60% of the Russell 1000 Published Sustainability Reports in 2018 — Trends Among Large-Cap, Publicly-Traded U.S. Companies Included in the Russell 1000® Index — G&A Institute Shares Research Results

Topline
60% of the Russell 1000 Published Sustainability reports in 2018, however of the smallest 500 by market cap only 34% are reporting, compare to 86% of the largest 500. Click here for more details.

How many times today do you think you looked at or mentioned a stock index to colleagues?

Some days investor and corporate conversations are about stock index performance (up, down and sideways!).  Stock indexes, explains Investopedia, are our powerful indicators for specific economies (such as that of the U.S.A.) and we are of course familiar with the bold face names whose “performance” many media report on constantly  – the “Dow” (DJSI), Nasdaq Composite and S&P 500.

There are thousands more used by investors as benchmarks for the analysis of their own performance “against the benchmark”. Investable products are created using the benchmarks (the intellectual property of their owners (such as the Dow and various S&P indexes, like Real Estate, Energy, Consumer Staples, etc.).

The familiar S&P 500® (launched in 1957) has 500 of the largest U.S. companies by market cap and other factors and represents about 80 percent of the total value of the U.S. stock market (it is market-weighted, or capitalization weighted). This is owned by S&P Global Inc. and its S&P Dow Jones Indices units provide a wide range of indexes/benchmarks for global investors.

The 500 and other large-caps are represented as well in another large index universe — the Russell 1000 Index, owned by LSE (the London Stock Exchange). This benchmark for large-cap companies is used by investors to go beyond the S&P 500 to include up to 1,000 of the large-cap U.S. equities, including the S&P 500 companies.

The S&P 500 Index companies are the largest companies with US$8 billion or more in market cap, 50% float, certain liquidity and positive earnings. 
The Russell 1000 Index is a subset of the broad Russell 3000 Index® and represents the largest 1,000 companies in the U.S. equity market (the largest is Microsoft).  About 90% of the total market cap of all U.S. listed stocks are represented by this important bellwether index, says Investopedia.

Each year since 2011 the analyst team at G&A Institute has tracked the S&P 500 companies’ ESG reporting activities.  That first year we found just about 20 percent of the companies publishing “sustainability, responsibility, citizenship” et al reports. 

In 2012 that number rose dramatically to more than half of the companies publishing such reports (53%).  Then each year after the number steadily rose (to 72% in 2013 and up to 86% in 2017).  We share the research results – you can see the latest “Flash Report” here.

The Russell 1000® Research Results
This year we expanded our research to include the “next 500” – the U.S. large-cap companies not included in the S&P 500 Index.  The top-line results:

  • 60% of the 1,000 companies are publishing sustainability reports in 2018.
  • The top half of the companies align with the S&P 500 universe and comprise 72% of the Russell 1000 universe that does publish a report.
  • Of the reporting companies, only 28% were from the bottom 500 of the Russell 1000 Index.
  • Of the 40% of that do not report, 83% were those smaller in market-cap, and only 17% were S&P 500 Index companies (reflecting the results of our annual S&P 500 research).

Takeaway: While the larger companies by market cap are by a wide margin the publicly-traded firms that publish sustainability and responsibility reports, their smaller peers in the Russell 1000 have a ways to go to catch up. Those non-reporters are or will be hearing from their institutional investors that an annual sustainability or similarly-titled report is expected to be published by the firm, following the example of their larger peer companies in the Russell 1000.  Many of the large caps are already being asked questions about their ESG performance by investors, major customers and other stakeholders. 

Within their sector and specific industry categories, the reporting & disclosure pace is set by larger-cap peers.  The laggards (the large-cap companies in the Russell 1000 that are not reporting) will have ever-rising challenges ahead as the larger pacesetters expand their reporting efforts (usually competing with other large peers) and raising the bar for those companies not yet reporting in the respective industry category or categories for diversified firms.

Note the Russell 1000 was launched in 1984 by the Frank Russell Company and is part of a family of indexes that are market-weighted; today the benchmarks are owned by FTSE Russell, a subsidiary of the London Stock Exchange (LSE).

Governance & Accountability Institute team members help companies publish sustainability and responsibility reports and in various ways disclose data and information about their ESG strategies, performance and results (outcomes of the sustainability journey efforts).  For more information please see our web site at www.ga-institute.com.

Information about our Russell 1000 Index analysis regarding public company ESG publishing is in the Flash Report, our Top Story this week.

Top Stories

FLASH REPORT: 60% of Russell 1000® Are Publishing Sustainability Reports, G&A Institute’s 2018 Inaugural Benchmark Study Shows   
Source: Governance & Accountability Institute, Inc. – In this inaugural benchmark study, G&A found that 60% of the [total] Russell 1000® published sustainability reports in 2018. Of importance to consider is roughly the top half (by market cap) of companies in the Russell 1000® are…

GRESB at the Decade Mark – the Global Real Estate Sustainability Benchmark Serving Investors, Real Estate Asset Owners and Managers, Developers…

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

A decade ago, two large institutional investors — PGGM Investments and APG Asset Management –and Maastricht University (The Netherlands) launched “GRESB” to try to develop more efficient access to comparable and reliable data related to the ESG performance of their investments.  (GRESB=Global Real Estate Sustainability Benchmark.) 

The initial research for the approach was done by Dr. Nils Kok and Sander Paul van Tongeren.

As the 10-year anniversary is observed in 2019, consider that GRESB data now covers US$4 trillion in real estate and infrastructure value, and the small group of pioneers (there were 10 founding members) is part of a considerable global network of institutional investors, asset owners/managers, and stakeholders including industry partners, ESG service providers and media platforms.

GRESB – Benchmark for Real Assets

The GRESB mission is to assess and benchmark the ESG performance of “real assets” (think: real estate and infrastructure) and move toward standardization and validation of such ESG data for consideration by capital market players.

Real estate and infrastucture industry players can have vital business intelligence to compare where they stand against peers and develop strategies and action plans to catch up or surpass peers — along with a reliable means of sharing their ESG data with investors.

To give you an idea of how far the concept of the GRESB approach has come, today there are more than 1,000 entities participating in the 2019 real estate assessment and 17 funds and 393 assets participating in the 2019 infrastructure assessment. 

GRESB covers 100,000 assets in total (of which 66,000 are reported at the asset level for the real estate market).

The GRESB annual survey for asset owners can be challenging — but worth doing for the company.  The annual surveys are organized in (7) specific categories with 50 or more questions for responders’ consideration…the results are scores assigned by GRESB. 

A Guidance Document helps responders (asset owners/managers) organize their effort to strive for a higher score (“100” is tops; downward scores from there represent percentages).

GRESB real estate assessment is a reporting framework for listed property companies, private property funds, developers and investors that invest directly in real estate.

The GRESB developer assessment focuses on development activities.

GRESB bold name members today include CalPERS, Credit Suisse, BlackRock and Aviva on the investing side; and, CBRE, Brookfield, Centerpoint and Manulife Real Estate on the real estate management roster. (Click here for the Member list)

GRESB is reviewing its 2019 results on a global basis with briefing in world capitals.  There’ll be shared insights on trends and best practices and reflection on “lessons learned” in the first decade of GRESB.

For the meeting near to you, check GRESB events.

Governance & Accountability Institute teamed with GRESB management to produce an introductory webinar – “GRESB in 60 Days:  Tech, Tools & Best Practices to Respond…” 

Here you can find out why these reports matter, and how to get started on the GRESB journey.  Guest speakers include Matt Ellis, Founder of Measurabl (a G&A partner organization); Mark Delisis, at Avalon Bay Communities; Ulrich Scharf of GRESB; and Hank and Lou from G&A Institute. You can tune in here.

Here is information from Measurabl on GRESB.

The G&A Institute team advises and supports several real estate management client organizations.  For more information about our services to the industry, please email info@ga-institute.com.

The Top Story

GRESB expands its ESG coverage of the real assets industry 
Source: GRESB – The Benchmark for Real Assets 

Dramatic Change of Direction For The Business Roundtable With Issuance Of “Purpose Statement” Signed By The CEOs Of America’s Largest Companies

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

The Business Roundtable (BRT) is an organization of CEOs of the largest companies in the U.S.A. — firms that generate a combined US$7 trillion in revenues, employ 15 million people, invest $ 147 billion annually in R&D, and provide healthcare and retirements benefits for tens of millions of Americans.

Member companies operate in every one of the 50 states and through the organization the nation’s top business leaders work to influence major societal issues — tax policy, infrastructure needs, trade and other issues..

This universe of large companies is where many institutional and retail investors place their bets on the economic future and enjoy some of the fruits of the efforts of the enterprises they invest in. 

Investors provide much of the capital that make the wheels go ‘round for the BRT companies.  Consider: investors in the BRT member companies received almost $300 billion in dividends.

And so investors have been a priority concern for the CEO members for the almost half-century existence of the Business Roundtable. 

The BRT’s long-term guiding philosophy seemed to many to have been rooted in the period four decades ago when influential economists such as Dr. Milton Friedman of the University of Chicago advised the CEOs that their primary duty was to look out for the shareholders first…and all else would fall in place.

Professor Friedman famously set out the agenda for major company CEOs and boards in his essay in The New York Times magazine in September 1970: A Friednzan Doctrine.

“When I hear businessmen speak eloquently about the ‘social responsibilities of business in a free-enterprise system’…the businessmen believe that they are defending free enterprise when the declaim that business is not concerned merely with profit but also promoting desirable social ends, that business has a ‘social conscience’ …” he began.

In doing this, he explained, those running companies believe they “have responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers…”

Only people can have responsibilities, the professor said. A corporation or business as a whole cannot be said to have responsibilities, even in this vague sense.

He concluded his 3,000 word anti-CSR screed with this: “…the doctrine of social responsibility taken seriously would extend the scope of political mechanism to every human activity. It does not differ from the most explicitly collectivist doctrine…” (Read: Communism; this was written in the days of the Cold War.)

Dr. Friedman saw corporate social responsibility as a “fundamentally subversive doctrine and that business had one and only one social responsibility: to increase profits so long as it stays within the rules of the game…”

In fact, the business managers / owners are, or would be if anyone else took them seriously, “preaching pure and unadulterated socialism.”

We Are In a New Era

We are almost 50 years away from the 1970 essay by the good professor.

The game has changed. The world has changed. The nature of the former Russia-USA standoff of the Cold War era has changed. Attitudes in the business (corporate) community have changed (witness the BRT “purpose statement”). Institutional investor attitudes have changed (see: sustainable investing). A vast array of stakeholders have entered this discussion since the 1970s.

So What Is The Purpose of The Corporation in the 21st Century – in 2019?

In 1997, the Business Roundtable issued its statement of the purpose of the corporation:  “The paramount duty of management and of boards of directors is to the corporation’s stockholders.”

No more.  This week, the Business Roundtable moved beyond the long-term “shareholder primacy” operating principle, releasing its revised “Statement on the Purpose of a Corporation” — representing a dramatic course change in the principle operating philosophy of this powerful, CEO-led organization.

The almost 200 CEO signatories pledged to: 

–invest in employees;

–deliver value to customers;

–deal fairly and ethically with suppliers;

–support communities in which they work; and, –generate long-term value for shareholders.

Each of stakeholders is essential, the Purpose Statement reads.  We commit to deliver value to all of them, for the future success of our companies, our communities, and our country.

Jamie Dimon, CEO of JPMorgan Chase is the current head of the BRT and played an important role in the dramatic shift of attitude in the official stance of the organization.  He sees this as “an acknowledgement that business can do more to help the average American.”

Adding color to this critical public re-positioning:  “Society gives each of us a license to operate. It’s a question of whether society trusts you or not,” Ginni Rometty, CEO of IBM told Fortune.

On its web site, BRT states “as leaders of America’s largest corporations, BRT CEOs believe we have a responsibility to help build a strong and sustainable economic future in the United States.”

We can say here that it appears that ESG and Sustainability basic principles are now “officially recognized” by the members of the CEO association — and have been enshrined in the declaration of the purpose of the U.S. large corporation.

The Purpose Statement does touch on numerous concerns of the sustainable investor – a good step forward for this powerhouse organization.

Perspective: This new BRT direction is about ESG / Corporate Sustainability / Corporate Responsibility / Corporate Citizenship — the issues and topic areas we deal with every day here at G&A Institute!

The BRT was created two years after the Milton Friedman essay appeared in The New York Times magazine (October 1972). Institutional investors were flooding into the equities market with relaxation of “prudent man/prudent investor” rules or guidelines of that the day. Large publicly-traded companies were the crown jewels of cities and towns (think: IBM, Hudson Valley, NY; GE, Connecticut; GM, Detroit).

The CEOs of that day — the predecessors to today’s BRT leadership — were operating in very different societal environments than in the 21st Century.

Congratulations to the CEOs who signed on to the new Purpose — no doubt the conversations with institutional investors will be centered in some ways on the new “official” BRT perspectives in the days ahead.

For the record, note that the BRT released its first sustainability report — “SEEing Change” — in April 2008 with 32 companies contributing to the report. The tally was 155 companies involved by 2017, with goals being set for E and S improvements.

We are following the discussion kick-started by the Purpose Statement and will have more to perspectives to share in the weeks ahead.

Our Top Story is the excellent Fortune feature on all of this by veteran business writer Alan Murray. It’s a great summary of the dramatic move by the CEO signatories this week.Click here to read the Business Roundtable’s “Statement on the Purpose of a Corporation” and see the list of corporate CEO signatories. 

The Top Story

America’s CEOs Seek a New Purpose for the Corporation
Source: Fortune – For more than two decades, the influential Business Roundtable has explicitly put shareholders first. In an atmosphere of widening economic inequality and deepening distrust of business, the powerful group has redefined its mission…

How Do We Get Board Room Attention For Our Corporate Sustainability Efforts? And Help Directors Understand and Support The Corporate Effort?

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

Those questions and more are often raised by managers trying to get the board room and C-suite attention – and support and resources needed — to launch or advance their company’s sustainability journey.

Here at G&A Institute our team has ongoing conversations with corporate managers about ESG / corporate sustainability and related topics.  What often comes up:  the “G” is challenging.  The questions raised include…

What metrics can we apply to show “governance progress” in our reporting?  Governance – that’s clearly a board room responsibility. What is measurable…and then reportable to be part of the ESG profile of the company?

How can we get the board’s attention to be able to keep them updated and involved in our company’s sustainability efforts? 

If we are staring out, how can we get the board’s attention to be able to help them understand the importance of corporate sustainability (we hear this from managers trying to get the program going and needing resources to be allocated).

What information does the board need to understand the whole topic area? (Corporate Sustainability / Sustainable Investing et al.)

Some answers to these and other questions are at hand in the advice from the World Business Council for Sustainable Development (the WBCSD) in the form of a commentary by the organization’s associate of redefining value, Johanna Tahtinen.  She offers perspectives and advice on Ethical Corporation’s platform.

To move from “nice to have” to “need to have”, she cites a McKinsey & Company report that found that a quarter of assets under management (globally) are now invested considering ESG factors, and what was a niche practice is now large and fast-growing.  Good for the board to know.

And, the World Economic Forum (WEF), the Davos meetings organizer, in its third Global Risk Report identified ESG as “…clearly becoming part of the everyday business realty and well as a fiduciary duty.  Good for the board to consider.

Governance metrics are a starting point and focus area for many investors, creating expectations for companies to integrate ESG “meaningfully into governance structures, management processes and disclosure”.  Clearly in the board room list of duties and responsibilities to address.

The influential WBCSD, Johanna Tahtinen explains, recently launched a project on governance and oversight to elevate ESG-related issues to the board room by supporting stronger decision-making, risk management and business resilience.

Good governance – assuring that this a high-priority in the board room – sends strong signals to the capital markets.  How do we know that? 

A recent study by WBCSD and Big 4 accounting firm PwC shows that investors (generally) have more confidence in the information reported and that governance metrics are a starting point and focus area for many investors today.

For the board room audience — the report put ESG in the risk category — it is all about risk, said Paula Loop, Leader-Governance Insights Center at PwC. She talked in February 2019 about risks, common misperceptions and the three stages of ESG with FEI Daily (the publication of Financial Executives International).

Her comments are of real value for you in assembling your board room presentation – check here:
https://www.financialexecutives.org/FEI-Daily/February-2019/ESG-in-the-Boardroom-A-Q-A-With-PwC%E2%80%99s-Paula-Loop.aspx

The advice for managers and senior executives for communicating the importance of ESG  to the board room from WBCSD includes:

  • Integrating material ESG information into the corporate reporting processes and decision-making.
  • Using consistent and comparable standards and metrics.
  • Making sure the board of directors understands the importance of ESG.

You’ll find details on these and more information in the Top Story.

The Top Story

From nice to have to need to have: how companies can push ESG up the boardroom agenda
Source: Ethical Corporation – Johanna Tahtinen of the World Business Council for Sustainable Development explains how boards can improve governance systems to meaningfully integrate ESG 

How To Build a Better – More Sustainable! – Brand … Advice From an Adweek Commentator

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

We seem to love our “top 10” [etc.] lists; these are typically eye-catching headlines for published news and commentaries about certain subjects. (As in: the 10 things you need to know about…). 

In Adweek, the authoritative news and insights publication for brand marketers over the past four decades, we learn about “the five truths needed to create a sustainable brand”. 

This is from a commentary by columnist Bruce Mau (he’s a prominent designer, co-founder of Massive Change Network and Visiting Professor at Pratt Institute).

The “mad scramble to make brands more sustainable is in full swing,” he advised his corporate marketing and advertising agency executives audience.  And many companies are still getting it wrong.  So what are the correct steps?  He suggests five – and explains the nature of each.

The first misconception to address (and change) is that a new, splashy product is not true sustainability, which comes about through a series of incremental improvements. 

Think of a product that is recyclable and (then) what that may take to create, produce and market successfully (in the end, that benefits the society by addressing the challenge of too much waste still going to landfill).

Then, (another step) in the lesson learned is usually that “you can’t do it alone” – society is facing an ecosystem of problems, and we all need help in addressing these.  

No firm can address an industry’s issues all alone.  Collaboration is key; imagine when a client on the scale of a McDonald’s says it will be sustainable, what happens if every of its vendor follows suit.  (Wal-Mart has been the prime corporate / retailer example of this over recent years.)

As we here at G&A tell our corporate clients and the many corporate managers we speak to each week, sustainability is not a destination; it is a journey! And the journey involves many people beyond those few taking the first steps in the company…the crowd will grow as the journey ensues. The excitement builds with more people involved.

“Strategy” is of course a very familiar (and over-used) word in the corporate world. This comes down to us from Ancient Greece, deriving its meaning from the concept that this is the work of generalship – being a leader.

Successful strategy comes from the top and begins with “clarity,” and understanding, author Bruce Mau tells us. Pursuit of sustainability should be a key strategy of the corporate enterprise.

Finally, today there is capacity to track the world’s energy and material flow and create metrics to enable those who manage brands to make better decisions and build “reasonable, actionable sustainability strategies”. 

Simple lesson is (for corporate leaders) — the impact that brands and brand marketers make can be better measured and managed. For better or worse.

Giving all of us – brand marketers and consumers and a widening range of stakeholders – a better way to track our progress (or lack thereof) and to determine the impacts we are making on our planet and society.

There’s a small treasure of insights for you in author Mau’s Adweek commentary – our Top Story for you this week.

Click here for more about Bruce Mau and his “Massive Change Network.

Please let us know how we’re doing with our selection of news, research and commentary that we present in our Highlights! 

This Week’s Top Story

The 5 Truths Needed to Create a Sustainable Brand
Source: Adweek – The mad scramble to make brands more sustainable is in full swing. And while companies are right to tackle this issue, the truth is that quite a few of them are still getting it wrong. That’s because there are still a few glaring… 

As Investors Suggest Tying Executive Compensation to Progress in ESG / Sustainability – Can This Be Factored Into Today’s Corporate Pay Programs?

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

For several decades now, investors have increasingly focused on issues involving executive compensation. 

Remember Graef S. Crystal?  Back in early 1990s the former compensation consultant to the nation’s largest corporations shape-shifted and became an author and activist focused on what he believed to be “excess” pay arrangements for U.S. corporate CEOs. (His 1992 book on the subject was a best-seller, “In Search of Excess – the Overcompensation of American Executives”.)

Crystal began his career at Towers Perrin, where he worked for two decades as a consultant to major companies on corp comp; he also taught at Haas School of Business (University of California, his alma mater). In later years Graef Chrystal was a leading commentator for Bloomberg News. (He passed away in April 2017.)

Every company faces the same questions, he explained in simple terms:  in terms of compensation of the senior management team, how much and how? 

In his work as a leading CEO comp consultant he explored the various approaches of the day and set the foundation for conversation about CEO comp over the ensuing months and years. (As corporate boards set compensation practices in place.) He was a major influence in his time as consultant in developing compensation programs for large public companies.

In 1989 he “switched” sides from advising Coca Cola et al and became a very vocal critic of CEO compensation schemes without having formal, accountable pay-for-performance systems in place.

For Crystal, It Was All About Pay-for-Performance

Let’s recognize here that much progress has been made in linking pay to performance over the years since Crystal’s (and others’) call for reform of the compensation packages of publicly-traded companies.  Institutional shareholder activism has certainly been a factor.

And as we have seen with the passage of new laws and operating rules of the road, there is increasing focus on CEO compensation. For example the Dodd-Frank legislation of 2010 – the the U.S. Congress attempted in the new statutes to address the issue. (The annual public report on the ratio of CEO pay to the median worker in U.S. public companies came about this way.)

The Dodd-Frank rules call for an advisory shareholder vote on the corporate compensation programs (the frequency of this vote to be approved by the shareholders).

The corporate proxy statement today greatly illuminates the board thinking in the structuring of basic executive compensation for the top executives — pay levels plus a growing variety of incentives.

More recently, there are calls from some institutional investors to have executive compensation tied to performance related to ESG / sustainability.

Authors Seymour Burchman and Blair Jones writing in The Harvard Business Review see “…the final link in the chain of improving corporate accountability for sustainability is to tie improvements to pay”. 

That gets us closer to Graef Crystal’s fundamental questions of how much and how?

These are real challenges for boards in considering the how of incentives tied to ESG — the number of possible sustainability improvement goals grows by the day. 

The long-term efforts to realize payback from most ESG initiatives don’t easily fit into the usual annual or three-year incentive timeframes. 

And then because incentives are typically tied to financial results…revenues, profit, returns…how do you weight the non-financial aspects of the business…and develop clear ROIs for ESG?

The authors — both experienced compensation advisors, like the late Graef Crystal — set out five steps to designing sustainability incentives to address these challenges and more to enable boards and management teams to create incentives that respond to internal and external stakeholder priorities.

Briefly, these are:

(1) reexamine the context – what are your measurements?;

(2) clarify the organizational scope – where to apply the incentives;

(3) quantify the duration (time horizon);

(4) consider the ends and the means – what are the goals?;

(5) and then structure the incentives. 

The authors spell out the specifics of each of the five steps.

The public discussion that Graef Crystal helped to start on the subject of senior management compensation more than a quarter-century ago continues today with varying expectations of investors about how much and how, but with far greater transparency on the part of companies about their plans.

We are now seeing companies acknowledging the importance of factoring progress in sustainability efforts into the pay packages. 

We think corporate boards and managements, and investors in the enterprise, will find the Top Story of importance in the context of the growing expectation that executive compensation will somehow reflect the continuing embrace of sustainability (or “ESG”) by public companies of all sizes in the U.S.A. – and by a growing number of mainstream asset owners and their managers.

This Week’s Top Story

5 Steps for Tying Executive Compensation to Sustainability
(Source: Harvard Business Review) – The final link in the chain of improving corporate accountability for sustainability is to tie improvements to pay. In our last article, we explained that companies should use incentives to motivate executives to tap big…

Plastic Bottles, Past Present and Future – Are They a Factor in Your Organization’s Operations? Some Remedies to Consider…

by Hank Boerner, Chair and Chief Strategist, G&A Institute

Among the fascinating – and horrifying – environmentally-focused stories we see now on a regular basis are those about the “Pacific Gyre” — that floating (and quickly becoming “a semi-continent”) of garbage and waste in the northern stretches of the vast Pacific Ocean.

The National Geographic Society describes “The Pacific Garbage Patch” as two distinct and vast collections of floating debris in the Pacific Subtropical Convergence Zone.

One patch (“the vortex”) spans east-to-west from the North American western coastlines (California to Oregon and Washington State) all the way to Japan and includes the Eastern Patch (garbage floating between Hawaii and California).

An ocean gyre, NG explains, is a system of circular ocean currents formed by the Earth’s wind patterns and the forces created by the planet’s rotation. The gyre center is calm and stable – and so garbage piles up and stays. 

Consider that a plastic water bottle carelessly thrown in the California surf crosses the Pacific and ends up a patch (after about six years of travel). 

Most plastics (alas) do not break down – so the gyre (made up of microplastics for the most part) grows and expands. Much of the debris then slowly sinks to the bottom of the ocean.

On the subject of the ubiquitous (plastic) bottle, how can we think outside the bottle to drive a more sustainable future?  That’s the topic of today’s Top Story, with commentary by Richard Howells and David Sweetman published on the Forbes platform.

They say that 8 million metric tons of plastic are added to our oceans every day.

Among the islands of plastic debris, they examine are the Pacific patches — one is the size of the State of Texas! 

Consider the impact: sea turtles caught around the Great Pacific Garbage Patch can have up to 74% of their diets comprised of ocean plastics…and in turn, some of the plastic consumed by sea creatures finds its way into our human diets. 

What have you eaten today that might have had “microplastics” on the ingredient label? (Hmmm…should we add that now to the required food labels?)

Some states, cities and municipalities are focusing on single-use plastics (shopping bags), plastic bottles and the like. 

In Suffolk County, New York (a bellwether county for progressive ideas that address societal issues, such as seat belts in autos and one of the first to adopt mandatory beverage container recycling 30+ years ago) recently adopted measures to reduce single-bag use by shoppers.

New York State government leaders quickly adopted a statewide ban on most types of single-use plastic bags in retail. This is a trend to watch.

Among the authors’ suggestions for your business:

(1) take action your on supply chain;  

(2) design products and packaging materials to be more bio-degradable;

(3) drive a circular economy (encourage re-use, recycling);

(4) examine the delivery of your products’ packaging – try re-usable containers vs. throwaway packaging.

The details are in the Forbes commentary.

Focus on plastic bottles, they advise, such as the disposable water bottle (that is thinking outside the bottle!).

You can use water dispensing machines; water filtration equipment (typically built in refrigerators now); re-usable water bottles (we have a neat blue bottle here on the desk, a gift from the folks at Nestle Water); be creative in recycling of water bottles. (Mohawk Industries recycles 3 billion plastic bottles annually for their carpet manufacturing.)

There’s more for you in the Top Story. 

And here’s a related story about Amazon’s efforts along these lines:
Amazon’s incredible, vanishing cardboard box  (Tuesday – July 16, 2019) Source: CNN 

You can learn more about the Garbage Patch on the NG website.

Thinking Outside the Bottle to Drive A Sustainable Future
(Monday – July 15, 2019) Source: Forbes – The tide of devastation from single-use plastics polluting our oceans is now at an all-time high. Approximately 8 million metric tons of plastic are added to our oceans every day. Long ago, islands of plastic debris started… 

What Does “Sustainability” Mean to Leading Manufacturers? Ingersoll Rand Helps to Explain Through Operations & Products

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

One of the long-term success stories in U.S. manufacturing is that of Ingersoll Rand, with history dating back to the 1870s as the Industrial Revolution gained great momentum in North America.

The company’s products were needed by other industrial revolution companies (such as compressors), by mining companies (rock drills), and in various elements (locks and more) of the b-to-b market. 

When the Panama Canal was being built more than a century ago by the U.S.A., Ingersoll Rand drills were on the job.

Over the decades numerous industrial companies were acquired, with technologies and products added – including such well-known names as Clark Equipment Company, Trane, Thermo King, Dresser-Rand, Harrow Industries, and others. In 2006 the company celebrated its 100th anniversary of listing on the New York Stock Exchange.

Today the company’s products are used in business and residential heating and air conditioning systems (HVAC), in the food industry, on golf courses (the familiar Club Cars), in temperature control (for transport), as well as the company’s plants turning out power tools, control systems and other equipment (there are 51 plants worldwide).

In 2014 at the UN Climate Summit the company announced its Global Climate Commitment to reduce GhGs from products and operations by 2030.  So – how is Ingersoll Rand doing today? 

Today’s Top Story is a Forbes interview with Rasha Hasaneen, VP-Product Management Excellence and Innovation at the company. (Before joining the company she was at General Electric.) The interview is authored by Joan Michelson, a ForbesWomen contributor) who talks with Rasha about “process” as well as products.

Ingersoll Rand has “a holistic view of sustainable innovation”, the VP explains, helping the company to find common ground with customers, partners and potential recruits. 

Keys to innovating with a “core value of sustainability” include (1) anticipating customers’ unstated needs; (2) performance comes first with sustainability a close second; (3) the focus is primarily on product portfolios; (4) the company is constantly innovating; (5) data helps make the business case for understanding the customers’ industries; (6) use the organization’s unique “language” to get support for innovation.

These “6 tips” explain, says Rasha Hasaneen, comprise the Ingersoll Rand approach to innovation. 

The challenges to address in the era of global warming with record heat across the U.S. include design and production of HVAC systems (heating, ventilation, A/C) which account for half of the energy consumption in U.S. homes and 39% of commercial buildings.

The company explains “sustainability”:  At Ingersoll Rand, we integrate sustainability into the anatomy of how we help our customers success and how we run our operations

There’s good information on the firm’s 2030 Sustainability Commitment and the challenges the company, customers and society faces here.

We note here that the two aspects of “sustainable” definitions used today in industry are involved: developing sustainable, long-term products for customers (such as innovative HVAC systems) and making those products sustainability — and to be sustainable and responsible as well in the language of ESG.

Note:  The company’s headquarters was for a long time in New York City, moving to neighboring New Jersey in the 1970s and then on to Davidson, North Carolina.  The company is now incorporated in Dublin, Ireland. (To us, that’s a clear sign of the impact of globalization on what we formerly considered to be our crown jewels of industry, our “national” businesses!)

Top Story

6 Tips For Driving Sustainable Manufacturing From Ingersoll Rand
(Tuesday – July 16, 2019) Source: Forbes – As record heats spread across the U.S. (and the globe), air conditioning systems and the power systems they depend upon are getting a workout. These HVAC systems – heating, cooling and ventilation – are used 24/7 “account for…

About Those Assembled “Best Of” Lists of Companies – What Lessons Are There For The Managers Of Other Firms…Those Not On The List Of The Chosen Corporates?

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

There are a number of “best of” lists that corporate managers and investment professionals scour to see which companies are judged to be doing well (by the list makers)…whether they be industry peers & competitors, or possible acquisitions or partners.

Where do we stand is on the minds of the corporate managers in viewing the many best of lists.

And — for investors, considering whether the listed firms (at or near the top of the lists) might be the right choices for investment portfolios.

One annual list that we do follow closely is produced by Corporate Knights – this is the “Global 100 Most Sustainable Corporations”, published for the 15th year in 2019. 

This list begins with around 7,500 possible inclusions in the top 100, all of the firms generating $1 billion or more in revenues.  Analysts devote 5,000 hours scouring almost 4 million data points to narrow the field to the chosen 100.

Examining the results, Holly Johnson of The CEO Magazine shared her perspectives with her readers.  There were top takeaways she learned from examining the work of Corporate Knights analysts:

  1. The top companies “live longer” (average age for the top 10 was 87 years!).
  2. They are better governed than peers, with lower CEO-to-worker pay ratio. They pay more in taxes.
  3. They’re “greener,” generating more revenues from clean (positive green or social impact) goods and services.
  4. More women are found in their ranks, and in the board room; there’s bound to be found a link between exec compensation and sustainability measures.
  5. Revenue is “cleaner” – generated through sustainable products. The Top Company is Chr. Hansen, generating 80% of revenues from development of natural solutions for food preservation and crop protection, as well as alternatives to using antibiotics for food animals.
  6. Investors are happier with these firms. 

You can find the details from each of these findings in our Top Story. There’s a link to the Top 100 Corporate Knights list in The CEO Magazine post.

The company names you’ll find in the Top 10 of the Top 100 firms include Prologis (USA); GlaxoSmithKline Plc (UK); Banco do Brasil S.A. (Brazil); Taiwan Semiconductor (Taiwan).

Author Holly Johnson is staff writer and digital producer with The CEO Magazine, in Australia, where “she now delves into the world of leading business executives.”  The magazine is Australia’s leading business publication.

Top Story

Green leaders: The world’s most sustainable companies in 2019
(Tuesday – July 02, 2019) Source: CEO Magazine – According to Corporate Knights’ list of the 2019 Global 100 Most Sustainable Corporations, it encompasses carbon and waste reduction, gender equality in leadership and even revenues derived from clean products. 

Do Consumer Favor Sustainable Brands for Their Products and Services Needs? NYU Stern School Research Dives Deep into the Data For Answers

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

Many people in consumer marketing are wondering about consumer preferences for “sustainable” products! In our weekly newsletter the G&A Institute team offers media and experts’ shared perspectives on various issues and matters related to corporate sustainability, responsibility; and, sustainable, responsible and impact investing.

In recent months the content shared frequently has focused on trends in the consumer market — to help answer the question of whether or not consumers reacting to brand-facing companies positioning themselves as sustainability leaders.

Is this type of brand marketing a successful strategy?  Worth the effort? 

So the important question in all of this “wondering” is: Are consumers now favoring sustainable or green (or pick your term of definition) for their products & services at retail? 

In our ongoing monitoring of news, feature and research results — such as for the fashion and footwear industries, the auto industry, food & beverages, and certain other categories — the results tell us brand leaders are now often introducing sustainable products alongside their usual cash cows. We included several items for you in this week’s newsletter along these lines. This was our top story:

Writing in the Harvard Business Review, Tensie Whelan, professor at New York University Stern School of Business, and leader of the NYU Stern Center for Sustainable Business, and Randi Kronthal-Sacco, director of Corporate Outreach for the Center (and formerly with Johnson & Johnson) describe the results of their recent in-depth research project. 

This research centered on trying to answer the question — do U.S. consumers actually purchase sustainably marketed products?  (Spoiler alert: yes – you must read the HBR article to find out more.) 

Whelan and Kronthal-Sacco used volumes of data sets from bar scan codes at retail for food, drug, dollar, and mass merchandisers, looking at 36 categories and 71,000+ SKUs, accounting for 40% of consumer products goods (CPG) sales over a 5-year period.

So, what did they find to be the largest share of sustainability-marketed products? 

Almost $1-in-$5 purchases at retail are for toilet tissue, facial tissue (think: forest products); milk, yogurt (the yield of countless dairy farmers); coffee (lots of attention on the global coffee-growing belt circling the Earth, and worker conditions therein); salty snacks (really?); and bottled juices (you’ll notice that Coke and Pepsi and other beverage marketers are advertising their shift away from sugary drinks). 

At the bottom of market share:  laundry care, floor cleaners and chocolate candy (accounting for a 5% share).

Say Tensie and Randi:  Pay attention, marketers and those all along the retail value chain, from grower field and factory floor to shelf space.  Consumers are voting with their dollars, for sustainable and against un-sustainable brands. 

Winners in the corporate sector include PepsiCo and Unilever; laggards include Kraft Heinz. (For the leader, Unilever:  think of the company’s sustainable labels like Seventh Generation, Sundial Brands and Pukka Herbs.)

And we are seeing in the many stories we bring you each week about consumers and sustainability, the future for sustainable CPG at retail is looking bright – look at the apparel industry.for examples  The agora is alive and well with many more sustainably-branded products on the shelves.  That’s the good news for sustainability professionals.

The NYU researchers used data from IRi (the research house for CGP, retail and health and beauty – information at: https://www.iriworldwide.com/en-US/Insights)

Congratulations to our colleagues Tensie Whelan and Randi Kronthal-Sacco at NYU Stern Center for Sustainable Business for sharing their insights and perspectives.

This Week’s Top Story

Research: Actually, Consumers Do Buy Sustainable Products
(Thursday – June 20, 2019) Source: Harvard Business Review – NYU Stern’s Center for Sustainable Business just completed extensive research into U.S. consumers’ actual purchasing of consumer packaged goods (CPG), using data contributed by IRI, and found that 50% of CPG growth from 2013 to…