The Survey Results Are Here: $12 Trillion in Professionally Managed Assets Are Guided by Sustainable Investing / ESG Approaches in the USA – That’s $1-in-$4 of All Capital Market Assets Under Professional Management At End of 2017

The results of the 2018 survey of asset owners, asset managers and community investment professions conducted by The Forum for Sustainable and Responsible Investment (“US SIF”) were announced last week.

Dramatic results were highly anticipated  — and the US SIF trends survey delivered:  at the end of 2017, ESG / sustainable assets under professional management (AUM) totaled US$12 trillion.  That’s 1-in-$4 of total professional managed assets (AUM) in the U.S. capital markets ($46 trillion).

The survey universe consisted of 496 asset owners, 385 asset managers and 1, 145 community investing financial institutions.

These professional money managers pursued ESG integration for a variety of reasons, including:  (1) to meet increasing institutional and retail client demand for “sustainable investing”; (2) to fulfill stated mission and pursuing social benefits; (3) to address a number of societal issues such as climate change, diversity, human and labor rights, weapons manufacturing, and corporate political spending.

High net worth individuals and retail investors increasingly utilized ESG / sustainable investing approaches reporting $3 trillion in sustainable assets.

One of the leading sponsors of the every-other-year study since the 2010 survey report is the Wallace Global Fund.  The managers have embraced sustainable investing and Executive Director Ellen Dorsey commented:  “We support this research as a critical tool to track crucial trends in the industry and benchmark our own goal of 100 percent mission alignment, as we promote an informed and engaged citizenry, help fight injustice and protect the diversity of nature.”

The Trends report breaks out the top ESG issues for investors – nine types of financial institutions (public employee funds, insurance companies, labor funds, and more), mutual funds, ETFs, money management firms, foundations, venture capital funds, and community investing institutions.  There is a tremendous amount of useful data and information or you in the Trends report available from US SIF.  The two top stories this week provide you with highlights.

We encourage readers to order the full report and keep it handy…for the next two years, volumes of content will be cited by investors, investor coalitions and advocates, media, academics, NGOs, government agencies, and others. To get started in digesting the sustainable investing trends, start with our two Top Stories below.

This Week’s Top Story

Breaking News: $12 Trillion in Professionally Managed Sustainable Investment Assets — $1-in-$4 of Total U.S. Assets
(Thursday – November 01, 2018) Source: Hank Boerner – Chair and Chief Strategist – G&A Institute – Call it “sustainable and responsible investing” or “SRI” or “ESG investing” or “impact investing” – whatever your preferred nomenclature, “sustainable investing” in the U.S.A. is making great strides as demonstrated in a new…

US SIF Foundation Releases 2018 Biennial Report On US Sustainable, Responsible And Impact Investing Trends
(Thursday – November 01, 2018) Source: US SIF Foundation – The US SIF Foundation’s 2018 biennial Report on US Sustainable, Responsible and Impact Investing Trends, released today, found that sustainable, responsible and impact investing (SRI) assets now account for $12.0 trillion—or one…

Is the Movement to Achieve Greater Societal Sustainability Reaching the Consumer? One Consumer Marketers’ Story…

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

The story is being well told -– a growing number institutional shareowners and their global networks of asset managers steadily embrace ESG / sustainable investing approaches.  Corporations of all sizes are adopting sustainability strategies and churning out sustainability and responsibility reports to tell the story of their sustainability journey.

Many national, state and local governments are following through on their commitments made in Paris in 2015 (the Paris Accord on climate change). NGOs galore are focused on driving sustainability into all corners of human behavior.

What about the vast global consumer market?  What’s happening at the consumer level?  The House Beautiful magazine (part of the Hearst UK Fashion & Beauty Network) brings us news from the UK about one large company’s sustainability-focused marketing efforts.

The headline:  Why 2018 is the year sustainability went mainstream. The most-watched TV show of the year was the BBC series on sustainability.  And at least one major retailer has put “sustainability at the heart of everything we do,” says its senior sustainability manager.

The firm in focus is John Lewis & Partners (manufacturers and marketers of “homeware, fashion, furniture, electricals,” mens and womens wear). The employee-owned company offers its lines of products through a vast network of retail outlets. What is the company doing?

It has introduced a duvet (quilt bed cover) made of 100% recycled polyester from plastic bottles (120 bottles = one duvet).  The product is made in an “eco-factory” running on renewable energy. The company has its own factories as well as contract manufacturers.

The S’well Geode Rose drinking water bottle sales are up year-to-year (by 37%) says the company.  Glassware made from recycled glass is offered in the company’s John Lewis Croft Collection.  As alternatives to tin foil and plastic cling film for food storage the company offers brands “Stasher” and “Bees Wrap” -– silicone kitchen storage bags.

The company works with the Re-Use Network in marketing its new sofas; when a customer buys a new sofa in the “Thomas Snuggler” line, the company arranges for the old sofa to be re-used or re-cycled in collaboration with local charities that support disadvantaged communities.

All of this and more is in its annual 2018 Retail Report.  Shoppers became more conscious about what they buy and where the products come from, explains the company.  And, this was the year we took it upon ourselves to build a more sustainable future rather than leaving it to others.

The company (“partnership”) is the largest employee-owned company in the United Kingdom. “Partners” (83,000 permanent staff) own 50 John Lewis shops across the United Kingdom, plus Waitrose supermarkets, shops at Heathrow International, online and catalogue shops, production facilities, farms, and more.

Founder John Spedan Lewis created a “constitution” to define the business and how individual “partners” are expected to behave toward stakeholders. This reminds us of the foundational document of Johnson & Johnson (“the credo”) here in the USA.

The partnership model was and is “an experiment in industrial democracy,” showing that long-term success can come from “co-ownership” with shared power and collective responsibilities.  Societal challenges like climate change and social inequality guide company thinking.

As information: https://www.johnlewispartnership.co.uk/csr/governance.html

Its human rights report and related information is available at: https://www.johnlewispartnership.co.uk/csr/source-and-sell-with-integrity/tackling-modern-slavery.html

This Week’s Top Story

Why 2018 is the year sustainability went mainstream
(Wednesday – October 24, 2018) Source: House Beautiful – This was the year we took it upon ourselves to build a more sustainable future rather than leaving it to others,’ said John Lewis & Partners in its annual Retail Report 2018. ‘We know that 73 per cent of millennials will spend…

And along the lines of sustainability-themed marketing…

Nielsen: How do sales of sustainable products stack up?
(Thursday – October 25, 2018) Source: Food Navigator – Sustainability-related claims on food products are popping up more frequently and while still just a small fraction of market, items mentioning sustainability outperformed the growth rate of total products in their respective…

State of Corporate Sustainability, GreenBiz Releases Latest Update — Top Lines: (1) We are making progress and (2) There are still challenges

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

It’s now three-quarters of the way through the year 2018 – what is the state of the Sustainability Profession?  John Davies, writing in GreenBiz (he’s VP & Senior Analyst), shares some interesting highlights gained through the firm’s recent report with us this week.

Among the major themes:  (1) Companies large and small see advances – progress – more companies are communicating what they are doing.  (2) Serious concerns, challenges, barriers are still ahead (look at what is happening to the US SEC and the dismissal of sound science by policymakers).

The Greenbiz report on the state of the profession is always eagerly awaited (every-other-year) and the latest (the 2018 report) is available for you (the link is in the Top Story).

GreenBiz presented results of its research on such items as gender pay equity trends; the embedding of the sustainability role(s) throughout the organization; more professionals coming in to the firm from outside vs. being promoted from within; and, the corporate sustainability programs becoming more sustainable.

There is also an interesting collection of news items we’ve selected for you that describes the range of activities within industries as companies of all sizes as the “corporate sustainability wave” gains momentum.  It’s below the Top Story for you.

This Week’s Top Story

The State of the Sustainability Profession, 2018
(Tuesday – September 25, 2018) Source: GreenBiz – That’s a significant change from 2011, when the Governance & Accountability Institute found just under 20 percent of S&P 500 companies were publishing such reports.

And we call your attention to:
Sustainable Brands Delivers Insight on How to Build Better Sustainability Metrics
(Friday – September 28, 2018) Source: Sustainable Brands – Sustainable Brands® reveals program, networking and activity highlights for its upcoming conference: New Metrics 2018. Nearly 400 business executives will convene October 29-31 at the Loews…

Seven Compelling Corporate Sustainability Stories For You – How Entrepreneurs Are Managing Their Sustainable Business and Meeting Society’s Needs

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

How do we structure a more sustainable (and responsible) business – it’s a question we are regularly asked here at G&A Institute. By big firms and small companies — publicly-traded or privately-owned (and numerous planning to go public).

As we get into the conversation, what often becomes clear is that the company really was founded to meet some kind(s) of societal need, and sometimes it actually created a need (think of the popularity of the Apple eco-system or the early days of the Ford Motor Company and the “horseless carriage”) that it fills, benefiting society.

And in the firm’s “growing up and maturing” phase the leaders want to be recognized as a sustainable and responsible enterprise.

There are well-known corporate models that can help point the way for a management team.  We explain the successes of our “top performers and reporters” roster as examples of how the industry leaders (depending on sector and industry) have achieved clear, recognized leadership in sustainability. Their stories are inspirational as well as instructive.

(Tip:  read the companies’ GRI reports for a deep dive into corporate strategies, programs, collaborations, and achievements – our team dives into 1,500 corporate reports and more each year in our work as GRI Data Partners for the USA, UK and Republic of Ireland.)

But what about smaller enterprises, not “giants” in their industry, or niche players, run by talented entrepreneurs and managers who want to do the right thing as they build their business?  How do we find their stories?

You know, like the early story of Ben & Jerry’s (ice cream), two young guys with borrowed money operating a small store (a renovated gas station) in downtown Burlington, Vermont; the founders, Ben Cohen and Jerry Greenfield, built their business as a pioneer in social responsibility. (In 1985, the Ben & Jerry’s Foundation got 7.5% of annual pre-tax profits to fund community-oriented projects and supporting dairy family farming was a priority – like the duo’s support of Farm Aid.)

What we have for you today are the stories of seven perhaps less well-known firms briefly profiled by tech blogger Kayla Matthews in her guest commentary on the Born2Invest platform.  The quick-read profiles explain the companies’ business models and how they try to operate as sustainable enterprises.

These are: Prime Five Homes (building $1 million eco-mod homes in Los Angeles); LaCoste (marketing the well-known crocodile brand of clothing); Liberty Bottleworks (recycled water bottles); Cleancult (paving the way for more efficient detergents); Andean Collection (marketing jewelry from the rainforest and providing Ecuadorian women with jobs ); Blockchain (technology); Wash Cycle Laundry (eco-friendly local laundry service).

What is interesting is that each of the companies, the author explains, develop products and manufacturing processes that benefit employers, employees and Mother Earth by striving for and being (more) sustainable.  The stories are fascinating – and very appealing in this age of anxiety for many of us.

These stories remind us of the 2018 “Sense of Purpose” letter sent to public company CEO’s by Chairman and CEO Larry Fink, who heads the world’s largest asset manager, BlackRock. As a fiduciary, he explains, BlackRock engages with companies to drive the sustainable, long-term growth that the firm’s clients (asset owners) need to meet their goals.

And society, he explains to the CEOs receiving the letter, “…is demanding that companies, both public and private, serve a social purpose.”

To prosper over time, Mr. Fink wrote, “…every company must not only deliver financial performance but also show how it makes a positive contribution to society…without a sense of purpose, no company can achieve its full potential.”

You can read Larry Fink’s letter to corporate CEOs here – it well worth the read: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

You can follow Kayla Matthews on her tech blog, Productivity Bytes, where she often connects technology and sustainability topics: https://productivitybytes.com/

And do read our top story – it’s a fascinating and brief read to learn more about these innovative companies striving for greater sustainability and societal responsibility.

This Week’s Top Story

How 7 Eco-Friendly Businesses Are Changing The Sustainability Game
(Tuesday – September 11, 2018) Source: Born To Invest – To save the planet, it’s going to take cooperation from everyone, including both individuals and corporations. In fact, an increasing number of corporations are realizing that modern consumers are growing more environmentally…

Colleges and Universities and Global Sustainability – Many Higher Ed Institutions Are Addressing the 21st Century’s Great Societal Challenges in Many Ways in North America, Asia-Pacific and Europe

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

United Nations Secretary-General Ban Ki-Moon thinks that institutions of higher learning are “…the leading torch bearers for global sustainability.”  The world’s universities, adds the Study International organization team: “…Universities play a vital role in helping us understand climate change…”

The Study International Staff looks at the roles of universities in addressing climate change challenges in the U.S.A., Asia-Pacific and in Europe in a very informative wrap-up that is one of our Top Stories this issue.

Under the Climate Leadership Network, they explain, more than 600 colleges and universities in every U.S. state and the District of Columbia have committed to take action on climate change, preparing students through research and education to solve 21st Century challenges.

The institutions profiled today:  the University of Utah’s College of Mines and Earth Sciences; the University of Queensland in Australia; College of Science and Technology, Temple University (USA); Asian School of Environment, Nanyang Technological University (NTU) in Singapore.

Our other two related Top Stories for you are (1) a feature from Florida by Bakari M. McClendon at the Florida A&M University’s Sustainability Institute (go Rattlers!), about the great work being done at the school to work toward “climate (impact) neutrality”, collaborate with the community and prepare students for the sustainability challenges of the 21st Century. (The school is a public, historically  African-American institution).

It’s a fascinating wrap up and FAMU faculty, staff and students are justifiably proud of telling.

And (2) on the other American coastline, far to the west, at the University of California’s Santa Barbara campus, there’s news about the school being named among the top-performing institutions in the 2019 Sustainable Campus Index (did you know there was such an index?).

The index is from the Association for the Advancement of Sustainability in Higher Education (“AASHE”) and it annually ranks the nation’s most sustainable colleges and universities in 17 impact areas related to academics, engagement, operations and administration based on it “STARS” methodology.  UCSB is part of the “sustainability revolution” in California that is helping to set the pace for the U.S.A. in addressing climate change challenges.

Here at G&A Institute we have a program for select intern-analysts to assist with ESG / sustainability / corporate disclosure and reporting research projects — which we then share results [of] with you on our G&A web platforms.

We are proud of the men and women who have participated in our rigorous programs over the years since 2010 – they are now influential in helping to advance corporate sustainability and sustainable investing out “in the real world” – you can find their profiles on our Honor Roll at:  https://www.ga-institute.com/about-the-institute/the-honor-roll.html

And the results of their research over the recent years that these outstanding professionals have helped to conduct is found at: https://www.ga-institute.com/research-reports/research-reports-list.html

If you are a college/university student, particularly a grad student, and you would like to be considered for an internship with G&A Institute, please examine this: INTERNSHIP OPPORTUNITIES: SUSTAINABILITY REPORTS DATA ANALYST

P.S.  If you don’t know about the Study International organization, which operates from the UK, Australia and Malaysia, and helps students find educational institutions and graduate employers connect, you can tune in to their web platform: www.studyinternational.com

Perhaps you will find an institution that your organization can collaborate with, or a graduate to fill that sustainability position at your organization.

This Week’s Top Stories

Resilient research hubs that strive for global sustainability
(Thursday – August 30, 2018)
From heads of states to businesses, civil society to Silicon Valley, leaders are not immune to the forces of change before us. Developmental, environmental and other social challenges…

Education is a launch pad for sustainability problem-solvers
(Tuesday – August 28, 2018) Source: Tallahassee Democrat – Colleges and universities are uniquely positioned to build pathways to interdisciplinary, solutions-oriented sustainability education for the thought leaders of tomorrow

Sustainability Strides
(Tuesday – August 28, 2018) Source: The Current – UC Santa Barbara named among top-performing institutions in three key categories in the 2018 Sustainable Campus Index

Calling Your Attention To

The JAMA Network (Journal of the American Medical Association) published an analysis of Health Care Organizations’ sustainability and CSR reporting. We share with you this week a very informative commentary from the JAMA Network (Journal of the American of the American Medical Association -AMA) that should be interesting reading for managers of healthcare facilities. This is an assessment of the sustainability reporting by large health care delivery organizations (HCOs) performed by two medical professional, Emily Senay, M.D., MPH; and, Philip J. Landrigan, M.D. MSC2:

Assessment of Environmental Sustainability and Corporate Social Responsibility Reporting by Large Health Care Organizations
(Thursday – August 30, 2018) Source: Jame Network, Emily Senay, MD, MPH1; Philip J. Landrigan, MD, MSc2 – Do large health care organizations participate in the business trend to report on sustainability activities?

Sustainability Over the Next Two Decades – Forward? Backward? Something We Just Take For Granted in Running a Company or Investing In One?

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

Predicting the way forward (that is, defining the future) is always challenging but pundits do try anyway. One of the most often quoted of such predictions is the 1944 forecast for the computer and copier markets with CEO Thomas Watson of IBM projecting…a market of perhaps five computers and as many as 5,000 copying machines! 

This week we bring you a two-part look at where Sustainability and Corporate Responsibility may be headed over the next 20 years, with 20 business leaders with expertise and experience in sustainability and CR weighing in on Edie.net.

The experts bravely putting forth their views of the future include John Elkington, well-known author and Co-founder, Volans Ventures; the Director of Sustainability for Carlsberg (Simon Boas-Hoffmeyer); the Managing Director, Energy Services of Renault-Nissan (Francisco Carranza Sierra); Moody’s head of Global CSR, Arlene Isaacs-Lowe; Interface’s Jon Khoo (he’s an Innovation Partner); Leonie Schreve, Global Head of Sustainable Finance at ING, Peter Harris, the director of sustainability at UPS…and others.

Among the intriguing perspectives shared in the two-part feature on Edie.net are these brief outtakes:

What is “sustainable” today will be the new normal so we’ll need something transformational.

We are witnessing the design of the future city; it’s an urban design experiment and the future city will need to be cleaner and greener.

The next two decades for sustainability in real estate will be absolutely critical.  The window of opportunity for preventing the worst effects of climate change is fast closing and so meaningful action across all parts of the R.E. value chain is essential.

The sustainability role is going from being executing sustainability-related actions to be a driver of change.  Driving the development through an integration of the sustainability agenda in the different functions of the company…going from doer to change maker.

Companies have always been bottom-line driven but the question now is whether their views will shift from short-term return perspective to long-term sustainability perspective.  The reality is that because of the way we invest, there needs to be a deliberate focus on what the long-term future of a company is going to reveal.

There’s much more for you in the two part feature.  So  – what are your thoughts about the directions of sustainability (forward… back… sideways… really unknown?) for the next 10 or 20 years?  Send us your views and perspectives so we can share them in our newsletter and on the blog!

This Week’s Top Stories

Thinking Forward: 20 Business Leaders Define the Next 20 Years of Sustainability – Part One
Thinking Forward: 20 Business Leaders Define the Next 20 Years of Sustainability – Part Two
(

Thursday/Friday – August 23 & 24, 2018)
Source: Edie – we’ve gathered the insights of 20 sustainability experts to give their views on the next 20 years of corporate sustainability, across of range of key areas. From resource efficiency to green finance; board diversity to consumer…

Focus On The Corporate Sustainability Journey This Week – News & Opinion All Around the Topic in Various Communications Channels…

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

Remember the great Beatles’ song…Here, There and Everywhere?  That’s what seems to be happening with “Corporate Sustainability” these days.

The news and commentary seem to be everywhere now, with an examination of how the corporate sector is embracing the concept and developing strategies, action plans, assigning teams and moving forward to address ESG issues.

When we began our sustainability news, commentary and research sharing at Governance & Accountability Institute more than a decade ago, the items were few and far between, skimpy and more periodic than regularly appearing.

Today, a widening range of media and communications channels bring us the news of what the players in the corporate sector are doing — and how institutional investors and other key stakeholders are responding to same.

We see numerous news stories and commentary about what companies are doing in their sustainability journey…and how this matters in so many ways for the issuer (such as improved risk management, more effective investor relations, greater access to capital, enhanced reputation for recruiting and retaining human capital, preferred supplier status, and more).

G&A Institute is the data partner for the USA, UK and Republic of Ireland for the Global Reporting Initiative (GRI) and in this role, we gather and analyze (and then database) the corporate sustainability and CR reports of literally hundreds upon hundreds of companies.

The progress we’ve seen companies making in their journeys is encouraging and pretty astounding if you think back just 10 years or so (to the dark days of 2008).

And so as companies move ahead in the journey and greatly expand their disclosure and reporting, the communication channels light up with the “sustainability” news, commentary and research focused on a company, a group of peers, investors, an industry or a sector.

We selected a few examples for you this week.  First, from the food processing industry, an examination by Kevin Piccione (he describes his company’s effort – Sealed Air, an early sustainability adopter).

He cites the World Economic Forum finding that most “sustainable companies” outperform their peers by a third – but only 2% actually achieve or exceed their sustainability goals. So why do they succeed?  A brief review for you.

The second article for you is Harry Menear’s more in-depth piece from Energy Digital, examining which companies stand out for “green credentials”.

His focus is on the Corporate Knight’s “Top 10 Sustainable Companies” roster, which is drawn from comprehensive research on 6,000 companies worldwide across all industries (for companies with US$1 billion revenues).

The companies were scored on energy use, carbon, waste and clean air production, innovation expenditures, taxes paid, diversity of leadership, supply chain management, and other elements of the sustainability journey.  Which companies made the Top 10?  The link is below for your reading.

The third item is a note of caution from Bloomberg by Emily Chasan and Chris Martin — who point out that in the midst of the growing enthusiasm about corporate sustainability, there are some companies that investors call out for their “corporate greenwashing” (and they name names).  The authors cite the recent Ceres report on this (500 companies were analyzed).

They write:  Companies are still making questionable claims but accountability is rising.

Emily and Chris tell us companies (and their executives) are being forced now to admit to greenwashing (that is, “gushing” sustainability claims with a tenuous grip on reality).

Examined:  Mid-American; VW; Wal-Mart; Amazon; AB InBev SA.  There are perspectives shared on this by Calvert,  CalSTRS, BlackRock, Neuberger Berman, DWS Group, UBS.

And there are as always many items that our editors share this week in the Highlights, as we say, drawn for you from the many communications channels that our team monitors every day.  Let us know your thoughts as to how we are doing and what you would like to see!

This Week’s Top Stories

Achieving your sustainability goals does not mean sacrificing profits
(Thursday – August 16, 2018) Source: Food Processing – Nearly 90% of business leaders believe that sustainability is essential to remaining competitive and despite the clear link between sustainability and profit, only 2% of companies either achieve or exceed their sustainability…

Top 10 Sustainable Companies
(Monday – August 13, 2018) Source: Energy Digital – Which companies stand out for their green credentials? Energy Digital finds out.

Investors Are Increasingly Calling Out Corporate Greenwashing
(August 20, 2018) Source: Bloomberg – Corporate sustainability reporting has risen dramatically over the last few years, with 85 percent of the S&P 500 index producing annual corporate responsibility documents in 2018, up from just 20 percent in 2011, according to the Governance & Accountability Institute. That’s partially due to investor demand. Assets in sustainable investment funds grew 37 percent last year, according to data tracked by Bloomberg.

Eco-Efficiency Green Firm-Specific Advantages — L’Oréal Case Study

Guest Post by Laura Malo Yague, Sustainability Reports Data Analyst, G&A Institute

Introduction:

The scope of this case study is the analysis of the sustainability strategy of the French company L’Oréal, focused on the actions taken related to the Eco-Efficiency Green Firm – Specific Advantages.

Eco-Efficiency is a type of operational environmental practices that some companies try to develop and incorporate to their production processes and procedures, in order to mitigate their impact for the planet, the climate, natural resources and human life.

Through these practices, the companies aim to get a closed-loop production, by using innovation and sustainable technology for minimizing the resources and raw material consumption and reducing the carbon footprint.

Companies and firms can improve their products’ design and performance by introducing eco-efficiency advantages in their strategy. One perfect example is the current case of L’Oréal with the official release in 2013 of their Program for sustainability of L’Oréal: ‘Sharing Beauty With All .

Product-related environmental management capabilities and environmental design capabilities under eco-efficiency advantages help firms to integrate environmental concern throughout a product’s life cycle and achieve material eco-efficiency, energy efficiency, and operational efficiency . Following these guidelines, L’Oréal presented its program supported in four basic main pillars:
• Innovating Sustainability
• Producing Sustainability
• Living Sustainability
• Developing sustainability

About L’Oréal and the Eco-efficiency Green Firm-Specific-Advantage: ‘Sharing Beauty With All’

L’Oréal released its first sustainability report in 2006 after acquiring The Body Shop company. The company reports under the GRI Standards and also complies with UNGC guidelines.

It wasn’t until 2013 with the founding of its ambitious sustainability program, ‘Sharing Beauty With All’ — spearheaded by CEO Jean-Paul Argon — that sustainability practices within the company became an important part of the yearly agenda. “We have stepped up our metamorphosis to the new L’Oréal: more universal, more digital and more sustainable,” states Argon.

‘Sharing Beauty With All’ is divided into four pillars of sustainability each with its own particular targets aimed to be achieved by 2020.

L’Oréal has undertaken a profound transformation towards an increasingly sustainable model, to respond to its environmental and social impacts, as well as to the main challenges which the world is facing today.

The company’s strong ethical commitment, its ‘Sharing Beauty With All’ sustainability program, its policy of promoting diversity and the corporate philanthropy actions conducted with the support of the L’Oréal Foundation enables the Group to contribute to 14 of the 17 Sustainable Development Goals (SDGs) set by the United Nations.

L’Oréal has also been awarded a ‘A’ by the CDP two years in a row and rated 4.2 in FTSE .

Through its company-wide program L’Oréal has successfully proven that economic performance and sustainability practices are not mutually exclusive. The program aims to show that both practices can go hand in hand.

For example, in 2017, L’Oréal reduced its CO2 emissions by 73% while increasing its production by 33%.

The CEO has placed the Sustainability Department directly under his leadership. Previously, the department was within the communications and PR department. Argon has also set up bonus incentives for the managers. Thus, the managers must hit their sustainability targets in order to receive their bonuses. These two facts clearly show how serious Argon and L’Oréal are about becoming more sustainable.

L’Oréal Sustainability Evolution and Development

In 1909, Eugène Schueller founded L’Oréal when he developed the first commercialized hair dye. Although L’Oréal got its start in hair-color products, the company expanded into other beauty sectors. In 1963 the company became publicly-traded on the stock exchange and by 1980 L’Oréal had become world’s largest beauty company.

Through multiple acquisitions, the company has grown to reach 140 countries, catering to the needs of each specific culture. As one of the leaders in Personal & Household Goods products, the group is making tremendous progress towards reaching their 2020 sustainability targets .

The first step in the Corporate Social Responsibility path was taken in 1989. Cosmetics R&D industry implies the use of new chemical reactions and components which can be harmful for human skin. After years of controversial due to their research practices, L’Oréal completely ceased testing its products on animals 14 years before the regulation required, becoming pioneers supporting animal welfare.

L’Oréal has learned how to adapt to the new context with a strong company policy tackling crucial issues for the current society, by promoting diversity and inclusion. Also, to the new scenario that our planet presents, with the increasing danger of a worsen global warming, the already-known marine plastic invasion, the unstoppable fossil fuel combustion and the fear of a world with limited natural resources.

With its 2013 Sustainability Commitment, L’Oréal wants to achieve important goals by 2020. Among other actions completed, the company has contributed to the mitigation of the environmental impact with the implementation of different Eco-Efficiency Operational Green Firm-Specific Advantages .

For example, by reducing the CO2 emissions of its plants and distribution centers by 73%, in absolute terms, compared to 2005, while increasing its production volume by 33% within the same period. The group reinforced its ability to combine economic growth with ambitious climate commitments.

Moreover, the 76% of products launched during the last 2017 improved its environmental or social profile. Every time a new product is created or renovated, the Group considers its contribution to sustainability as well as its performance and profitability.

The number of people from underprivileged communities who gained access to employment through one of L’Oréal’s programmes at the end of 2017 was 53,505. The company’s goal is to reach 100,000 people by 2020.

Furthermore, the company has already conducted an assessment of the environmental and social impact of more than 91% of their brands.

Finally, other important challenge was the complete elimination of PVC its packaging by 2016.

We can see the L’Oréal trends by the development of Eco-efficiency Green FSAs and practices under two main pillars from the company sustainability strategy: ‘Producing Sustainability’ and ‘Innovating Sustainability’.

As explained, L’Oréal adopted 14 of the 17 Sustainable Development goals — most of them aligned with these two pillars (see exhibit 1); this, reinforcing the Company’s Eco-efficiency strategy focused on the development of more sustainable products by using more sustainable processes.

Some of the negative ESG (Environmental, Social and Governance) hotspots from L’Oréal that they should take in account for improvement are the product packaging, which they state they are already working on, and the issue ofwater consumption.

Most of L’Oréal products contains many different single-use plastic and paper components, with the implications for the environment, from the extraction of natural resources all the way through to the disposal of the product.

Extracting finite natural resources to produce raw material depletes our resources and requires a significant amount of energy.

In addition, plastic and paper manufacturing process releases an immense amount GHG into the atmosphere.

Regarding the water issue, many of their products also involves water intensive processes along its entire life cycle. Therefore, L’Oréal is trying to reduce water consumption by 60% per finished product unit by 2020. Plastic extraction and cellulose treatment for the paper manufacturing, imply water uptake.
Conclusion

Nowadays, L’Oréal is the biggest beauty brand in the world, generating about 27.2 billion dollars in sales in 2017.

The adoption of this sustainability corporate policy by the company could initially imply big efforts for the group, such as, substantial upfront costs or important changes in the supply chain.

However, due to the important role that L’Oréal plays in the cosmetics industry market, the company can also have a positive and remarkable impact by mitigating CO2 emissions, decreasing fossil fuel use or reducing plastic use and pollution.
Any changes towards sustainability or eco-improvements will directly affect the L’Oréal ecological footprint, bringing great benefits for the environment and for all of us. L’Oréal states that

‘The path from fundamental research to the finished product involves an ultimate challenge, packaging innovation. This is what ensures that the product will be delivered in the best conditions of performance, safety and practicality’.

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Author Laura Malo Yague is a full-time candidate in the Master of Science in Sustainability Management at Columbia University. She was graduated with a degree in Industrial Technical Engineering – Industrial Electronics in Spain and has seven years experience in Product and Project Management. She was a valued intern-analyst at G&A Institute in 2017.

From Laura, some additional background: From Spain to New York City — with a professional background of seven years working as an engineer and a great lover of the environment, I arrived in 2016 seeking for a change in my career path. During the last two years I have been training myself in Project Management, focused in monitoring and evaluation, Corporate Responsibility and Sustainability at New York University (NYU).

I collaborated as a volunteer in the NGO ‘Engineering Without Borders’ for eight years participating in sustainability and development projects focused on environmental problems, eco-efficiency climate change and taking responsibility of our planet’s health, trying to do things better.

I love travelling with my ukulele, where I can combine my passions discover new cultures, meet people and enjoy the diversity of our planet. I would like to work in sustainability strategy to improve the accountability of market and industry process and development.

More information is at: https://www.ga-institute.com/about-the-institute/the-honor-roll/laura-malo-yague.html

Note to readers:  This content was prepared for completion of the Certification in Corporate Responsibility & Sustainability Strategies offered by G&A Institute, with dual credentials from the Swain Center for Executive & Professional Education at the University of North Carolina Wilmington Certificate. The course work is prepared by Professor Nitish Singh, Ph.D., founder and consultant at IntegTree LLC, and Associate Professor of International Business at St. Louis University, Boeing Institute of International Business. Information: http://learning.ga-institute.com/courses/course-v1:GovernanceandAccountabilityInstitute+CCRSS+2016/about

Sustainability & ESG Trends in View -– The G&A Institute Team Closely Monitors Developments For You

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

Every week G&A Institute assembles the value-added content that our team gathers for you as we closely monitor trends and developments in corporate sustainability, corporate responsibility, corporate citizenship, sustainable investing, and related topics and issues.

Our Editor-in-Chief Ken Cynar leads the daily effort and you see the results of his work in each issue of Highlights (note we are on #406 this week).  We hope that you benefit from this effort, part of our information-sharing and educational mission.

One of the benefits for us on the G&A Institute team is the yield from the close and continuous tracking and deep analysis of important trends in the related fields in every corner of the world, and in varying spheres of influence.   We are monitoring thought leaders on the corporate sector side, on the asset owner and manager side, from the perspective of the NGO or civic activist, the regulators, the academics, the ESG research service providers, and many more.

As the Global Reporting Initiative’s  (GRI) Data Partner for the United States of America, the United Kingdom and the Republic of Ireland, our team collects, analyzes and databases considerable volumes of data and narrative from the more than 1,200 reports we process each year (the reports are then made part of the GRI global inventory for public access).

From the thousands of corporate & institutional sustainability reports we process year-after-year, the yield includes value-added information on long-term trends, emerging trends, and “might-be-a-trend-taking-shape” development.  And so high on our list is news, information, research results related to corporate sustainability and responsibility reporting.  We highlight a few for you at the top of the newsletter this week.

We share volumes of information through our communication platforms, such as this weekly newsletter; our G&A Institute company website; the Accountability Central and Sustainability HQ web platform; the  G&A Sustainability Update blog; our TwitterFacebook, and other social media feeds; and more in-depth management briefs through our “G&A Institute To the Point!” platform.

IMPORTANT:  As always, we welcome your engagement, invite your queries, your feedback, your suggestions for issues and trends to watch, and suggestions for the guidance of the information-sharing that we do.  We’d also welcome the opportunity to speak with you about our consulting services.  Email us at info@ga-institute.com.

In this week’s issue, we’ve identified an especially higher number of important trends for you that are worth “tuning in to” as you continue on your sustainability journey.

“Sustainability “ trends that are the march – worldwide!

“Warm regards to you” from The Team at G&A Institute this sweltering summer in most parts!

“Total Impact Valuation” – Monetizing the Enterprise’s “Cost-Benefit Analysis” of the Impact on Society? This is for CEOs – Advice From The Conference Board

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

Today’s question for corporate CEO’s:  Have you examined your company’s “Total Impact Valuation,” a new approach being advanced by The Conference Board, wherein the enterprises’ impact on society is monetized (cost/benefit evaluated and value attached)?

A small group of companies is doing these exercises. Think of their efforts to date as expanding the usual reporting of “Input/Output” to seriously consider (1) Outcomes, (2) Impacts, (3) Cost and Benefit to Society (and to the company).

Such firms as BASF (the German chemical giant), cement industry leaders Holcim/Ambjua Cement and LafargeHolcim, Samsung, Akzonobel (materials), ABN AMRO (Holland, financial services), Volvo (vehicles), and Argo (materials, Colombia) have been doing something along these lines and reporting results for a few years now on web sites, in sustainability reports, in financial statements, in a “total contribution report” or “value-added statement”, and by other means.

Some of these disclosures are third party assured (Argo’s is by Deloitte) and otherwise guided; the big accounting firms are involved (PwC and KPMG included).

This appears to us to have the potential to take corporate sustainability reporting to expanded (new) levels for at least the publicly-traded large caps – that is, if enough investors jump aboard the concept and ask for the information.  (Think about public discussion of the company’s “plus or minus” impact on society beyond the fences.)

Thomas Singer, Corporate Leadership research leader at The Conference Board, presents findings of his sampling of firms (those identified above) and shares his perspectives on the concept in Chief Executive Magazine – it’s our Top Story for you this issue.

BASF shares its “Value to Society” model (there’s a link to this in the article).  The company, explains Singer, monetizes more than 20 different types of environmental, social and economic impacts, including direct and indirect suppliers and even customer industries.

Author Thomas Singer turns out a good amount of strategic advice to company leaders and has been focusing more in his Director Notes on ESG and corporate sustainability.  There’s links to his papers and publications for you in the link.

A major drawback here in the U.S.A.: there is no standard benchmark for measuring progress or lack of, and to guide reporting; there is in turn no way to compare company “A” to “B” for investors, ratings analysts and others.

So what do you think – is this a “we’re a long way from Kansas, Toto” moment for corporate leaders in terms of expectations of shareholders and stakeholders for what the companies will share in their disclosures of the future?  (The “Kansas” reference being the bad old days practices of chemicals and other companies “externalizing” costs to society for environmental mismanagement and minimizing the actual costs of clean up in financial reports.)

The total value practice got underway in Europe – and we will be watching to see if U.S.-based public companies pick up on the concept. Especially those where their foreign peers have the modeling and techniques underway.  That is what happened with corporate sustainability and ESG reporting over time.

Top Stories

CEOs Need To Put This Sustainability Trend On Their Radar
(Tuesday – July 03, 2018) Source: Chief Executive – What if America’s CEOs could understand the full financial impact their company has on society? It could make them rethink their game plan for how they prevent workplace accidents, lessen air pollution, manage waste – the list…