Workplace Ready — Is Your Company a Sustainability Standout?

The Millennial Generation — that’s men and women born in the years 1982 to 2004 (according to researchers Neil Howe and William Strauss).  This generation’s members are ages 17 to 35, and now said to be outnumbering the previously dominant cohort of the Baby Boomers in the workplace (BBers were born 1946-1964, some 77 million in all).

Consumer product marketers of course want to know what the Millennials value, what they are interested in, what information they need, what motivates to shop and buy.  And just as important and maybe more:  employers want to know more about the Millennials as they recruit them and bring them into their corporate culture. And keep them there!
One of the more long-lasting, familiar brands in Corporate America is Rubbermaid Commercial Products (RCP).  The company commissioned a report by Lightspeed to determine the attitude of Millennials and the relationship of corporate and brand values and corporate sustainability to them, in terms of recruitment — and workforce retention.

The resulting report:  Recycling in the Workplace: A Millennial View.  One important conclusion of the study:  To attract and maintain new employees, companies will be required to surpass the status quo and get serious about putting sustainability strategies into action. 90% of the generation, the authors concluded, identified sustainability as a crucial consideration when making career moves.

Sustainable Brands published highlights of the study — see our Top Story for more details.

And — if you have recruited members of the Millennial Generation, point them towards the Governance & Accountability Institute education courses to help them get up to speed quickly on sustainability, corporate responsibility, sustainable investing and related topics.  There’s more information on these offerings here:  http://www.ga-institute.com/training.html

Top Stories This Week…

New Study Cites Sustainability as Top Priority for Millennial Workforce
(Tuesday – April 11, 2017)
Source: Sustainable Brands – According to a new study by research body Lightspeed on behalf of Rubbermaid Commercial Products (RCP), a brand’s commitment to sustainability — or lack thereof — is an important concern for millennials and one which will…

And there is much more information of value in the Wikipedia definitions of Millennials and other generations (Gen X, Gen Y, BBers, and more):
https://en.wikipedia.org/wiki/Millennials

Corporate Responsibility – Sustainability – Citizenship: Is It In Jeopardy in the Trump-ian Years? Don’t Think So!

by Hank Boerner – Chair & Chief Strategist – G&A Institute
April 17, 2017

The mid-1960s….the time of the wonderful beginnings of the modern era of Corporate Social Responsibility. Corporate Citizenship.  And then large corporations began backing off their prior commitments as new administrations came to power in Washington.

The relationship of large corporations to the general society (i.e., the rest of us) has long been of interest to me. My career has been an exciting journey through up and down cycles of clear demonstration of corporate social responsibility, corporate citizenship, environmental responsibility, by large corporations…and at times, and at times, a clear lack thereof.

The news has mostly been very positive for the past two decades about CSR and sustainability — and corporate citizenship. Will this continue in the months and years ahead?

This of course is a question on the minds of some as the Trump Administration and the Congress continue to at least verbally assault the New Era of Enlightenment of the corporate sector.

Corporate-Society relations — this is something I closely monitor and am involved with daily in our Governance & Accountability Institute work, of course. And the progress made, or at times lack of progress, is a subject area that I have often commented on in my writings over the years since the 1960s.

* * * * * * *

Consider:  U.S.A. – Industrial Powerhouse of the Postwar Era

The publisher of Time magazine (Henry Luce) commented that the 20th was the “American Century,” in great measure thanks to the fantastic production of the United States corporate community.

The nature of the post-World War II economy was firmly set in place by the production prowess of the war years (1941-1945), when the United States of America was the “Arsenal of Democracy,” with fantastic output of weapons and war materiel by large companies. (Ford Motor stopped making cars and instead made B-24 bombers; General Motors turned out tanks, with innovative transmissions that became best-selling features on post-war autos, etc.)

The rapid military buildup helped to lift large U.S. manufacturers and their tens of thousands of workers out of the dark days of the Great Depression era and into renewed prosperity. A “military-industrial” complex thus arose that continued through the decades onward to today. The great American middle class was set firmly in place after the war and the world’s greatest consuming economy was created in catering to the needs and wants of the population.

Because American and British bombers had devastated the factories of Germany and in other European countries, and American bombers the manufacturing facilities of the Empire of Japan, the U.S.A. dominated postwar [world] trade, for many years accounting for fully half of global trade flows.

* * * * * * *

Civil Rights in Focus

Despite the broad and inspiring progress made in uplifting American families to middle class status, not all “boats rose” on the rising tide of progress.  The benefits of Corporate America were not evenly enjoyed.

The relationship of the corporate sector, and of the public sector, and the nation’s African-American population, was over the years problematic. There was discrimination in hiring, in training, in promotion, in access to goods and services; the African-American community steadily lagged behind white peer groups.

The sweeping Civil Rights Act of 1964, followed by The Voting Rights Act of 1965, set in place public sector commitments to change things, to open up opportunities in employment, in access to college education, to affordable home mortgages, and more.

Of course, not all American citizens welcomed the changes; particularly in the American South, there was pushback and protests and defiance of Federal anti-discrimination laws. (Including the landmark 1954 Brown vs. Board of Ed, which seemed to assure equal education for all citizens.)

* * * * * * *

The Rise of Civil Unrest in the 1960s

With rising civil unrest in the inner cities, filling with African-Americans in the Great Migration north, there were riots in 1963 and 1964 in Birmingham and Savannah; in Chicago and Philadelphia; with both whites and blacks involved, battling each other, and more often battling police.

In 1965, there were riots in Los Angeles (the “Watts” neighborhood), 4,000 people were arrested, 34 people were killed, hundreds were injured, and tens of millions of dollars of property damage resulted.

The year 1966 brought unrest to Chicago, Los Angeles, Cleveland (“Hough” neighborhood) — 43 disorders in the U.S. in all. More people died; the National Guard was mobilized; more protests were in store for the next year. And in Spring into Summer 1967, there were riots in Tampa, Cincinnati, Atlanta, Newark and Northern New Jersey, and Detroit.

The Report of The National Advisory Commission on Civil Disorders (issued March 8, 1968) noted: The summer of 1967 again brought racial disorders to American cities, and with them, shock, fear and bewilderment to the nation. The worst came during a 2-week period in July, first in Newark (N.J.) and then in Detroit.

Said the authors. this is our basic conclusion: Our nation is moving toward two societies, one black, one white — separate and unequal.

Reaction to the disorders has quickened the movement and deepened the division. Discrimination and segregation have long permeated much of American life; they now threaten the future of every American. (end quotes).

* * * * * * *

An important irritant: the increased involvement in the war between North and South Viet Nam — a conflict in which young men of privilege (attending Ivy League schools, for example) could skip military service while a high proportion of African-Americans would be drafted and shipped to the war zone.

* * * * * * *

Corporate Sector Response

After passage of civil rights legislation, companies doing business with the Federal government were required to meet certain requirements; state and local governments had to come in line with affirmative action (such as set-asides in hiring for members of minority communities).

As the rules-of-the-road of the Federal civil rights statutes were set in place, both government agencies and America’s largest employers began to change their strategies, practices and policies to match the law of the land. This was not always easy — and certainly was not met with universal acceptance in many quarters of our population.

As the corporate community adjusted, G.A. Lloyd, a respected director public affairs/ community affairs manager at Humble Oil and Refining Company became an active public speaker on the changes taking place.

He wrote a small booklet: The Human Side of History (published 1967 – 16 pages) to help to educate his corporate community colleagues in the business sector on the changes taking place. He delivered a delivered powerful speech at University of Houston and around the Southwest, in late-December 1967, a time when I had been appointed as the “citizenship officer” of my employer, American Airlines (so I was paying close attention).

The Great Progress Made in the Private Sector

Mr. Lloyd advised us that “…leadership socially-conscious companies business organizations” such as those encouraged in the day’s electric utility industry association) were striving to make a difference. (Was this the beginning of modern-day “corporate social responsibility”? Perhaps.)

The corporate functions involved included public relations, community affairs/ community relations and philanthropy.

His employer — Humble Oil Company – in November 1967 was reacting very positively to key government action: passage of the Federal Civil Rights Act and the Voting Rights Act

The chairman of the board of his company, M.A. Wright, in October 1967 said: “The business community’s involvement with social problems must take a new look. In the search for solutions, they must bring into play their leadership and analytical capabilities. They must devise new and better approaches to existing public programs. Businessmen have no practical choice but to insist social problems be given the same analytical treatment that business uses in solving its own problems. ”

There were three outstanding business attributes and resources to bring to bear, the common wisdom told us: the three E’s of education, employment, environment.

G.A. Lloyd was busily telling business and academic audiences, “poor youths” were being put to work in the NASA Manned Space Center in Houston, Texas; 187 youths were recruited, paid a wage and provided training (“learning skills” was important).

Note the accepted language of the day: They were “economically-deprived boys and girls” from families of “the hard core unemployed,” and the objective was to keep them from falling into poverty as they grew up. They learned to type, run duplicating machines, operate machinery, and learn about electronic equipment.

The community-based programs that they were recruited from included: Job Fair; Junior Student Trainee Program; Job Opportunities for Youth (“JOY”); Vocational Education Program; and Back to School Youth Opportunity Campaign. Buses picked the students up, brought them to work and back home.

By the year 1967, Lloyd informed us, some 348 U.S. insurance companies had agreed to invest $1 billion to upgrade U.S. “slums” (concentrated primarily in major U.S. cities).

And more good news:

U.S. Gypsum (building materials) bought or optioned tenement buildings in Harlem and a handful in Cleveland to rehabilitate.

Smith, Kline & French (the Philadelphia pharma) rehabbed buildings in its neighborhood and sold them to the local housing authority.

Hallmark Cards in its home city of Kansas City planned over the next 16 years (that would be to 1983) to invest more than $100 million in rehabbing a “run-down” 85-acre area.

Polaroid (then based Cambridge, Massachusetts) established a “job clearing house” and invited colleagues in from more than 700 Boston-region firms to hire “underprivileged Negros” sans high school diplomas to earn that diploma on company time and expense. Companies responding supplied interviewers at the clearinghouse.

Met Life in New York City was recruiting new employees through The Urban League and social service organizations and put them through a 13-week training course. This process includes a “culture fair test” (no details provided).

Pacific Bell & Telephone dispatched African-American and Spanish-speaking recruiters out to barber shops, pool halls, beauty parlors and “where ever people meet” to identify potential new employees. Those selected were given training to develop skills; 18 of the first 20 men and 21 of the first 22 women became full-time employees.

Jobs Now (operating in Chicago) helped street gang members and those with minor criminal offenses to get local employers to look at candidates that had been on the straight-and-narrow for at least six months. High school diplomas were waived.

For his company, Humble Oil, applicants with low math and “chemical comprehension” (knowledge) were provided with lower entrance qualification testing and given training. (“They were educationally-deprived,” he noted. (In those days before self-service at gas stations the company was training minority men for jobs as service station driveway salesmen at the pump in Newark, New Jersey; Baltimore; and Los Angeles, working with local job development agencies.)

What did all of this mean for the people and communities involved?

  • They got a job – and a salary. And were trained.
    Dignity and self-respect was restored.
    They were able to buy an affordable home. With an affordable mortgage.
    There were less people on the welfare rolls.
    More minority youth were able to attend college. And become professionals.
    There was less potential for civil unrest – the riots of recent past years.
    Neighborhoods could be rehabilitated.
    It was good for business — especial for the private sector.  Major companies and small businesses would prosper.
    Entrepreneurial businesses gained a good foothold.
    These were optimum results at minimum cost, as some experts observed.

* * * * * * *

Hedley Donovan, Editor-in-Chief of Time magazine and one of the most influential of American journalists, observed that it was good business to apply the same creative radicalism used to create good, and sometimes great, products, into create “good” and “great cities.”

* * * * * * *

Importantly, a manager of public relations at giant DuPont (one of the dominant industrial firms of the era), advised that a major objective of American business should be “public service,” not just pursuit of profit. That is, public service through new or better products for the benefit of humankind…the objective is “just making money” was not sufficient, in his view.

Even in those faraway days there were many men (mostly men) who had stopped looking for work and too much unemployment concentrated in minority communities.  American corporations tried to do their part to change this situation.

This was all good news, of course, but there were changes in the wind.

* * * * * * *

As a long-time student of the Corporate-Society Dynamic, I have concerns that with the election results of November 2016, there might be backsliding in the efforts of Corporate America to be “better citizens,” and to continue to “do well by doing good” in terms of benefiting the American and global societies.

We shall see. The early signs are very encouraging. So far, this is not a revival of the actions of Richard Nixon presidency. Even though then-President Nixon encouraged adoption of the Federal Environmental Act and created the US EPA, his dog whistles to the business community helped to bring about an end to much of the above described good works of many major companies.

With the rise of right-leaning political leadership, the era of “Neutron Jack” Welch at General Electric would become the model for other CEOs. Slash and burn, chop away at R&D budgets, get rid of people, concentrate on profits and not people.  And please Wall Street. Not the many Main Streets of America.

Good news:  We have not yet seen a repeat of the rhetoric of Professor Milton Friedman as he so eloquently stated in The New York Times Magazine of September 13, 1970: The Social Responsibility of Business is to Increase its Profits. (You can read that essay here: http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html)

In case you have not read the piece, the summation of the essay was: “…the doctrine of ‘social responsibility‘ taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means. That is why, in my book Capitalism and Freedom, I have called it a ‘fundamentally subversive doctrine’ in a free society, and have said that in such a society, ‘there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.’ ”

We have come a long, long way from those positions as stated by a respected academician of his time. This is so very long ago in today’s corporate rhetoric on corporate citizenship.

What will the future hold? We’re closely watching the Trump Administration and the Congress to hear the dog whistles and see the signals perhaps being quietly sent to the business and investing communities.

With all the progress being made by “universal owners” (the all-important independent fiduciaries of our time), and wide-awake NGOs and other key stakeholders, I don’t think we’ll have a Nixon-ian and Ronald Reagan type of backsliding. Not just yet. That’s the good news.

Your thoughts?

Accountability Demonstrated by This Bank Board? Wells Fargo Directors Clawback $75 Million from 2 Former Execs

April 10, 2017

by Hank Boerner – Chair & Chief Strategist – G&A Institute

We often hear about bank industry un-accountability; is this the beginning of a turn toward greater accountability?  Time and actions taken will tell us…over time.

The Board of Directors of Wells Fargo has clawed back $75 million in compensation from two former executives — the CEO and the head of retail banking.  That’s a drop in the bucket to some governance experts and consumer protection advocates, but it’s a good sign that corporate accountability is being demonstrated by at least one bank board.

Former Chair/CEO John Stumpf gave up $41 million in comp when he resigned last October; he now is ordered to pay back an additional $28 million.

Former head of retailing Carrie Tolstedt gave up $19 million in comp, and now will lose $47 million in stock options.

This after a 6-month investigation ordered by a handful of independent board members and conducted by the Shearman & Sterling law firm. The bank has paid $185 million to date in regulatory fines.

Some 2 million (!) fraudulent accounts were opened in customer names to inflate sales claims (the retail banking operations were overseen by Tolstedt).  More than 5,000 employees have been fired, accused of participation in the scheme, which went on for more than a decade.

Wells Fargo is one of the “Big Four” commercial banks of the USA.  The familiar red stage coach hustling across the western prairies is the symbol of the venerable institution, founded in May 1852. But today’s bank is the result of the merger of the old Wells Fargo & Company with Norwest Bank back in 1998.

Strumpf joined Northwestern National Bank (banking arm of Norwest Corporation) in 1982 and had risen in Norwest operations / then the combined company over the years, becoming CEO in June 2007 and adding the board chair title in January 2010.

So — he was not a “newbie” perhaps not always familiar with the culture of the merged bank operations. His action seriously tarnished the reputation and brand value of the “stagecoach bank” founded so long ago by Messrs Wells and Fargo.

With this action, the Wells Fargo board of directors takes an important step in addressing the cultural woes of the merged bank.

As The Washington Post writer observed, this is an attempt to demonstrate that banks can hold themselves accountable (and so avoid regulatory action for mis-behaviors).

The new CEO?  That’s Timothy Sloan, who was the former COO and therefore the supervisor of retail bank head Tolsteadt!  The board members have all been re-nominated for re-election this year.  Let’s see how “accountable” shareholders think the board has been when they vote their proxies.

Culture — it’s all about culture!  Culture — good or bad – is the ultimate determinant of outcomes!

 

The SDGS – Are You Tuned In, Aligning Your Company’s Strategies, Operations, Performance, Actions? 2030 Is Just Around the Corner!

Gaining momentum in the global corporate sector, among sovereign governments and institutional investors — the 17 UN Sustainable Development Goals (“SDGs”).  After reaching agreement in September 2015, the countries of the world adopted goals to end poverty, protect our planet and ensure prosperity for a greater number of the world’s population through a universal agenda for action (with 169 specific targets under the wonderfully-aspirational broad goals).

The nation-states of the United Nations are now busily adopting the SDGs to address their issues, some broad and experienced by many nations, others more specific in impact on the country.  The goals include climate change-related issues; the growing scarcity of natural resources; adoption of absence of, new technologies;  continuing growth of cities at the expense of rural areas; water, water, water; reducing poverty; empowering women…and more.  The SDGs are in force out to year 2030 with many milestones between then and now.

There are 17 major categories of goals and 169 specific targets within these, for attention by all sectors of society out to year 2030.  Are you on board?  Your company or organization?

Matthew Yeomans (founder of Sustainly, and author of the annual Social Media Sustainability Index), writes for Sustainable Brands on the opportunity for organization leaders to align their efforts with the SDGs to work with governments, NGOs, and other companies to address the challenges through a commonly-understood framework for engagement and action on the issues (inherent in the 17 goals).

Aligning the company with the SDGs could help companies in key areas:  for marketers, or corporate communicators, the actions taken could be embedded in a campaign for customers (consumer, business, public sector).  The corporate storytelling could bring data and metrics to life and help guide customers to the company’s core sustainability reporting that might otherwise be overlooked or disregarded (perhaps thinking, is this reporting just PR?).  The SDG focus could help to underscore a company’s serious commitment, authenticity and transparency regarding actions on the SDGs.

Author Yeomans provides brief examples with Wal-Mart Stores (addressing poverty, women empowerment), Pearson’s (quality education for all) and Stella Artois (clean water).  Highlights are in the Sustainable Brands post and there’s a link to more information at Sustainly.

The G&A Institute team has been focused on the SDGs and helping our corporate clients to better understand and “adopt” material goals and the targets and key performance indicators under the broad goal, those that can be more “naturally” aligned with the adopted corporate mission and overall strategy and implementation of the corporate sustainability journey.

For example, Goal 6 is to “ensure availability and sustainable management of water and sanitation for all.”  How to do that?  We help corporate managers understand the “natural” alignments available to them within the goals/targets, and explore ways to “adopt” the goal and make it an integral part of the company’s sustainability journey.  What are the KPI’s that will matter? What are the “water issues” of importance to the company and its stakeholders?  What can the company do to address water availability, water use in products, waste water, protection of public water supplies, making water supply more secure in the communities in which it operates?  And more….

What are the data sets and metrics that will help the company to adopt operations to the goal(s) and later make the storytelling about all of its progress a more compelling tale? What are the important stakeholder relations to begin, or to enhance if a relationship exists?  What are the natural alignments within the industry or sector that can form a collective approach (perhaps through trade association) to address critical issues?  What is the ROI for the company?  How to determine these and then measure progress (or lack of)?  And finally, how to build the progress into the various reporting schemes, including the company’s GRI report?

If you need more information on these aspects of the SDGs for adoption by your company, please let the G&A team know.  We’d love to set up a call to discuss SDGs with you!

Click here to read more about G&A service related to SDG Alignment.

An important resource for you:  The Post-2015 Development Agenda:  Goals, Targets and Indicators

Top Story

Why You Should Align Your Brand’s Sustainability Efforts with the SDGs
(Thursday – March 30, 2017)
Source: Sustainable Brands – The United Nations’ Sustainable Development Goals (aka Global Goals) are viewed by most in the sustainability community as the biggest opportunity yet for the world to shape a new and better way of doing business while shaping a…

Cradle-to-Cradle Case History: Shaw Industries

Guest Commentary by Jennifer Moore – at the Conference Board

Content originally prepared for Certification in Corporate Responsibility & Sustainability Strategies – on-line courseware by G&A Institute **

The early 21st century ushered in a new wave of heightened concern about resource scarcity and climate change. Consequently, consumers have been more concerned about the sustainability of the products they purchase and the effects they are having on the environment.

Businesses have also taken on the challenge of incorporating sustainability strategies into their business models. Many more companies are now integrating sustainability practices through product stewardship and their R&D activities.

These companies are focusing on life cycle assessments of their products and are aiming to achieve Cradle-to-Cradle status. As defined by the Ellen MacArthur Foundation, the Cradle-to- Cradle school of thought is an important branch within the circular economy concept.

Cradle-to-Cradle focuses on products that have a positive impact and reduce the negative impacts on commerce through production efficiency (see footnote 1).

Cradle-to-Cradle and circular economy goes beyond the “reduce, reuse, recycle” campaign of the late Twentieth Century to focus more on the design and production of products, rather than on consumption by the consumer.

The authoritative work, “Cradle to Cradle: Remaking the Way We Make Things”,  authored by Michael Braungart and William McDonough called for a new era of production, wherein, companies should be focusing more on “doing more good,” rather than “doing less bad.”

The goal and focus should be on the end of the product’s lifecycle, and whether it will either be safely re-entered into the environment — or be recycled back into production.

Cradle-to-Cradle aims to achieve three things: (1) eliminate the concept of waste, (2) power with renewable energy, and (3) respect human and natural systems. (2)

This concept argues that resource consumption and economic growth should not be isolated from each other. In fact, they often go hand-in-hand. (3)

The private sector is not siloed; it has been highly influenced by the public sector and discussion forums. Many non-governmental organizations (NGOs), driven by public demand, have advocated for the advancement of a circular economy. The World Economic Forum, Oxfam International and the United Nations in particular have been vocal about transitioning to a circular economy.

Also, the emphasis of the Sustainable Development Goals (SDGs) released in 2016 by the United Nations is on developing a more circular economy and seeking to implement sustainable development across the UN member states. (4)

While the SDGs are driven by politics and protecting human rights, the goals cannot be achieved without businesses and were developed with input from the private sector. There is business value for companies to align their strategy with the SDGs. (5)

Many companies have recognized the benefits of aligning their goals with the SGDs and the relationship between resource consumption and economic growth.

Consumers are now expecting companies to provide products that are eco-friendly and reduce resource waste. According to a survey conducted by Nielsen in 2014, “55 percent of on-line consumers indicated they were willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, an increase from 50% in 2010 and 45% in 2011.” (6)

The Business Community’s Embrace of Cradle-to-Cradle

Businesses across all industries are now developing their product stewardship products to meet these consumer demands. Companies cite “customer demand for solutions that address global sustainability challenges, such as climate change and resource scarcity” as primary drivers of sustainable product initiatives. (7)

For example, 3M is striving for 40 per cent of their new products to be sustainable and Kimberly-Clark is developing solutions for used diapers. One exemplary model of sustainable product stewardship is Shaw Industries’ dedication to Cradle-to-Cradle.

The Shaw Industry Model

Shaw Industries is the largest producer of carpet tile in North America. While carpet tiles can have a lifespan of 10-to-25 years, commercial owners and tenants often update their facilities more frequently than that to reflect contemporary trends, resulting in a high-waste industry.

Historically, when the time came for flooring to be removed from businesses, schools, retailers, hospitals and other properties – whether for wear-and-tear or aesthetics, it was sent to landfills.

Recognizing the opportunity to create a better solution for customers and to create a product that would help advance toward a more circular economy, Shaw developed EcoWorx-backed carpet tile, which it introduced in 2008 and continues to optimize for sustainability performance.

The world’s first Cradle-to-Cradle Certified carpet tile — EcoWorx — was designed for reuse. To create a carpet tile that could be infinitely recycled with no loss of quality meant removing PVC, phthalates and other chemicals. As a result of its meticulous design process, Shaw understands what’s in its EcoWorx products and, therefore, what’s going into the next generation of its products.

Today, with 16 years and more than 3 billion square feet of EcoWorx installed, Shaw continues to optimize the product’s performance in alignment with Cradle-to-Cradle criteria – material health, material reutilization, energy, water and social responsibility.

Most recently, Shaw worked with one of its suppliers to remove an ingredient from its latex that was added to the list of banned chemicals within version 3 of the Cradle-to-Cradle Certified Products Program Standard.

Further, the company employs sustainable manufacturing practices – making efficient use of materials and natural resources, using alternative and renewable energy sources when possible, and designing and operating its facilities and manufacturing processes in accordance with widely recognized sustainability and safety standards.

It completes the sustainable manufacturing process by delivering its products using the most efficient mode of transportation feasible while meeting customer deadlines.

Shaw has committed itself to embracing Cradle-to-Cradle practices and has lead the way in carpet reclamation in the flooring industry. Today, 65 percent of its products – commercial and residential – are Cradle-to-Cradle Certified, with a goal of designing 100% to Cradle-to-Cradle principles by 2030.

Not only is Shaw committed to upcycling within its own operations, it also looks for opportunities in other industries.

For example, the company converts plastic drink bottles into residential carpet through a joint venture with DAK Americas: The Clear Path Recycling Center in Fayetteville, NC produces 100 million pounds of clear flake each year, recycling approximately three billion plastic drink bottles annually.

Furthermore, in 2016 alone, Shaw supplied more than 200 million pounds of post-industrial waste to other businesses for a variety of recycled content needs. For instance, the wood flour – waste fiber from hardwood flooring operations – is used by a major producer of composite decking and the minimal waste from its resilient manufacturing facility is used to make garden hoses.

The Future for Cradle-to-Cradle in Industry

Today, sustainable leadership companies, like Shaw, can strive to achieve cradle-to-cradle production through the certified program by the Cradle-to-Cradle Products Innovation Institute.

The Institute examines certifiable products in five (5) quality categories – (1) material health, (2) material reutilization, (3) renewable energy and carbon management, (4) water stewardship, and (5) social fairness. (Footnote 8)

Sustainability managers must partner with their design and strategy teams to develop sustainable solutions to the products and services their company offers. Not only are these products essential ecologically and socially, they are also drivers of revenue growth.

If managers are concerned about getting [internal] corporate buy-in to fund ESG R&D, they are able to present the business case of how other companies — especially like Shaw Industries with the illustrations here in this case study — have seen Cradle-to-Cradle’s positive impact on their revenue. (9)

According to The Conference Board, “revenues from sustainable products and services grew at six times the rate of overall company revenues.”

In order to address Earth’s ecological crisis, companies must lead the way by ensuring they are designing eco-friendly products and services that respects the finite resources available on the planet. Sustainability managers can look to Shaw as one company that is leading by example.

# # #

Jennifer Moore is Manager, Executive Programs, Sustainability & EHS at the Conference Board. She engages with senior executives from Fortune 250 companies to understand their needs and help solve their business issues. She oversees and executes all aspects of 15 roundtables per year.

# # #

**  Information about the G&A Institute on-line course:

http://learning.ga-institute.com/courses/course-v1:GovernanceandAccountabilityInstitute+CCRSS+2016/about

# # #

Footnotes:

(1) Ellen MacArthur Foundation. Cradle to Cradle in a Circular Economy – Products and Systems. Retrieved March 5, 2017. https://www.ellenmacarthurfoundation.org/circular-economy/schools-of-thought/cradle2cradle

(2)  Ellen MacArthur Foundation. Cradle to Cradle in a Circular Economy – Products and Systems. Retrieved March 5, 2017. https://www.ellenmacarthurfoundation.org/circular-economy/schools-of-thought/cradle2cradle

(3) Strahel, W. (2015). The Performance Economy. Palgrave MacMillan: 2006

(4) United Nations. United Nations Economic and Social Council. Millennium Development Goals and post-2015. Development Agenda. Retrieved March 5, 2017. http://www.un.org/en/ecosoc/about/mdg.shtml.

(5)  Yosie, T. Is There Business Value in the UN Sustainable Development Goals? Retrieved March 5, 2017. http://tcbblogs.org/givingthoughts/2017/02/07/is-there-business-value-in-the-un-sustainable-development-goals/#sthash.L0MLUAN7.xHIHNvHZ.dpbs

(6) Singer, T. Driving Revenue Growth Through Sustainable Products and Services. New York: The Conference Board, 2015. p. 17.

(7) Singer, T. Driving Revenue Growth Through Sustainable Products and Services. New York: The Conference Board, 2015. p. 8.

(8)  C2C Product Certification Overview – Get Certified – Cradle to Cradle Products Innovation Institute. Retrieved March 5, 2017. http://www.c2ccertified.org/get-certified/product-certification

(9)  Singer, T. Driving Revenue Growth Through Sustainable Products and Services. New York: The Conference Board, 2015. p. 6.

# # #

 

In the Dark Days of White House / EPA Action on Climate Change, Here are 7 Encouraging Trends for You from Amy Augustine at Ceres

Horrible headlines now coming out on the developments at the White House regarding climate change, global warming, and related issues as campaign rhetoric is fitted, however clumsily or mean-spirited, to public governance to attempt to match ill-advised campaign promises.

The reality is that there are a number of very encouraging developments, trends that hold great promise for those of us who are not climate change deniers and think that global warming is a hoax coming from China to disadvantage American companies!

The Ceres staff members have long been engaging with, monitoring and advising (the rest of us) on critical issues in the areas of Corporate Sustainability – Responsibility – Citizenship – Environmental Management — and of course, the paths to more sustainable investing.

Amy Augustine, the senior director of corporate programs at Ceres, shares with us in our Top Story the seven trends she sees continuing to drive corporate sustainability in 2017.  Our view is that this could be a “hinge year” for the United States in terms of focus on climate change, global warming, societal issues, environmental management and host of related issues therein.  (As in. “the hinge of history” with things going this way or that, the before and after.)

Amy observes:  “Bold leadership, as well as individual collective action from influential companies and investors, is critical to ensure continued progress in achieving the ambitions of the historic Paris Climate Agreement and the United Nations Sustainable Development Goals (SDGs).”

The seven trends are encouraging: (1) U.S. corporate sector support for U.S. clean energy policy is accelerating;  (2) investor expectations continue to rise that public companies will disclose information on more climate change risks and opportunities. (Remember, the US SEC in 2010 reminded boards of companies that they have the responsibility to oversee risk, and that climate change is clearly a risk.  But that was yesterday, under the former Administration…today is the era of climate denial in the White House.)

Trend 4 is the focus on Water Risk — large-cap companies operating in water-stressed areas are not waiting for government action to conserve  protect water sources.  Amy Augustine cites the efforts of such responsible enterprises as General Mills, Gap and Pepsico engaging with policymakers in California to urge on stronger water management measures.

What about Trend 3 – and 5, 6 and 7?  The details are waiting for you in the Top Story (link below). Amy’s concluding comment is…”No doubt, company actions on all of these (7 trends fronts) will continue to evolve and hopefully accelerate; such leadership is more essential than ever.”

At G&A Institute, we’re doing our part to report on both sides of the hinge — the great things that have been accomplished in the “good days” of the past decade, and the threatening things that are proposed or (positions) adopted in these not-so-good-days at US EPA, the White House or in the Congress.  Do check out the second in the newsletter, our comments in G&A’s Sustainability-Update Blog on the latest moves by the President and EPA Administrator to attempt to roll back the rich legacy of the prior administration.  (You can sign up to receive updates as these are posted.)  Let us have your thoughts as well!

And, we invite you to download “Trends Converging,” the book prepared in 2016 by G&A Chair Hank Boerner, which sets out important information about where are as the climate change deniers/destroyers go to work in Washington DC to undo the progress made.  Click here to download the digital copy.

Top Story

7 Trends That Will Drive Corporate Sustainability in 2017
(Wednesday – March 22, 2017)
Source: Triple Pundit – As we confront a new political climate that is inspiring both uncertainty and rising citizen action, I am more convinced than ever that business must play a critical role in achieving a sustainable, equitable and clean-energy…

Climate Change Risk? Nah – The Deniers & Destroyers Are At Work – White House Attempts to Roll Back Obama Legacy

Deniers/Destroyers are at work – at US EPA — the White House — hoping/wishing for rollback of rich Obama legacy positions on climate change issues…

by Hank Boerner – Chairman, Chief Strategist – G&A Institute

March 28, 2017

In classic-CNN style we bring you !!!BREAKING NEWS!!! – the Climate Change Deniers and Environmental Regulatory Protection Destroyers are at work in Washington DC today.

You’ve heard the news by now: President Donald Trump and EPA Administrator E. Scott Pruitt are preening and pompously strutting as they announce the important beginnings of what they want (and hope!) to be the rollback of important environmental and public health protections of the Obama Administration … you know, the “job killers” that were at work putting coal miners out of business.

At least that’s some of the twisting, grasping, pretzel-elian logic that underpins the actions taken today (which in turn tells the Trump loyal voting base that yes, still another campaign promise is being carried out on their behalf).

During his early months in office, President Barack Obama signed important Executive Orders that addressed climate change issues and global warming challenges — and please here do note that these and other Presidential EOs are always based on (1) the existing statutes enacted by Congress and (2) the authority of the Office of the President.

You remember some of the key statutes involved in these issues  — The Clean Air Act (CAA); The Clean Water Act; (CWA) the foundations laid by the all-empowering National Environmental Policy Act (NEPA) …and other landmark legislation sensibly reached on a bipartisan basis over the decades since American rivers burst into flames.

Today, President Donald Trump signed [a very brief] EO with a flourish — the “Promoting Energy Independence and Economic Growth” Executive Order.

The action orders the U.S. Environmental Protection Agency to begin the [legal] process of un-doing or re-doing the nation’s Clean Power Plan, the keystone to President Obama’s actions to address global warming. (Or “climate change” if one is skittish about being on the side of the angels on this issues.)

Here is what today’s EO covers:

  • Executive (cabinet) departments and agencies will begin reviewing regulations that potentially burden the development/or use of domestic energy sources — and then suspend, revise or rescind those that “unduly burden” the development of domestic energy resources…beyond the degree necessary to protect the public interest.
  • All [Federal] agencies should take appropriate actions to promote clean air (!) and clean water (!) for the American People — oh, while following the law and the role of the Congress and the States concerning these matters. (One hopes this includes Flint, Michigan residents. We can hear great, cogent arguments in the Federal courts about all of this.)
  • Costs are to be considered — regarding “environmental improvements for the American People” — as, when “necessary and appropriate” environmental regulations are to be complied with…and the benefits must be greater than the cost.

This is encouraging, if only that it is stated to provide cover for legal challenges: Environmental regulations will be developed through transparent processes that employ the best available peer-reviewed science and economics!

  • All Federal agencies are to review actions that are described in the Trump Executive Order and then submit to the [White House] staffed departments and the Vice President their plan(s) to carry out the review for their agency.

Here’s The Important Deny/Destroy Actions

By swipe of pen, the President revoked these important cornerstones of the Obama Administration climate change legacy:

  • Executive Order 13653 (November 1, 2013) – “Preparing the U.S. for the Impacts of Climate Change.”
  • President Memorandum (June 25, 2013) – “Power Sector Carbon Pollution Standards.”
  • Presidential Memorandum (November 3, 2015) – “Mitigating Impact on Natural Resources from Development and Encouraging Related Private Investment.”
  • Presidential Memorandum (September 21, 2016) – “Climate Change and National Security.”
  • Report of the Executive Office of the President (June 2013) – “Climate Action Plan.”
  • Report of the Executive Office of the President (March 2014) – “Climate Action Plan Strategy to Reduce Methane Emissions.”
  • The Council on Environmental Quality guidance (August 5, 2016) – “Final Guidance for Federal Departments and Agencies on Consideration of GhGs and Effects of Climate Change in NEPA Reviews.”

And The Very Important Clean Power Plan…

  • A review of the EPA’s “Clean Power Plan,” to be suspended, revised or rescinded, or, new rules proposed following the steps necessary. This will affect:
  • The final rules of the Clean Power Plan (October 23, 2015) – “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generation Units”;
  • Final Rules (October 23, 2015) – “Standards of Performance for GhGs from New, Modified and Reconstructed Stationary Sources: Electric Utility Generating Units;
  • Proposed Rule (October 23, 2015) – “Federal Plan Requirements for GhGs Emissions from Electric Utility Generating Units Constructed before January 8, 2015”; “Model Trading Rules: Amendments to Framework Regulations”.
  • The Interagency Working Group on Social Cost of Greenhouse Gases – convened by the Council of Economic Advisors and the Director, Office of Management and Budget (OMB) — is disbanded, and the documents that established the “social cost of carbon” no longer represent public policy.

Beyond these specifics, the EO also orders the Secretary of the Interior to review its rules, and any guidance given, and (if appropriate) suspend, revise and rescind these. Included:

  • Final Rule (March 26, 2015) – “Oil and Gas: Hydraulic Fracturing on Federal and Indian Lands”;
  • Final Rule (November 4, 2016) – “General Provisions and Non-Federal Oil and Gas Rights”;
  • Final Rule (November 14, 2016) – “Management of Non-Federal Oil and Gas Rights”;
  • Final Rule (November 18, 2016) – “Waste Prevention, Production Subject to Royalties, and Resource Conservation.”

For the record: The EO is intended to (1) promote clean and safe development of “our Nation’s vast” energy sources; (2) avoid regulatory burdens that constrain production, energy growth and job creation; (3) assure the Nation’s geo-political security.

US SIF Weighs In

The influential trade association for sustainable, responsible and impact investing swiftly responded. Lisa Woll, CEO of US SIF, commented:

“On behalf of our 300 institutional members, US SIF belies the Administration should be working aggressively to reduce carbon in the atmosphere and that this Executive Order accomplishes the opposite.

“The United States is paying a high economic price from the ravages of severe drought, wildfires and storms associated with increased atmospheric levels of carbon. This is not the time to retreat from the call to protect current and succeeding generations from the catastrophic implications of further, unrestrained climate change.”

In the US SIF biennial survey of sustainable and impact investment assets, it should be noted here that U.S. money managers with US$1.42 trillion in AUM and institutional asset owners with $2.15 trillion in assets consider climate change risk in their investment analysis — that is three times the level in the prior survey in 2014.

Now — Investors – NGOs – State and local governments – social issue activists — business leaders — Federal and State courts — can push back HARD on these moves by the Trump Administration.

Otherwise, it could be drill, baby, drill — dig, baby, dig — and, hey, it’s good for us, we are assured by the Deflector-in-Chief and his merry band of wrongheaded Deniers/Destroyers in the Nation’s capital!

What do you think — what do you have to say? Weigh in our this commentary and share your thoughts – there’s space below to continue the conversation!

World Bank & Partners + S&P Dow Jones Indices, & Partners — Rolling Out New Sustainable Investing Approaches for Institutions…

Forward Momentum! — Two new approaches that spell out a-d-v-a-n-c-e-m-e-n-t for sustainable investment: World Bank and S&P Dow Jones Indices (separately) roll out new products and approaches with key partners’ participation.

Despite the nay-saying about climate change, global warming, sustainability and related subjects in certain quarters in the United States, major players in global finance enthusiastically rolled out new products / approaches for institutional customers.

First:  The World Bank, as part of its “SDGs Everyone” initiative has partnered with (initially) institutions in France and Italy for issuance of equity-index bonds that link returns to the performance of 50 companies that “advance global development priorities” as determined by the methodology of Vigeo Eiris Equities.  The bonds are being marketed by BNP Paribas. (Proceeds:  163 million Euros.)

The proceeds will be used to finance projects that help to eliminate poverty and boost shared prosperity, advancing Sustainable Development Goals (SDGs) that are being adopted by nations around the world.  This is the World Bank and partners “walking the talk” of sustainability and responding practically to the aspirational 2030 SDG goals.

Second:  S&P Dow Jones Indices (“S&P DJI”) created the S&P Green Bond Select Index (for ‘green label” bonds), to “meet strong market demand,” according to the company.  The first licensee is VanEck, to create an Exchange Traded Fund (ETF).   S&P DJI offers more than 100 financial indices to its global capital market customers. (The S&P 500, for example, represents more than 80% of U.S. value of corporate equities and is the most widely used benchmark.

G&A Institute each year monitors and reports on the S&P 500 universe of companies’ reporting on their sustainability journeys.  Watch for our news coming shortly on the latest survey results.

VanEck notes that the market value of “green bonds” was US$82 billion in 2016 and could reach $150 billion in 2017.  Click here for details . There’s also a good introduction to “green bonds” on the web site.

As Sustainable Brands, in reporting on the developments noted…”this could expand sustainability investment and drive it towards the mainstream…”  The details are here for you in our Top Story:

Dow Jones, World Bank Unveil New Financial Tools to Expand Sustainability Investments
(Wednesday – March 15, 2017)
Source: Sustainable Brands – &P Dow Jones Indices (S&P DJI), the world’s leading provider of index-based concepts, data and research, has announced the launch of the S&P Green Bond Select Index which captures the most liquid and tradeable segment of…

Climate Change Resolutions / and Investors’ Voting — “Hurricane” Coming in 2017 Shareholder Voting?

“Stormy Weather Ahead Warning”:  Climate Change Resolutions / and Investors’ Voting — “Hurricane” Coming in 2017 Shareholder Proxy Voting Season?

Guest Commentary – by Seth DuppstadtProxy Insight Limited

The United Nations‘ consensus reached in the “Paris Agreement” (COP 21), the goal to limit global temperature rise to within 2 degrees Celsius could turn shareholder support for climate change resolutions from a squall into a powerful hurricane at U.S. energy and utility companies this proxy season. says our team at Proxy Insight.

Example cited:  The BlackRock Investment Stewardship Team’s new guidance on climate risk engagement made the possibility of a Category 5 storm conceivable — if companies aren’t responsive.

During the 2016 corporate proxy season, a particularly successful subset of shareholder-sponsored climate change resolutions — known as 2 Degree Scenario (“2DS”) proposals —  averaged 37.73 percent shareholder support:

ISSUER MEETING DATE % FOR
Devon Energy Corporation 8-Jun-16 36.06
Southern Company (The) 25-May-16 34.46
Exxon Mobil Corporation 25-May-16 38.14
Chevron Corporation 25-May-16 40.76
FirstEnergy Corporation 17-May-16 31.9
Anadarko Petroleum Corporation 10-May-16 42
Occidental Petroleum Corporation 29-Apr-16 48.99
Noble Energy Inc. 26-Apr-16 25.1
AES Corporation (The) 21-Apr-16 42.21

 

This was a notably high level of support for a first-round shareholder proposal — especially for climate change related. *

Example:  The proposal at Occidental Petroleum almost gained a majority with 48.99% of votes cast in support (not including abstentions).

Proxy Insight data show Institutional Shareholder Services (ISS) recommended For votes for all nine 2DS resolutions, while proxy advisor Glass Lewis opposed one.

The shareholder resolutions ask companies to stress test their portfolios and report on financial risks that could occur in a low-carbon economy.

Up to 17 2DS resolutions are expected to move to vote at U.S. companies in 2017 proxy voting, according to Ceres.  (Ten will be filed at companies not having these resolutions before).  The next scheduled company voting on 2DS will be at AES Corp on April 20th. A preliminary proxy indicates Duke Energy shareholders will be voting on May 4.

*excluding non-US “Strategic Resilience for 2035” proposals (2015/16)

 TOP-10 INVESTORS (AUM) MOST FREQUENTLY SUPPORTING “2DS” CLIMATE CHANGE RESOLUTIONS

Investor For Against Abstain DNV Split
Deutsche Asset & Wealth Management 100.00% 0.00% 0.00% 0.00% 0.00%
Legal & General Investment Management 100.00% 0.00% 0.00% 0.00% 0.00%
Legg Mason Partners Fund Advisor, LLC. 100.00% 0.00% 0.00% 0.00% 0.00%
AXA Investment Managers 100.00% 0.00% 0.00% 0.00% 0.00%
APG (Stichting PF ABP) 100.00% 0.00% 0.00% 0.00% 0.00%
Schroders 100.00% 0.00% 0.00% 0.00% 0.00%
M&G Investment Management 100.00% 0.00% 0.00% 0.00% 0.00%
Aviva Investors 100.00% 0.00% 0.00% 0.00% 0.00%
Canada Pension Plan Investment Board (CPPIB) 100.00% 0.00% 0.00% 0.00% 0.00%
California Public Employees’ Retirement System (CalPERS) 100.00% 0.00% 0.00% 0.00% 0.00%

Information is available at:  https://www.linkedin.com/pulse/climate-change-voting-calm-before-storm-seth-duppstadt

Proxy Insight is the leading provider of global shareholder voting analytics.

Visit www.proxyinsight.com for more information, where you can also sign up for a trial or contact Seth Duppstadt, SVP Proxy Insight Limited at: seth.duppstadt@proxyinsight.com  Telephone:  646-513-4141

Musing About the Alphabet Soup of ESG – SRI – CSR … et al!

Blog post

March 16, 2017

by Hank Boerner and Louis CoppolaG&A Institute

Often in our conversations with managers at companies that are new to corporate sustainability and especially new to publishing corporate sustainability reports, we often move into exploration of the various terms and titles applied to corporate sustainability.

SRI.  ESG.  Sustainability.  Corporate Citizenship.  Corporate Responsibility. 

Or, Corporate Social Responsibility.  Shorthand:  CSR, CR.  What else!

And on the investment side, in our discussions with financial analysts, or asset managers, we’re discussing socially responsible investing, sustainable & responsible investing (both SRI) and more recently, sustainable & responsible & impact investing — the “S&R&I”).

This alphabet soup of titles, characterizations, approach classifications and so on is usually confusing to corporate managers not well versed in matters related to corporate sustainability.

And, to investors new to sustainable investing, sustainable & responsible investing, impact investing, analyzing corporate ESG analytics…those managers also have questions on what all these terms really mean (And ask: is there a substantive difference between terms?).

Each year as the data partners for the Global Reporting Initiative (GRI) in the U.S.A., United Kingdom and Republic of Ireland, we analyze and database more than 1,500 reports each year (most are published by corporations; there are also institutional and public sector reports). Here we see firsthand every day this alphabet soup of terms playing out:

  • Corporate Responsibility / Corporate Social Responsibility (CR/CSR)
  • Corporate Citizenship (an older but still popular titling, especially among large-caps)
  • Corporate Sustainability (more often leaning toward environmental management, growing out of the traditional EHS functions at operating companies)
  • Environmental Update / Progress Report
  • Corporate Ethics

The Investment Community Point-of-View

And for investors:  There is also Faith-based investing and ethical investing, and a few other terms.  (“Green Bonds” are coming on strong!)

Many institutional investor  — asset owners and their managers, and their analysts — are seeming to favor “ESG” because it better captures the entirety of the three main issues buckets (Corporate Environmental, Social and Corporate Governance strategies, performance and issues) that make up what most investors consider to be a pretty good definition of corporate sustainability.

As corporate sustainability consultants and advisors, working closely with managements to help them effectively engage with investors on ESG issues, and so we see the term ESG becoming more and more of a preferred term for these discussions.

Consider, too, the familiar Bloomberg terminal on the desks of many investors is helping to bring volumes of corporate ESG data through the Bloomberg ESG Dashboard.

The Views of the Professional Analyst

The CFA Institute, the global education, training, testing and certification, and professional standards organization for financial analysts (“Charterholders” use the CFA professional designation) addressed this alphabet soup in its recent guide for investment professionals — “Environmental, Social and Governance Issues in Investing” (published in 2016).

The guide authors explain:  “The practice of environmental, social and governance issues in investing has evolved significantly from its origins in the exclusionary screening of listed equities on the basis of moral values. A variety of methods are now being used by both value-motivated and values-motivated investors considering ESG issues across asset classes.”

(The guide was authored by Usman Hayet, CFA; Matt Orsagh, CFA, CIPM; with contributions by Kurt N. Schacht, JD, CFA; and Rebecca A. Fender, CFA.)  Consider their views:

E:  Looking at the environmental components (the “E”), CFA Institute, investor concerns include climate change and fossil fuel assets [becoming stranded], water stress…that means that corporate ESG KPIs should be carefully examined.

S:  Looking at the social (“S”), the authors point out that labor relations can have a direct and significant impact on financial performance.

G:  Looking at corporate governance (“G”), the authors note that these were previously seen as a concern for value-motivated investment, and the E and S issues were relevant mainly for values-motivated investors.  Not anymore  — ESG issues are relevant for all long-term investors.

The CFA authors explain that there are various labels for the same issues and ESG common theme underlying the various labels is an emphasis is on ESG issues.

We Are Leaning in the Direction of….

In our work we prefer to use “Sustainability” or “ESG”, which we think best encapsulates the entirety of what we consider to be the issues in focus for institutional and individual investors.  And therefore we advise that the company’s ESG key performance indicators should be a priority concern for the board, C-suite and various level of management and corporate function areas, because of the importance of access to capital, cost of capital, and so on.

The corporate ESG performance and reporting on same might be positioned under an oversight umbrella in the corporate structure. We see these ESG activities being in the province of legal, public affairs, human resources, supply chain management, operations, EHS, investor relations, finance, corporate communications, and so on.

At times, however, we do find that some people in the corporate community hear the term “Sustainability” they automatically think only of environmental-related issues — (“E”) which of course, are just one part of what we consider sustainability to be.

And yes, all of this is still not clear cut, is it?  Varying terms and titles will probably be used for a while.

As explained, we prefer ESG when we are working with our sustainability consulting clients because this term includes the three main issue areas or buckets of issues — and says what it means. Using “ESG” tends to  make sure that it’s clear that our work includes three “bucket” areas – Environmental, Social and Corporate Governance.  (Not just Environmental!)

And the clearer we can be with our terminology, and more specific, the better off we will all be.

But Investors Are Not Asking….

Managers at many companies that we communicate with, especially in our investor relations sustainability consulting, will say, “Why don’t our analysts ask questions about sustainability on our quarterly calls?”

Erika Karp, formerly of UBS and founder of Cornerstone Capital in New York City often responds to this key question during her public presentations (Cornerstone is an ESG-focused investment firm.)

Erika:  “You’re wrong, they are asking!  If you peel back the layers of the “E” (climate, biodiversity, water, energy, waste etc); the “S” (employee retention, training, community engagement, human rights, labor contracts, benefits); and the “G” (executive compensation, proxy resolutions, board makeup, board independence, board skills, board diversity, critical issues management, and oversight of the company’s key functions) — then you can listen to the quarterly calls and you will see that you are in fact getting questions on sustainability (or ESG issues).”

We agree with Erika!  And this line of discussion points even more to the problems with our terminology in this space.

Of course, even though the analyst may not be asking: “Hey, so what about your sustainability?” the analysts and asset managers on your  calls may be or are asking about the individual elements that make up sustainability, and some of these ESG KPI’s are more important than others.  It’s important to recognize that these are Sustainability issues that they are asking you about!

As We Move Ahead…

All of this terminology discussion is our industry’s challenge, and somewhat of an educational problem in that we need to better inform others about the intricacies and the complexities that make up “Corporate Sustainability” so that there is deeper understanding of the full breadth and depth and importance of the ESG performance areas — and of the full impacts on a company’s reputation, valuation and more.

Of course, there are variations in which of these ESG issues is important (or material!), depending on industry and sector, size and geography.

We think that as we move along, “ESG” will continue to be a more preferred term for many analysts looking holistically at a public issuer. ESG will likely to continue to catch on because this approach will more clearly reflect the “completeness and complexity” of the various issue buckets that make up the corporate sustainability journey – ESG represents what it means and says what it is!

The Early Evolvement of SRI – and the Lasting Legacy

Looking back, the emergence of the Socially Responsible Investing approach (SRI #1), starting with screening out the shares of companies from portfolios (tobacco, gaming, etc.) may have a lasting legacy for some in the investment community.  More and more investors are now using the term, Sustainable & Responsible Investing (SRI #2), and even Sustainable & Responsible & Impact Investing (SRI #3 also!). These are gaining currency in the mainstream analyst and asset management communities.

And so, this is not necessarily a new discussion about titles and terminologies – it has been going on for quite some time.  In April 2009, when one of us (Hank) was editing the National Investor Relations Institute monthly magazine — IR Update — he offered up a commentary: ” Stay Tuned: More Initials for the IRO — These Could Spell Long-Term Success… Or Market Failure for Corporate Issuers ”

It was about ESG – SRI – CSR – even TARP (remember that?) — in that almost a decade-ago column, we noted that a 2008 survey of asset owners and managers, two terms were emerging as the preferred references:  ESG and Sustainability best summed up their approach.  We think this still rings true today.

It’s still an interesting read:  http://www.hankboerner.com/library/NIRI%20IR%20Update/2009/Boerner2009Apr.pdf

What are you thinking about this?  Do weigh in — please share your thoughts in the comments area below — weigh in on the dialogue!

What are your preferred terms in the daily conversation about…….