Ceres on Corporate Sustainability: “Turning Point” Research Effort Results

We can view this as very encouraging news:  Ceres released a report – “Turning Point” — that shows almost two-thirds of 600 companies examined intend to reduce GHG emission; half have water management policies; and just under half of the companies are formally committed to “workers’ rights”. The current research effort is the third assessment of corporate progress against key expectations of the framework, “The Ceres Roadmap for Sustainability,” and is a follow up to Ceres’ “Gaining Ground: Corporate Progress” report in 2014.

The report used data from the ESG research organization Vigeo Eiris that examined 600-plus of the largest publicly-traded companies in the USA.

Says the Ceres researchers:  In looking at the 600+ companies for the best examples on sustainability leadership, a key finding is that “sustainability” is now overseen by senior executives in more companies (65% today, vs. 42% in 2014), and high-level corporate officers manage GHG reductions in 98% of the companies surveyed.

That’s the good news.  The “bad news,” as provided with examples by Brian Collett in our Top Story (commentary from TriplePundit), is that while corporate responders said they were committed to reducing GHG emissions (64% said “yes”), only 36% set clear goals.

The Ceres survey results at times sound like the familiar “I have good news for you/and bad news” jokes.  While 69% of companies say they are concerned about their supply chain environmental and societal impacts, only 34% have “the means to take action”.

While about one-third of companies conduct materiality assessments, only 6% can describe the results guiding their planning and decision-making. On “water control,” more than half of companies are “committed,” but only 15% have priority targets focused on high risk.

Author Collett tells readers that using data from Vigeo Eiris the good news is that a select number of leading brand marketers in the USA are indeed meeting Ceres’ research recommendations to the corporate sector (“intensify your sustainability actions”).

These companies include Citi, Coca-Cola, CVS Health, Gap, General Mills, Intel, Kellogg, Nike, and PepsiCo.  The CSOs at General Mills and Citi Group add their perspectives to the TriplePundit piece.

Commenting on the research effort, Betty T. Yee (Controller of the State of California) noted:  Turning Point is a critical tool for smart business decisions, providing investors and shareholders with helpful insights to better understand key sustainability trends and leading industry practices.”

Watch next week for G&A Institute’s update on in our annual Flash Report on the CSR/Sustainability reporting trends of the S&P 500® Index companies.

To read the Ceres’ “Turning Point” report:  https://www.ceres.org/resources/roadmap-for-sustainability

To learn more about the framework — Ceres Roadmap for Sustainability:  https://www.ceres.org/ceres-roadmap

This Week’s Top Story

600 Companies, More Senior Executives Commit to Sustainability Policies
(Monday – March 05, 2018) Source: Triple Pundit – Record numbers of the largest and most influential companies in the US have been found in new research to be committing themselves to ambitious sustainability policies.

Building Success Into The Firm’s Sustainability Efforts – By Making Sustainability Everyone’s Responsibility

Lately, we’ve been participating in conferences where CEOs and other senior managers have been on the lectern describing their companies’ sustainability journeys – the why, how, challenges and positive outcomes.
Most presenters are the leaders in brand marketing who know that the stakes are higher now, in terms of both investor and customer expectations.  They know that the customer-facing company that wants competitive market positioning will demonstrate greater corporate responsibility and strive to be more sustainable.

One of the common threads that we hear in these presentations is the key role that employees play in making corporate “sustainability” or “responsibility” or “citizenship” programs more successful.  There are typically key management metrics applied, ranging from the simple-to-the-sophisticated.  Employee volunteer hours.  Return on these efforts(equivalent to dollar amounts donated in some cases).  Employee retention and customer loyalty rates. Investor response.

And for a few enterprises, the strategic approach of alignment of effort and incentive – building recognition and rewarding of the employee contributions to the positive outcomes (small today but appears to be a growing practice for savvy leaders).

Encouraging and organizing employee volunteering is often among the core activities when a company sets out on the sustainability journey – it’s a great internal morale builder and positive way to put the brand forward doing something that benefits society.

CB Bhattacharya writing in the Harvard Business Review shares his experiences gained in interviews with CEOs and C-suite execs, middle managers and “shop floor” workers in 25-plus companies to understand “why most companies fail to embed sustainability in their business models and what drives success among the handful that do.”

Hint:  it is about creating and promoting “ownership” – successful companies create conditions for stakeholders to “own” sustainability. 

Bhattacharya is H.J. Zoffer Chair of Sustainability and Ethics as the University of Pittsburgh’s Katz Graduate School of Business. He’s developed a three-phase model to help companies understand how to move beyond rhetoric and take ownership of sustainability (walking-the-talk).These are incubation, launching and entrenching.  These steps help to build a feeling of ownership (among employees) and “de-mystify” the internal stakeholders’ contributions to the overall corporate effort.

He offers examples citing such firms as BASF and its “Sustainability Solution Steering”; ING and the “sustainable transitions” and the application in real estate and clean technology; Old Mutual and workshops to show how employees are changing lives through their day jobs.

The advice shared from Unilever is not to create a “little department” for sustainability but to mainstream the efforts into all countries, brands, and divisions.  Example: the Unilever R&D and marketing departments work to create and promote products that serve business and society.

Ringing in our ears as we write this:  BlackRock CEO Larry Fink’s recent “CEO-to-CEO” letter calling on corporate leaders in which his company invests to ensure that the company fulfills a “social purpose!”  Almost every one of the corporate honchos we’ve heard embeds the phrase in their story-telling now.  That’s good news, we would say.

There’s very helpful advice for corporate leaders in the HBR article that is our Top Story, whether the enterprise is starting out on the journey, cautiously advancing one foot at a time, or well along in the journey and looking to stay way ahead of its peers.  As CB Bhattacharya (who is writing a book on the subject) observes:  “Establishing [employee] ownership prevents the feeling that that sustainability is someone else’s problem to manage.”

This Week’s Top Story

How to Make Sustainability Every Employee’s Responsibility 
(Monday – February 26, 2018) Source: Harvard Business Review – Do you believe that sustainability is important for your company, but that it’s “someone else’s problem”? You aren’t alone: While most organizations talk the talk of sustainability — doing things such as integrating environmental…

Supply Chain Responsibility – A Signal of Excellence in Corporate Accountability? Stakeholders Are Increasingly Thinking That Way…in the “New World Order”

Back in 1991, the tense “Cold War” environment of the post-WWII era was coming to an end.  President George H.W. Bush, a veteran fighter pilot in WWII and “Cold War Warrior,” addressed the U.S. Congress (January 19th) to deliver his State of the Union address.

“We stand at a defining hour,” he declared. “What is at stake is more than one small country (referring to Iraq at that moment); it is a big idea – a New World Order, where diverse nations are drawn together in common cause to achieve the universal aspirations of mankind…peace, security, freedom, and the rule of law. Such is a world worthy of our struggle and worthy of our children’s future.”

While the comments included references to the winding down of the Cold War and the enduring division of nations into two competing blocs (the USA and USSR) and standing-by status of “the Third World” of developing nations, the term “New World Order” captured the imagination and has endured.  But what does it mean?

Among other things, it means a freer flow of goods, capital and people among the nations of the world, relatively more peaceful conditions and more freedom to create more opportunity in every corner of the globe.  And that meant the s-t-r-e-t-c-h-i-n-g of the corporate procurement and sourcing efforts and the building of a much-more complex and far-flung supply chain for many developed society companies.

And as that supply chain became a more universal practice and more deeply embedded into the vital operations of the corporate sector, indeed many aspects of the “New World Order” became apparent.  And questions began to arise: What are the conditions of the workers within your global supply chain?  What are the environmental protections being put in place as the local suppliers in less-developed nations strive to produce more for the major customers in developed societies? What is your firm’s contributions to the well-being of the local community at which you source your goods?

Many company managements do struggle with the answers to these questions – and investors and stakeholders continue to raise questions about the nature of, the operation of, conditions within, the supply chain of many companies in their portfolios.

We have brought you numerous reports from around the world on the subject of global supply chains in these weekly newsletters. This week’s Top Story is about survey results from DNV GL; the company conducted a survey of professionals at global companies across Europe, the Americas and Asia – out of 1400 responses, 60 companies emerged as supply chain “sustainability leaders” based on attributes defined by DNV GL.  You’ll want to read this.

The New World Order has come to define many business and investing activities over the 25-plus years since President Bush delivered his remarks.  The USA has signed on to the WTO treaty, which was a departure from the traditional GATT talks encouraged by the U.S. after WW II.

The fundamentals of manufacturing have significantly been re-ordered over these years – with apparel and footwear and accessories as examples virtually disappearing from assembly lines in North America.  Yes, we are living in the New World Order – ask a veteran purchasing manager or sourcing manager about that if you can – we are miles beyond the operating conditions of 1991.

With rising purchaser expectations of greater accountability on the part of companies they do business with, supply chain responsibilities inch closer and closer to the top of priorities. Tell us, show us, the mantra of the stakeholders seems to be!

This Week’s Top Story

Supply chain management survey indicates greater pressure on companies to demonstrate sustainability
(Thursday – February 22, 2018) Source: Modern Material Handling – A new international survey by DNV GL, a global quality assurance and risk management company, reveals an emerging gap between beginners and leaders when it comes to managing sustainable supply chains

Remembering Marjory Stoneman Douglas and Her Rich Sustainability Legacy

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

As we watched the news of the tragic events at the high school in Broward County in South Florida, I wondered how many of us connected the oft-mentioned name of the high school with the woman – and her legacy – behind the institution’s name.

It’s a wonderful story to share with you: Marjory Stoneman Douglas was a valiant and heroic pioneer in so many ways on so many environmental and social issues.

She moved to Florida in 1915 from her early roots in Minnesota and New England (she was a Wellesley College grad) when the Sunshine State was in so many ways actually really a very new state. (Miami on her arrival had but several thousand residents and was a pioneer settlement).

Shortly after WW I ended there was a land boom in South Florida, with the Miami area coming alive with entrepreneurial and land and community development activity.

Some pieces of Miami land changed hands 10 times with the owner not even seeing the property “they owned.” The Miami Herald –her father was the founder and publisher — carried more classified advertising (buy my real estate!) than any other American newspaper at that time.

Marjory was born in 1890 and died in 1998 – her life spanned almost all of the 20th Century. She was an accomplished newspaper and magazine journalist, a tireless author and playwright and inspiration for female writers; an advocate for women, for civil rights, for human rights, for public health; a fighters for social justice; and a conservation leader who defended the previous Everglades eco-system for much of her life.

She moved to Miami – the new frontier of the American Atlantic coast in the early years of the 20th Century – and wrote for the city’s signature newspaper. She also wrote many short stories about this and that, for national magazines, and a run of good books. And then, in a defining moment in her life, she was invited by the Rinehart & Co. book publishing firm to contribute to the landmark series, “Rivers in America.”

(The 65 books in the series began appearing in 1937 and continued to 1974, with three publishers helming the efforts of local writers providing essays about their local rivers and the communities surrounding them.)

The editors asked her to write about the Miami River, which was not really a river at all, she cheerfully responded.

But then she began to research the ‘Glades” and there focused on the broad “wet” plains and the Biscayne Aquifer, giant Lake Okeechobee, and the role of the Kissimmee River in the fabled Everglades. The water was of the great stretch of wetlands was…well… moving…like a river.

The ‘Glades — not quite a river there, she explained to her readers, at least not like the Rio Grande or the Hudson or the Missouri and Mississippi – but it could be seen as a river of grass.

The result of her years of extensive exploration and research and working with naturalists and conservationists was her 1947 work, “The Everglades: River of Grass”.

She observed that the water did move, ever so slowly, shaping everything around it. That work awakened her interest in things conservation and environmental.

The Everglades was not just some, well, “swamp” – but a very important and vast and vital eco-system.

The Rivers series was very successful for the publishing house. I have copies of some of the book here on my bookshelf. Including River of Grass. Which has sold more than a half-million copies in the 70 years since first appearing in book stores. It is often compared to Rachel Carson’s Silent Spring in terms of impact and influence and awakening of the public conscience.

Marjory fought for many years to preserve and protect that eco-system and much of South Florida. Woe be to the “official” who stood in her way! She became known in the state as the “Grande Dame of the Everglades,” and a string of governors and other elected officials came into her crosshairs — and eventually under her sway.

I had the privilege to see Ms. Stoneman Douglas in action in Florida on several occasions. She appeared quite tiny and frail in her later days. But then she began to speak…and the sparks would fly! Her tiny voice was a megaphone for protection of the environment in Florida!

When I was an editor and publisher of Florida newsletters, magazines and management briefs, I constantly monitored the activities of the great lady, and came to appreciate the many achievements of her lifetime and way beyond (in the beneficial impacts on society today).

Today, thanks to her efforts, the Everglades National Park is a reality, saved from the relentless expansion and growth of developed areas for which Florida is nationally-known. Open space? Pave it over!

The area is also designated as a Wetland of International Significance and an International Biosphere Preserve.

We can all enjoy the Big Cypress area of the ‘Glades thanks to Marjory. Lake Okeechobee is still threatened by industrial activities but it is in much better shape than it would have been had she not joined the battle to push back on the flow of fertilizers, wastes into the lake, and other impacts that threatened this precious natural resource that helps to define Florida.

Well-Intended But In Turns Out, Boneheaded

The U.S. Army Corps of Engineers in the late-1930s and into the 1940s made a number of bone-headed decisions for “improving” the Kissimmee River flow and the effects on the Everglades. A series of floods had caused damage to newly-developed and agricultural areas, and the rising complaints by the increasing population moved government officials to “action”.

The river was “straightened out” in the 1940s and 1950s for much of it meandering course – with disastrous results. The little river flows from Lake Kissimmee, from close by to the well-visited Orlando area resorts, 100 miles south to the expanses of the Lake Okeechobee area through a wide and very flat floodplain.

This is home to a rich and wide variety of natural fauna and flora. In 1948, the Corps began building the “Central and South Florida Project” to move the river to a ditch, the C-38 Canal and installed water control facilities that…destroyed the natural river.

In 1992, the “reversal” began, restoring parts of the old natural river. The US Army Corps of Engineers splits the cost with the South Florida Water Management District – which Marjory helped to organize. (Known locally to some as “swiff-mud”.)

Marjory had strenuously pushed back on such modernization and “progress” — and won support for the restoration of the river; the project is still underway.

Marjory Stoneman Douglas High School:  The high school being named after her was in honor, we could say, of her quest for learning throughout all of her life. The Marjory Stoneman Douglas Building in the state capital (Tallahassee) is home to the offices of the Florida Department of Environmental Protection.

In her lifetime she was awarded the nation’s highest civilian honor – the Presidential Medal of Freedom – by President Bill Clinton (1993). England’s Queen Elizabeth paid her a visit. The National Wildlife Federation Hall of Fame inducted her, as did the National Women’s Hall of Fame in 2000.

When she passed in 1998 – 20 years ago at the age of 108! – President Clinton said: “Long before there was an Earth Day, Mrs. Douglas was a passionate steward or our nation’s natural resources and particularly her Florida Everglades.”

The Hall of Fame said of her book: “Her best-seller raised America’s consciousness and transformed the Florida Everglades from an area that was looked upon as a useless swamp – to be drained and developed commercially – to a national park that is seen as a valuable resource to be protected and preserved.”

And as we all know now, the scene of the February 2018 Parkland high school shooting tragedy took place at the high school named after her in 1990, during her lifetime.

Upon her passing her ashes were made part of the land – dust-returning-to-dust, to become part of the Marjory Stoneman Douglas Wilderness Area of the Everglades National Park.

And now you know more about the great lady of that name, who was a powerful voice that would very much at home in today’s sustainability movement!

She would be railing (I could picture her doing so) about global warming and the rising seas. She experienced the devastation hurricanes that ripped through South Florida in the 1920s and worried about her little house in Coconut Grove – that might be underwater at some point in the 21st Century (the restored house is a National Historic Landmark).

Her advice (according to a biographer, Mary Jo Breton in 1998): “Be a nuisance where it counts, but don’t be a bore at any time. Do your part to inform and stimulate the public to join your action. Be depressed (and she was at times in her life), discouraged and disappointed at failure but the disheartening effects of ignorance, greed, corruption and bad politics – but never give up.”

# # #

Graphic:  Wikipedia Commons

To learn more about this extraordinary woman and fighter for our environment, see the well done profile on Wikipedia: https://en.wikipedia.org/wiki/Marjory_Stoneman_Douglas

About her work, “The Everglades: River of Grass”: https://en.wikipedia.org/wiki/The_Everglades:_River_of_Grass

About The Kissimmee River restoration project: http://www.ces.fau.edu/riverwoods/kissimmee.php

ING Surveyed Corporate Finance Execs: The Results are Encouraging, as the Respondents Commented on Positive Results of Corporate Sustainability

Take our Top Story today and get it in front of your firm’s finance leaders

So often we hear that “investors don’t ask” or “no one inside seems to care” or “our finance folks don’t believe in” when we talk with corporate connections about corporate sustainability at their firm.  And, inside the company, skepticism can typically be found in the finance offices.

We have some good news “findings” for you today from the ING folks to add to the growing number of research studies demonstrating the sustainability business case.  ING is a leading global financial institution (banking, financial service) of Dutch origin, with a strong European base, serving clients in 40+ countries; it is selected to be among the leaders in the Dow Jones Sustainability Index’s Bank Industry category.

The firm just issued a report — “From Sustainability to Business Value – Finance as a Catalyst” — based on survey results (analyzing the views of 200-plus US-based finance executives in financial services, manufacturing, tech, consumer goods, real estate, industrial engineering, telecom, media, agriculture, infrastructure, chemical, transport, and logistics).

The survey respondents included CFOs, financial controllers, finance directors and senior treasury professionals, with revenues in their firms of from $500MM to $20+ billion.  The survey was intended to help to improve understanding of how financing and lending can support the goal of building a low-carbon, sustainability society.

The findings are encouraging for the most part, and resonated with us.  In our discussion with many corporate managers, the conversation usually includes “encouraging greater Corporate Sustainability is important for me internally, especially with our tough-minded and often skeptical finance folks. So being able to make the strong business case is a critical task…”.

Here’s some help for you from ING: 
The important role played by corporate finance and the benefits that these professionals identified were described in these ways:

“Almost half of the firms responding said that sustainability concerns have some level of influence on their business’s growth strategy…and 40%+ of firms with a mature sustainability framework in place said revenue growth is a main driver for acting.”

Supporting that portion of the business case?

  • 87% of survey respondents in firms with sustainability frameworks (the “mature” firms) said they experienced better revenue,
  • and 65% improved their credit rating.

ING states that it believes that financial institutions have a duty to explore how their financing can help to support energy transition and combat climate change. CEO Ralph Hamer is a “champion”  in the Alliance of CEO Climate Leaders.

An important takeway is the ING CEO’s perspective:

“We are witnessing an important shift in how companies in the United States view sustainability. Our research shows that it is no longer just about cutting costs or creating positive brand awareness ­— sustainability strategies are being deployed as true revenue drivers,” said Gerald Walker, CEO, ING Americas. “The finance function holds the key to unlocking the business value of these strategies, and are crucial to pushing the sustainable agenda in the U.S. as the industry continues to mature.”

There’s more for you in the Top Story, which also has a link to the ING Report:

Research: U.S. Companies Implement Sustainability Strategies To Drive Revenues
(Friday – February 16, 2018) Source: Chem Info News – ING’s sustainability report, ‘From Sustainability to Business Value — Finance as a Catalyst’, published today, finds that revenue growth is the most important factor when deciding to implement sustainability strategies, as 39…

How Tariffs Will Affect the State of Solar in the U.S.A. in 2018

Guest Column – By Kyle Pennell

The year 2018 did not start off well for the solar industry in the United States. In January, US President Donald Trump signed into law a 30% tariff on all imported solar panels, sending the entire renewable energy world into a controlled panic.

While the White House has repeatedly stated that this move is intended to help U.S. solar manufacturers who cannot compete with pricing coming out of China and India, there are many industry experts and environmentalists who have expressed a bleak outlook for the next several years of U.S. solar advancement.

What effect will Trump’s tariffs have on an industry that has been steadily growing since the 1970’s? What fortune, good or bad, will come from this ruling throughout 2018?

Trend: Foreign Producers Moving to the US

When signing the tariffs into law, President Trump stated that it was his hope to see foreign solar manufacturers move some of their production efforts to the United States. Jinko, a large Chinese solar company, seemed to take note of that, announcing plans to build a new plant in the US.(Jinko has an American subsidiary.)

Jinko announced in January 2018 that its board of directors have green-lit this U.S.-based plant’s construction, while subtly suggesting that their decision was a result of the tariff. They said in a prepared statement that the company “continues to closely monitor treatment of imports of solar cells and modules under the U.S. trade laws.”

Manufacturing products in the United States would allow Jinko the flexibility to avoid paying the tariff while continuing to affordably supply US installers with their products.

President Trump has been very vocal about his belief that the tariffs he has imposed on both imported solar panels and washing machines will coax more foreign companies into moving production state-side.

Foreign Countries Will Seek Compensation

The Trump Administration’s tariffs seem to have earned the ire of the global solar industry, with countries throughout Europe and Asia making official complaints with the World Trade Organization and seeking compensation from the US for what they believe is a WTO violation.

The Chinese government has filed an official WTO complaint against the United States, citing WTO provisions that they allege the U.S. has violated. It wasn’t long before the European Union followed suit, sending the United States a demand for compensation talks.

While the EU has not officially accused the US government of breaking WTO rules, it is seeking financial compensation on behalf of member-state Germany, a major solar hardware exporter.

There are some who fear that these filings could be the first step in an all-out trade war against the Trump Administration and the United States economy and business sector as a whole.

Thousands of American Jobs Will Be Lost

While the White House has touted these tariffs as a positive move for the American solar manufacturing industry, there are many who believe that this could spell the beginning of the end for the renewable power efforts in the United States — at least for the immediate future.

“Solar” is one of the fastest growing employment industries in the United States. The industry creates jobs at a rate 17% higher than the national average. The solar industry’s growth has been tied for years with the solar learning curve, which tells us that when prices fall by 20%, installations rise by 20%.

The Solar Energies Industry Association spoke out against these tariffs, alleging that increasing the cost of solar installations will slow the industry’s acceleration and lose upwards of 23,000 American jobs.

The SEIA went on to say that large investors will cancel projects that would have injected billions of dollars into renewable energy as a result of price hikes. It stands to reason that huge solar companies would look elsewhere for their expansions, where costs are limited, and incentives abound.

The SEIA was proven correct in their assumption, when the U.S. energy company SunPower postponed a planned $20 million expansion of its factories soon after the tariffs were announced.

Sun Power was seeking to grow its business in the California and Texas markets, but as a company that relies primarily on affordable hardware from the Philippines, this job creating environmentally-friendly expansion became economically-unwise.

“We have to stop our $20 million investment because the tariffs start before we know if we’re excluded,” SunPower CEO Tom Werner said in an interview with Reuters. “It’s not hypothetical. These were positions that we were recruiting for that we are going to stop.”

Those positions that SunPower stopped recruiting for are the first casualties of the Trump tariffs, but if the SEIA is to be believed, they will not be the last.

Questionable Motives, Questionable Future

President Trump has been a huge supporter of the domestic coal mining industry. During his successful 2016 presidential election bid, candidate Trump touted his support of “beautiful clean coal”, going as far as to bring it up once more in his January 2018 State of the Union address.

Many observers are tying this tariff to Trump’s unwavering support for fossil fuel power and are alleging that the president is seeking to wound the renewable industry to protect coal mining and fossil fuel power production.

Time Magazine even went as far as to call it “…the largest blow he’s dealt to renewable energy yet.”

But no matter what the president’s reasoning was, solar is a $28 billion industry which relies on foreign components for 80% of its manufacturing needs. Problems are going to arise.

While the world has benefited greatly from fossil fuel energy, the environment has suffered. It’s important to remember that technological evolution is the forefather or progress.

Examples abound: The rotary wired phone gave way to the cell phone. Blockbuster Video fell victim to streaming services. And we believe that fossil fuel power is destined to fall to renewable energy.

By blocking the advancement of solar, the U.S. federal government and the President of the United States are holding back the real potential of American energy efforts.

Thanks to Kyle Pennell from PowerScout (a home solar marketplace that lets consumers compare multiple quotes for home solar) for contributing this article.

  • Information: powerscout.com
    Email: kyle.pennell@powerscout.com


They Are Beginning Now – the Long-Awaited Corporate Disclosures on Ratio of CEO Ratio – CEO Pay-to-Median-of-Workforce Pay

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

The big-deal and long-waited corporate announcements / disclosures are beginning in 1Q 2018. 

Way back when…after the 2008 financial crisis when the Dodd-Frank capital markets reform legislation was passed (in 2010)…one of the requirements was that public companies must develop a ratio and disclose this publicly: how much does the CEO earn, and what that is that compared to the median compensation of the employee workforce? (Half below/half above is the median level to be arrived in an analysis for public filing.)

This is the Ratio, CEO Pay-to-Median-Worker-Pay disclosures.

The Securities & Exchange Commission finally issued its guidance on all of this in September 2017 (companies and their trade associations had steadily pushed back on the 2010 disclosure mandate and the SEC struggled with the “how-to” rulemaking / or more “gentle” guidance, causing delays in applying the law).

So – today the CEO-Employee Pay Ratio is upon us – and the first important disclosures are coming out now – including the first filing for a S&P 100 firm.

Bloomberg Markets News reports that Honeywell International Inc’s filing shows that CEO Pay is 333 Times More Than Median Workers. CEO Darius Adamczyk’s pay package was $16.5 million in 2017; the median employee pay (for the company’s 130,000 workers) is $50,296.

The Honeywell CEO package for 2017 is 60% more than for the prior year (when he moved into the job).

Earlier this month Teva Pharmaceutical Industries disclosed a pay ratio of 302-to-1 ($19.4 million for the CEO, median worker $64,081).

The AFL-CIO projected a 347-to-1 ratio (CEO: $13.1 MM; workers, $37,000).

When the SEC guidance was firmed up in 2017, some market observers said this was a “local newspaper headline” and not something that serious investors would pay attention to.

The Los Angeles Times – both a regional newspaper and one with national reach and influence – now features this headline: “The First Official Report on CEO-Worker Pay Ratios Shows and Enormous 333-1 Gap at Honeywell”

LAT’s Pulitzer Prize-winning financial commentator Michael Hiltzik used words like “…obscene…raw figures…economic inequality…the 1%…telling…massively embarrassing..”

Sam Pizzigati, the prominent author and social commentator at the Washington DC think tank Economic Policy Institute, was quoted in the LA Times article:

“This is a confirmation of research done up to now,” Sam Pizzigati, a fellow at EPI, says of the Honeywell data. He expects some corporations to show much larger discrepancies. That could show up especially in the retail sector, where median earnings are likely to be well below the $50,000 level of Honeywell’s heavily professional workforce.

Walmart, for instance, says its average hourly pay for full-time workers was to reach $13.38, following a company-wide wage increase in 2016. That’s about $27,800. Its CEO, C. Douglas McMillon, was paid $22.4 million last year. That would create a ratio of about 805-to-1 based on hourly wages alone.

Bloomberg BusinessWeek writer Anders Melin published a piece in January – “Why Companies Fear Disclosing CEO-to-Workers Pay” — noting:

“U.S. companies must soon begin disclosing what many would rather keep secret: The ratio between the CEO’s compensation and the paycheck of the company’s median worker. The mandate was included in the 2010 Dodd-Frank Act to shed light on the growing income gap between executives and workers. Opponents say it’s only meant to embarrass executives and won’t be useful to investors. One critic called it an example of bigotry against the successful.”

And: The disclosures will provide a first-ever glimpse into how thousands of U.S. companies compensate their workers, plus a more accurate sense than ever before of the CEO-to-worker pay gap.

A year ago, Alex Edmans writing in The Harvard Business Review said “…the numbers are striking…the idea is that a high pay ratio is unfair…I strongly believe that executive pay should be reformed…[but] the pay ratio is a misleading statistic because CEOs and workers operate in very different markets…”

His commentary is at:

(He is a professor of finance at London Business School.)

Our new “G&A Institute’s To the Point!” management brief platform has background on the CEO-Worker Pay Ratio, published for guidance in September 2017 as the SEC published its guidance:

IT’S H-E-R-E NOW: SEC Guidance on CEO-Employee Pay Rule Clarified in Interpretive Guidance. Your Company Should Be Prepared for First Quarter 2018 Disclosures and Beyond!

The information is at:

I have a chapter in my book (“Trends Converging!) about the pay rule (Chapter 9) – the entire book is available for you with my compliments at:

We’ll continue to bring you news of the CEO-Worker Pay Ratio corporate disclosures in 1Q 2018– company announcements and the public response to same.

Proof of Concept for Sustainable Investing: The Influential Barron’s Names the Inaugural “The Top 100 Sustainable Companies — Big Corporations With The Best ESG Policies Have Been Beating the Stock Market.”

By Hank Boerner – Chairman and Chief Strategist, G&A Institute

Barron’s 100 Most Sustainable Companies

Barron’s is one of the most influential of investor-focused publications (in print and digital format) and a few months ago (in October), the editors published the first of an ongoing series of articles that will focus on ESG performance and sustainable investing, initially making these points:

  • Barron’s plans to cover this burgeoning style of investing on a more regular basis. A lot of possible content that was developed was left on the cutting room floor, the editors note.
  • Says Barron’s: “We are only in Version 1.0 of sustainable investing. 2.0 is where ESG is not a separate category but a natural part of active management.”
  • And:  “Given the corporate scandals of recent days (Wells Fargo, Equifax, Chipotle, Volkswagen, Valeant Pharmaceuticals), it is clear that focus on companies with good ESG policies is the pathway to greater returns for investors!”

The current issue of Barron’s (Feb 5, 2018) has a feature article and comprehensive charting with this cover description:

The Top 100 Sustainable Companies – Big Corporations With the Best ESG Policies Have Been Beating the Market.”

Think of this as proof of concept: The S&P 500® Index Companies returned 22% for the year 2017 and the Barron’s Top 100 Sustainable Companies average return was 29%.

The 100 U.S. companies were ranked in five categories considering 300 performance indicators.  Barron’s asked Calvert Research and Management, a unit of Eaton Vance, to develop the list of the Top 100 from the universe of 1,000 largest publicly-held companies by market value, all headquartered in the United States.

Calvert looked at the 300 performance indicators that were provided by three key data and analytic providers that serve a broad base of institutional investors:

  • Sustainalytics,
  • Institutional Shareholder Services (ISS)
  • and Thomson Reuters ASSET4 unit.

Five umbrella categories were considered:

  • Shareholders
  • Employees
  • Customers
  • Planet
  • Community

There were items considered in the “shareholders” category, like accounting policies and board structure; employee workplace diversity and labor relations; customer, business ethics and product safety; planet; community; GHG emissions; human rights and supply chain.

We can say here that “good governance” (the “G” in ESG) is now much more broadly defined by shareholders and includes the “S” and “E” performance indicators (and management thereof), not the formerly-narrow definitions of governance. Senior managers and board, take notice.

Every company was ranked from 1-to-100, including even those firms manufacturing weapons (these firms are usually excluded from other indexes and best-of lists, and a number of third party recognitions).

Materiality is key: the analysts adjusted the weighting of each category for how material it was for each industry. (Example: “planet” is more material for chip makers using water in manufacturing, vs. water for banking institutions – each company is weighted this way.)

The Top 100 list has each company’s weighted score and other information and is organized by sector and categories; the complete list and information about the methodology is found at Barron’s.com.

The Top 5 Companies overall were:

  • Cisco Systems (CSCO)
  • salesforce.com (CRM)
  • Best Buy (BBY)
  • Intuit (INTU)
  • HP (HPQ)

The 100 roster is organized in categories:

  • The Most Sustainable Consumer Discretionary Companies (Best Buy is at #1)
  • The Most Sustainable Financials (Northern Trust is #1) – Barron’s notes that there are few banks in the Top 100. Exceptions: PNC Financial Services Group and State Street.
  • The Most Sustainable Industrials (Oshkosh is ranked #1)
  • The Most Sustainable Tech Outfits (Cisco is at the top)

Familiar companies names in the roster include Adobe Systems, Colgate-Palmolive, PepsiCo, Deer, UPS, Target, Kellogg, Apple, and Henry Schein.

Singled out for their perspectives to be shared in the Barron’s feature commenting on the ESG trends: John Wilson, Cornerstone Capital; John Streur, Calvert; Calvet Analyst Chris Madden; Paul Smith, CEO of CFA Institute; Jon Hale, Head of Sustainability Research at Morningstar.

Calvert CEO John Streur noted: “This list gives people insight into companies addressing future risks and into the quality of management.”

Top-ranked Cisco is an example of quality of management and management of risk: The company reduced Scope 1 and 2 GHG emissions by 41% since 2007 and gets 80% of its electricity from renewable sources.

This is a feature article by Leslie P. Norton, along with a chart of the Top 100 Companies.

She writes: “…Barron’s offers our first ranking of the most sustainable companies in the U.S. We have always aimed to provide information about what keenly interests investors – and what affects investment risk and performance…” And…”what began as an expression of values (“SRI”) is finding wider currency as good corporate practices…”

The complete list of the top companies is at Barron’s com. (The issue is dated February 5th, 2018)  You will need a password (for subscribers) to access the text and accompanying chart.

For in-depth information: We prepared a comprehensive management brief in October 2017 on Barron’s sustainable coverage for our “G&A Institute’s To the Point!” web platform: https://ga-institute.com/to-the-point/proof-of-concept-for-sustainable-investing-barrons-weighs-in-with-inaugural-list-of-top-100-sustainable-companies/

The Words From Davos In 2018: Sustainability, Responsibility…And More In This, The Fourth Industrial Revolution

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

The World Economic Forum (WEF) annually convenes business leaders, government officials, celebrities and other luminaries in the Swiss village of Davos-Klosters to explore societal issues and develop or work to advance solutions to same.

This year’s convocation was staged over four days n late-January. Some of the highlights for you:

UN Sustainable Development Goals in Focus
The Government of Denmark and the WEF signed a memorandum of understanding to move ahead with a partnership to improve the state of the world through a public-private cooperation. The agreement provides a model framework that could lead to improvement over the long-term.

And, adoption of the approach by other nations. Consider what this European nation and the WEF have in mind:

  • They will pursue public-private partnership to promote green growth.
  • Develop a technology and innovation partnership.
  • Work together to encourage greater adoption of the SDGs.
  • Support the mobilization of private capital for infrastructure through the WEF-led initiative, the Sustainable Development Investment Partnership.
  • Support trade and investment through the Global Alliance for Trade Facilitation (a multi-stakeholder initiative).
  • Work to implement the WEF’s System Initiative on Education, Gender and Work.
  • Denmark will assign a Ministry of Foreign Affairs senior advisor to the WEF New York City office (a second such WEF appointment for Denmark).

Prime Minister Lars Lokke Rasmussen said: “Denmark has an ambitious agenda to promote public-private partnerships…in terms of sustainable growth, social cohesion and technological skills. We are delighted to team with WEF to create concrete progress on these agendas…to create better lives for more people and sole the urgent climate crisis. We must build bridges across sectors, borders and old divisions…”

Addressing Modern Slavery
Influentials addressed the need for coordinated global action to end modern slavery – that was championed by US Senator Bob Corker (R-Tennessee); Monique Villa, CEO of Thomson Reuters Foundation; and, Gary Haugen, CEO of the International Justice Mission.

Senator Corker drew attention to the new Global Fund to End Modern Slavery (“GFEMS”), a public-private partnership to fund programs in countries where such practices are prevalent.

The initial funding is from the United States and United Kingdom; the goal is to raise US$1.5 billion-plus and develop a global strategy to address modern slavery. (It’s estimated that as many as 40 million people now live in modern slavery conditions. This is said to be a $150 billion global business.)

There are three pillars adopted by GFEMS: (1) leverage the rule of law; (2) “energized” engagement with business sector (3) work to sustain freedom.

Jean Baderschneider is CEO of the new Global Fund. The fund’s work will be modeled on the global effort to fight AIDS, TB and malarial infections, bringing together governments, the private sector and NGOs.

Tech-Reskilling Drive Announced
The Information Technology industry is going to work to target 1 million people to offer resources (such as on-line tools) and training opportunities to “re-skill” adults to help them meet the requirements of the tech industry for employment, as well as continue their education and learn more about today’s technology.

Big names in tech are signed on: Accenture, CA Technologies, Cisco, Cognizant, Hewlett Packard Enterprise, Infosys, Pegasystems, PwC, Salesforce, SAP, and Tata Consultancy Services. The coalition is seeking more members to help develop tools and processes to address the “barriers preventing adults from re-skilling or successfully completing training, initially in the United States. There are plans to scale to other geographies.

The coalition’s “SkillSET” is hosted on the EdCas AI-powered Knowledge Cloud Platform, accessible to all.

ISO 20121:2012 Certification for Davos
The conference was awarded the ISO certification for “sustainable event planning and operation” by DNVGL (a certifying body). ISO 20121 is a framework for identifying and managing key social, economic and environmental impacts of an event.

Sustainability measures implement by the Forum included carbon compensation for all air travel by the staff, media and participants; promotion of “sustainable transport” in Davos (walk don’t ride); energy efficiency; water management; sourcing of renewable energy; reduction of waste and recycling.

Ending With A Call to Action
The 2018 Forum closed with a call to action to “globalize compassion” and “leave no one behind.” This, the 48th WEF Annual Meeting, closed on a creative note with four artists sharing visions of how painting, photography, film and dance can inspire empathy with other people’s stories.

Across all of the 400 sessions, the Davos organizers said, “…one key theme kept emerging, the need to embrace our common humanity in the face of rapid technological changes ushered in by the Fourth Industrial Revolution.”

And so the call for a spirit of inclusion, diversity and respect for human rights…this characterized the 2018 gathering, said Sharon Burrow, one of the seven female co-chairs of the meeting (she is General Secretary of the International Trade Union Confederation).

Important outcomes of the meeting included these developments, on the theme of “mending our fractured world”:

  • Preparing workers for the future.
  • Safeguarding our oceans.
  • Closing the gender gap.
  • Tackling waste and pollution.
  • Unlocking nature’s value.
  • Making meat sustainable.
  • Bridging the digital divide.
  • Fighting financial crime and modern slavery.
  • Taking on fake news.
  • Securing air travel.

And…advancing the Fourth Industrial Revolution, which includes Forum centers at work with social, public and private sector partners in numerous countries.

As Oliver Baitch writing in Ethical Corp observed, having spent four days at the conference:

“First, and foremost, sustainability is here to stay. Long gone are the denials or debates as to whether “non-financial” or “soft” issues are the preserve of global business. Themes such as citizenship-centred science, a post-oil energy matrix and tax transparency have shifted from side-room workshops to the main stage.

“Second, companies are beginning to put their money where their mouths are. Davos 2018 saw a litany of firm, measureable corporate commitments – professional services firm PwC promising to cut its carbon emissions by 40% by 2022 (having cut them by 29% since 2007) through to Coca-Cola pledging to collect and recycle the equivalent of every bottle or can it sells globally by 2030.”

You can read his summary of the 2018 confab at: http://www.ethicalcorp.com/will-sustainability-be-ceos-trays-after-davos

And, of course, there is a significant amount of related information at the WEF web site:  https://www.weforum.org/

The Most Trustworthy Business and Professional Leaders – the Rosters Are Out Today From Trust Across America / Trust Around the World

January 30, 2018
by Hank Boerner – Chair& Chief Strategist, G&A Institute

Trust!  For many of us, when a critical incident or crisis occurs, one of the first words that come to mind is “trust,” as in “they really broke the trust with us” or “the organization can’t be trusted” (as in the statements made) or “the leaders can’t be trusted.”

Apply this to now-familiar settings:  Wells Fargo bankers and the security of your personal bank accounts.  BP and deepwater ocean drilling or Alaska drilling.  Equifax and your personal financial information.  Valeant pharma and drug pricing – and alleged gouging.

In a world of those little swirling computer screen circles, and IT dominating our business & persona lives…threats can now be everywhere — internet hacking and phishing abounds – and we think:  who can we trust with your information?  That becomes a conscious and subconscious thought process on both a business and personal basis for many of us.

In business and professional life, trust is a valuable and precious commodity.  Warren Buffett has observed, “…it takes 20 years to build a reputation and five minutes to ruin it…if you think about that, you will do things differently…”

“Trustworthy” is a very valuable characteristic, we would say!

And so does an organization that has been identifying the “Top Thought Leaders in Trust” think that way:  the Trust Across America / Trust Around the World (TAA/TAW, owned by Next Decade, Inc.)

The founder and guiding spirit is CEO Barbara Brooks Kimmel, who 10 years ago created the program and its proprietary FACTS® Framework (used to measure the trustworthiness of more than 1,500 U.S. public companies). FACTS incorporates five indicators of trust and integrity – Financial stability, Accounting conservativeness, Corporate governance, Transparency and Sustainability.

Barbara is also the editor of the Trust INC. book series and runs the global Trust Alliance.

Every year since 2008, TAA/TAW assembles judges and conducts a survey and analysis to select a small universe of the Top Thought Leaders in Trust.  After five continuous years on the annual list, a small number of awardees receive the Lifetime Achievement Award.  This year’s lifetime roster additions include:

  • John Baldoni – President, the Baldoni Consulting organization.
  • Donna Boehme – Principal of Compliance Strategists LLC.
  • Doug Conant – former CEO of Campbell Soup and founder, Conant Leadership.
  • Robert Easton – Chairman and Senior Manager of Accenture Australia and New Zealand.
  • Mark S. Fernandes – CEO of Capitalism 2.0, Inc.
  • Barbara Brooks Kimmel – CEO of Trust Across America.
  • Holly Latty-Mann – Licensed Clinical Psychologist, Cofounder, and President of The Leadership Trust.
  • David Reiling – CEO of Sunrise Banks and social entrepreneur.

TAA / TAW is the leading global program devoted to researching and building tools to elevate organizational trust. A Google search will return over 1300 entries.

In 2015, the organization added the “Lifetime Honorees” designation to 12 professionals.  I was honored to be one of the original twelve, after five years of being the awardee for the annual award.  In 2016 and in 2017, seven more professionals were added to the roster (each year), and now in 2018, there are eight professionals added.

Ninety-one individuals were named to the 2017 individual award, including for the second year in a row, G&A Institute Co-founder and Executive Vice President Louis D. Coppola.

You can see the full list in the latest TRUST! Magazine here:  http://trustacrossamerica.com/magazine.shtml


Of course, Lou and I are humbled and proud to receive such honors.

TAA / TAW points to the organization’s core values and principles, which are excellent “north stars” for professionals’ and their organizations’ guidance:

Integrity – Quality – Community – Objectivity – Credibility – Success. 

You can learn more about these and the organization at: http://www.trustacrossamerica.com/about-words.shtml

Do you have a nominee for the Top Thought Leaders 2019 award?  The nominations are now open – there’s information at: http://www.trustacrossamerica.com/cgi-bin/nominations.cgi

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Adding my thoughts….

Trust – this apparently comes down to us for common understanding and use from ancient languages.  There are derivations from the Old Norse – the language of the wandering Vikings (“traust” and “trow”).  From the Old Dutch (“troosten”).  And the German or Teutonic tongue (“trosten”).  And more from the Gothic English-the Anglo Saxon roots of spoken English today (“trausti”).

These ancient and current tongues convey to us:  

Truth.  Comfort. Trustworthy.
An agreement or covenant – to be true to one’s words and deeds.
To be believed.

And therefore – to be trusted and trustworthy.  Worth striving for, we would say in these often chaotic days of the 21st Century!

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There’s information on the 2017 awards in the news from TAA:  https://www.prnewswire.com/news-releases/announcing-2018-top-thought-leaders-in-trust-300589490.html