Tag Archives: UNGC

ESG Reporting Frameworks & Standards – Continue to Multiply

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Original:  October 14 2021

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

The number of ESG disclosure and reporting guidelines, frameworks and standards continues to expand – here comes the GRI Universal Standards, the SASB XRBL Taxonomy, and much more.

The range of available transparency tools is making it more challenging for corporate management and investors to navigate.

The ESG / Sustainability / Sustainable Investing lexicon for both publicly-traded companies and their providers of capital is today chock-a-block with acronyms and initials. GRI, SASB, TCFD, OECD, IIRC, SDG, PRI, UNGC, GRESB, WEF, IFRS, EFRAG, EC’s NFRD – you get the picture!

And there are a host of industry-focused standards (such as RBA, once known as EICC), IEPC, LEED).

The venerable player is the Global Reporting Initiative (GRI), a comprehensive, ever-expanding, stakeholder-focused reporting framework created by global stakeholders over two decades ago with roots in Boston, in the Ceres Pledge of the early-1990s.

That pledge was created by SRI investors after the Exxon Valdez oil tanker disaster in Alaska and was intended to invite corporate managements to promise to do better in what is now ESG performance.

The first two signatories of significant size were General Motors and Sun Oil. G&A team members were involved in encouraging firms to sign on to the pledge in those early years.

By 1999-2000 the first corporate environmental, responsibility, et al reports were being published in the United States and Europe (a few dozen appeared in the first round with the first generation of the GRI framework, G1).

Over the ensuing years the GRI framework evolved and matured on through G3, G4 and finally in recent years to a more formal standards-based approach. And those modular standards for ESG reporting are continuing to evolve as GRI enters its third decade.

The news today about GRI is focused on the launch of what are called “Universal Standards”, which in modular form will be in place for corporate and institutional reports to use if they are going to report in accordance with the GRI Standards.

The now-familiar Core and Comprehensive will go away; it will still be OK to use “GRI-Referenced” (a less strict version which references parts of the GRI reporting standard) in reporting following the Universal Standards, which will go into effect in January 2023.

The new GRI Universal Standards align with the United Nations Guiding Principles on Human Rights, the OECD Governance Standards, and the International Corporate Governance Network (ICGN).

The elements of the Universal Standards to keep in mind are these: what is the impact of the corporation on society, and society on the corporation; materiality of disclosures; due diligence on the part of reporters.

Keep in mind the standards are broad and focused on stakeholder disclosure, of course including providers of capital as stakeholders. All companies can use the Universal Standards to communicate the firm’s impact on the broader society. (Think: how does your firm connect with people?)

Supply chain operations are an important part of GRI reporting going forward. Consider, as one expert recently explained, that of the large, multi-national enterprises of the developed world, more than 90 percent of production is beyond the company’s walls, out there in the world of non-company producers (many in less-developed nations as well as in China).

The European Union is considering adopting corporate sustainability reporting that would use the GRI Universal Standards for mandated disclosure by all companies operating in the 27 EU states (with certain qualifications as to size and other considerations).

GRI standards-focused disclosure is expected to include story-telling and metrics about corporate sustainability actions and activities, governance, strategies, planning, practices, engagements, and more. Materiality assessment activities are critical elements of GRI standards reporting, notes the GRI team.

In addition, GRI is launching a series of Sector Specific guidance, beginning with the new “Sector Standard for Oil and Gas.”

The sector standards will address “how decision and actions of companies address widespread stakeholder concerns about their climate change-related impacts, while ensuring a just transition for workers, communities and the environment”.

We are sharing details of the above developments at GRI with you in the Top Stories this issue.

The G&A Institute team has been focused intently on GRI reporting since 2000 and was designated as the GRI Data Partner for the U.S., and then the U.K. and Republic of Ireland more than a decade ago.

Over this decade, we’ve gathered and analyzed in depth thousands of GRI reports since then. G&A Institute is a Community Member of GRI, and we of course watch the work of GRI very closely.

Whether you are a corporate manager, executive or board member, or provider of capital to the corporate sector, you should also keep a close watch on GRI.  And, the G&A team is available to help answer any questions you have.

TOP STORIES

Attention Finance Officers – The Sustainability Journey & The Company’s Bottom Line

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Original:  September 2021

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

When corporate managers talk about their company’s ESG and sustainability efforts it is most often now in the context of “telling the story of our corporate sustainability journey.”

The hallmarks of this journey are typically about the continuous improvement in the enterprise’s ESG performance indicators and ever-increasing and more robust disclosures to inform investors and other stakeholders that this (is indeed!) a most sustainable company..

G&A Institute began tracking the ever-expanding reporting of sustainability journeys by mainly publicly-traded companies in the S&P 500 Index in 2011, when we determined that about 20 percent of those firms published a formal sustainability or corporate responsibility report.

That percentage grew quickly to 50% and on to 70% and to the current 90% of the 500 companies over a decade. As we analyzed the data and narrative that was being shared, it became clear that the corporate financials were an increasingly important element of the company’s ESG story.

The World Economic Forum (WEF) is talking about that now; the WEF posits that there is growing evidence that strong ESG credentials can improve the corporate bottom line, improve access to capital, and lower the cost of capital.

The WEF recommends that corporate CFOs should take on the responsibility of aligning their company’s ESG and financial goals. (Until recently, WEF points out, the CFO would not have included sustainability in an analysis of what affects the bottom line.)

The WEF points to evidence of a strong correlation between financial and ESG performance.

There are cost savings in reducing energy usage, more efficient use of resources, and new business opportunities presented.

Deloitte predicts that by 2030 (only 400+ weeks away), organizations committed to sustainability as embodied in the Sustainable Development Goals will generate US$12 trillion in savings and gain of new revenues (for energy, cities, food, and health).

In our Top Story we’re sharing the WEF’s perspectives as authored by CEO and Executive Director Sanda Ojiambo of the UN Global Compact.

There are examples of “better outcomes” when CFOs embrace sustainability – Enel of Italy, Tesco of UK, Chanel of France. These firms issued sustainability-linked bonds to raise capital. JP Morgan predicts that bonds linked to the issuer meeting environmental goals could reach US$150 billion by the end of this year.

The UN Global Compact organized a “CFO Taskforce” in December 2019 to engage CFOs worldwide; to integrate the SDGs into corporate strategy, finance, and IR; and, to create a broad, sustainable finance market.

There are 50 members in the task force today; the aim, CEO Sanda Ojiambo writes, is to have 1,000 members by 2023.

The shift of corporate business models from focusing primarily on shareowners and short-term expectations to “broader, more sustainable, and equally profitable alternatives” is creating more opportunity for the finance executive to become more instrumental in helping to shape a sustainable future, she writes.

In the G&A team’s conversations with corporations about sustainability topics and issues, the good news is that many more finance and investor relations executives are an important part of the conversations and decision-making about their firm’s sustainability reporting and are focused on the disclosure and organized reporting of their firm’s ESG efforts.

We’re including a report from Entrepreneur about the growth of Sustainability Investing from 2019 to 2020. And, to underscore the importance of sustainability-linked corporate bonds, two other items: the news from Eli Lilly of its issuance of a €600 million sustainability bond; and Walmart will issue a US$2 billion sustainability bond (first for the largest retailer in the U.S.).

TOP STORIES

Pressure is Building on the C-Suite – to Start or Advance the Enterprise’s Sustainability Journey

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July 2021

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

Pressure points:  The corporate executive suite in recent months has experienced pressure from both inside and outside the organization in terms of rising expectations related to corporate sustainability, responsibility, citizenship, ESG, and so on.

For example, asset owners and external asset managers are asking many more questions now about the sustainability journey of the companies they are invested in, including the company’s ESG strategies, actions, performance, metrics, outcomes, external recognitions, and more.

The customer base for a growing number of companies is now an important consideration related to the supplier/provider’s positioning in its sustainability journey.

The working principle here:  the large customer especially considers the supply chain “partners” to be part of their own ESG footprint.  Third-party organizations pose questions to supply chain partners on behalf of their client base (Ecovadis being an excellent example of this practice).

Consider, too, that the Federal government is the largest buyer of goods and services in the U.S. and the Biden Administration has instituted sweeping sustainability policies on sourcing of many kinds.

Regulators of different sorts are moving towards strongly urging companies to disclose more about their sustainability journeys and considering mandates to help ensure more comparable, accurate, complete, decision-worthy data and narrative disclosures to help providers of capital (investors, lenders, insurers) in their own portfolio management.  We see that now in the U.S. and in the European Union.

There is peer pressure – corporate issuers moving ahead to leadership positions in sustainability put pressure on industry peers to perform better, disclose more, and attain at least middle-of-the-pack positions. And laggards (those not yet on their journeys) are under even greater pressure today.

One place where the leader board really counts is in the now-numerous ESG ratings and rankings provided to institutional investors by the likes of MSCI, Sustainalytics, Institutional Shareholder Services, and other ESG rankers and raters.

And then there is the internal pressure point – employees want to work for a company demonstrating leadership in sustainability and responsibility.  They want to be an integral part of the journey and be a part of the team making great things happen. All this counts in recruitment, retention, and motivating the workforce.

This week we pulled together some of the contours of these pressures on boards and executive and management teams.  As you read this, thousands of people are gathering virtually for the UN Global Compact Leaders’ Summit to discuss the growing pressure on governments, companies, investors, and other stakeholders to take action on climate change and sustainability issues.  The UNGC released the 2021 Survey of Companies & CEOs ahead of the gathering.

Top line results:  Business interests need to transition to more sustainable business models.  Over the past three years corporate leaders have been experiencing the pressures to do this; and 75 percent of survey respondents expect the next three years to be times of increased pressure on boardrooms and executive suites.

Where is pressure coming from?  Certainly, from the investor side.  For example, 450+ investors managing US$45 trillion in assets released a joint statement calling on world governments to create a race-to-the-top on climate policies…

This is the “2021 Global Investor Statement to Governments on the Climate Crisis” that asks for climate-related financial reporting to be mandatory, recognizing the climate crisis.

Seven investment management partners created “The Investor Agenda” to be shared at the recent G7 meeting to encourage advocacy for “ambitious climate policy action” leading up to the Glasgow, Scotland meeting of “The Conference of the Parties” (COP 26) in November.

The Investor Agenda is in the Top Stories below for your reading, along with comments from heads of NYS Common Fund, State Street/SSgA, Alliance Bernstein, Legal and General Investment Management, Fidelity International, and others.

In the U.S., 160 investors with U$2.7 trillion in AUM joined by 155 corporate leaders and 58 not-for-profit organizations are advocating for the Securities & Exchange Commission to protect investors from risks including systemic and financial risks related to climate change by mandating climate disclosure.

By doing this, corporate issuers can clarify the risks they should measure and disclose so that investors can make sound investment decisions.  SEC rules are needed, say the advocates, to provide comparable and consistent information.

Who are these advocates?  A group of state financial officers —  Illinois State Treasurer Michael Frerichs, California State Controller Betty Yee, New York State Comptroller Tom DiNapoli – as well as Steven Rothstein, Managing Director for the Ceres Accelerator for Sustainable Capital Markets and others.  Their suggestions for moving to an SEC mandate is another Top Story selection for you.

G&A is closely monitoring the various pressure points being placed on organizations to start or advance your sustainability journey, and you can detect other pressure points in the story selections in the topic silos.

TOP STORIES

Corporate Sustainability Reporting: Changes in the Global Landscape – What Might 2021 Bring?

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

Change is a-coming – quite quickly now – for corporate sustainability reporting frameworks and standards organizations.  And the universe of report users.

Before the disastrous October 1929 stock market crash, there was little in the way of disclosure and reporting requirements for companies with public stockholders. The State of New York had The Martin Act, passed in 1921, a “blue sky law” that regulates the sales and trades of public companies to address fraud issues.  That was about it for protecting those buying shares of public companies of the day.

Under the 100 year old Act, the elected New York State Attorney General is the “Sheriff of Wall Street — and this statute is still in effect. (See: AG Eliot Spitzer and his prosecution of the 10 large asset managers for analyst shenanigans.)

President Franklin Delano Roosevelt, elected two-term governor of NY before his election to the highest office in November 1932, brought along a “brains trust” to Washington and these colleagues shaped the historic 1933 Securities Act and 1934 Securities Exchange Act to regulate corporate disclosure and Wall Street activities.

Story goes there was so much to put in these sweeping regulations for stock exchanges, brokerage houses, investor protection measures and corporate reporting requirements that it took two different years of congressional action for passage into law in the days when Congress met only briefly and then hastened home to avoid the Washington DC summer humidity and heat.

The Martin Act was a powerful influence on the development of foundational federal statutes that are regularly updated to keep pace with new developments (Sarbanes-Oxley, 2002, updated many portions of the 1934 Act).

What was to be disclosed and how? Guidance was needed by the corporate boards and executives they hired to run the company in terms of information for the company’s investors. And so, in a relatively short time “Generally Applied Accounting Principles” began to evolve. These became “commonly accepted” rules of the road for corporate accounting and financial reporting.

There were a number of organizations contributing to GAAP including the AICPA. The guiding principles were and are all about materiality, consistency, prudence (or moderation) and objectivity like auditor independence verifying results.

Now – apply all of this (the existing requirements to the Wild West of the 1920s leading up to the 1929 financial crash that harmed many investors — and it reminds one of the situations today with corporate ESG, sustainability, CR, citizenship reporting.  No generally applied principles that all can agree to, a wide range of standards and frameworks and guidance and “demands” to choose from, and for U.S. companies much of what is disclosed is on a voluntary basis anyway.

A growing chorus of institutional investors and company leaders are calling for clear regulatory guidance and understanding of the rules of the road from the appointed Sheriffs for sustainability disclosures – especially in the USA, from the Securities & Exchange Commission…and the Financial Accounting Standards Board (FASB), now the two official keepers of GAAP.

FASB was created in the early 1970s – by action of the Congress — to be the official keeper of GAAP and the developer of accounting and reporting rules.  SOX legislation made it official; there would be two keepers of GAAP — SEC and FASB.  GAAP addressed material financial issues to be disclosed.

But today for sustainability disclosure – what is material?  How to disclose the material items?  What standards to follow?  What do investors want to know?

Today corporates and investors debate the questions:  What should be disclosed in a consistent and comparable way? The answers are important to information users. At the center of discussion: materiality – everyone using corporate reports in their analysis clamors for this in corporate sustainability disclosure.

Materiality is at the heart of the SASB Standards now developed for 77 industry categories in 11 sectors. Disclosure of the material is an important part of the purpose that GAAP has served for 8-plus decades.

Yes, there is some really excellence guidance out there, the trend beginning two decades ago with the GRI Framework in 1999-2000. Publicly-traded companies have the GRI Standards available to guide their reporting on ESG/sustainability issues to investors and stakeholders.

There is the SAM Corporate Sustainability Assessment (CSA), now managed entirely by S&P Global, and available to invited companies since 1999-2000. (SAM was RobecoSAM and with Dow Jones Indexes managed the DJ Sustainability Indexes – now S&P Global does that with SAM as a unit of the firm based in Switzerland.)

Since 2000, companies have had the UN Global Compact principles to include in their reporting. Since 2015 corporate managers have had the UN Sustainable Development Goals (SDGs) to report on (and before that, the predecessor UN Millennium Development Goals, 2000-2015). And the Task Force on Climate-Related Financial Disclosure (TCFD) recommendations were put in place in 2017.

The Securities & Exchange Commission (SEC) in February 2010 issied “guidance” to publicly-traded companies reminded corporate boards of their responsibility to oversee risk and identified climate change matters as an important risk in that context.

But all of these standards and frameworks and suggested things to voluntarily report on — this is today’s thicket to navigate, picking frameworks to be used for telling the story of the company’s sustainability journey.

Using the various frameworks to explain strategy, programs, actions taken, achievements, engagements, and more – the material items. Profiling the corporate carbon footprint in the process. But there is no GAAP to guide the company for this ESG reporting, as in the example of financial accounting and reporting.

Institutional investors have been requesting more guidance from the SEC on sustainability et al reporting.  But the commission has been reluctant to move much beyond the 2010 risk reminder guidance even as literally hundreds of publicly-traded companies expand their voluntary disclosure.  And so we rely on this voluntary disclosure on climate change, diversity & inclusion efforts, political spending, supply chain management, community support, and a host of other ESG issues. (Human Capital Management was addressed in the recent Reg S-K updating.)

We think 2021 will be an interesting year in this ongoing discussion – “what” and “how” should companies be disclosing on sustainability topics & issues.

The various providers of existing reporting frameworks and standards and those influencing the disclosures in other ways are moving ahead, with workarounds where in the USA government mandates for sustainability reporting do not yet exist.

We’ve selected a few items for you to keep up with the rapidly-changing world of corporate ESG disclosures in our Top Stories and other topic silos.

There are really important discussions!  We watch these developments intently as helping corporate clients manage their ESG / sustainability disclosures is at the heart of our team’s work and we will continue to keep sharing information with you in the Highlights newsletter.

More about this in The Wall Street Journal with comments from G&A’s Lou Coppola: Companies Could Face Pressure to Disclose More ESG Data (Source: The Wall Street Journal)
TOP STORIES

The United Nations at 75 Years This Week – Corporate CEOs Around the Globe Pledge Support of the Missions

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October 20, 2020

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

Three-quarters of a century of serving humanity — the family of nations celebrates the 75th Anniversary of the founding of the United Nations on October 24th.

After the global conflict of World War Two, with great losses of life, liberty and property, 51 nations of world gathered in San Francisco to put the Charter into force — to collectively explore a better way forward with collaboration not confrontation.  (The Charter was signed as the war was ending in the Pacific and had ended in May in Europe).  We can say that on October 24, 1945, the United Nations “officially” came into existence with the ratification of the Charter by nations and the gathering of delegates.

The United Nations members states — the global family of sovereign nations collaborating peacefully for seven-plus decades to address common challenges — got good news in its 75th anniversary year.

More than one thousand business leaders from 100+ nations endorsed a Statement of Renewed Global Cooperation, pledging to further unite in helping to help to make this a better world…for the many, not the few. Some of the world’s best known brand marketers placed their signatories on the document.

UN Secretary General Antonio Guterres received the CEOs’ messages of support at a Private Sector Forum during the recent General Assembly in New York (September).

The Statement from Business Leaders for Renewed Global Cooperation was created as the nations of the world are coping with the impacts of the Coronavirus, domestic and global economic slowdown, rising political and civic unrest, wars in different regions, critical climate change challenges, the rising demand for equality of opportunity, and more.

The corporate CEOs’ public commitments included demonstration of ethical leadership and good governance (the “G” in ESG!) through values-based strategies, policies, operations and relationships when engaging with all stakeholders.

Now is the opportunity, the statement reads, to realign behind the mission of the UN to steer the world onto a more equitable, inclusive and sustainable path. We are in this together – and we are united in the business of a better world.

“Who” is the “We”? Leaders of prominent brands signing on include Accenture, AstraZeneca, BASF, CEMEX, The Clorox Company, Johnson & Johnson, Moody’s, Nestle, Thomson Reuters, S&P Global, Salesforce, Tesla, and many other consumer and B-to-B marketers. (The complete list of large-cap and medium and small companies accompanies the Statement at the link.)

There are many parts of the global community’s “meeting place” (the UN) that touch on the issues and topics that are relevant to us, the folks focused on sustainability. Think of the work of:

UN Global Compact (UNGC)
This is a non-binding pact (a framework) to encourage enterprises to voluntarily adopt sustainable and socially responsible policies and report on same; 12,000+ entities in 160 countries have signed on to date (the Compact was created in July 2000).

UN Principles for Responsible Investing (PRI)
Founded 2006, this is a global network of financial institutions and others in the capital markets pledging to invest sustainably, using 6 principles and reporting annually; today, there are 7,000+ signatories to date in 135 countries; this is in partnership with UNGC and the UNEP Finance Initiative.

UN Sustainable Development Goals (SDGs)
The SDGs (17 goals with 169 targets) build on the earlier Millennium Development Goals MDGs- (2000-2015).

The Paris Agreement builds on the UN Framework Convention on Climate Change.

The UN Environment Programme (UNEP) plays important roles in protecting the world’s environment.

In all, there are almost three dozen affiliated organizations working to advance humanity through the United Nations System.

 

SHARED PERSPECTIVES: FAYE LEONE
With all of this activity, the UN needs support, and shared ideas, to build even stronger foundations. Our colleague, G&A Institute Senior Sustainability Content Writer Faye Leone, has a decade of experience reporting on the UN.

Her perspectives: “It is exactly right for business leaders to express support for global cooperation– not competition- at this time. This is in the spirit of the UN’s 75th anniversary and critical for the next big challenge for multilateralism and solidarity: to fairly provide a safe vaccine for COVID-19.”

She explains that leading up to its 75th anniversary in September 2020, the UN conducted a year-long ‘listening campaign”. The results, after over one million people around the world participated!

They said they do not want “more of the same” from the UN.  They overwhelmingly called for a more inclusive, diverse, and transparent UN that does a better job of incorporating businesses, cities, vulnerable peoples, women, and young people. They also said the UN should be more innovative.

(View Source)

The Sustainable Development Goals, says Faye, can help with that.  The 17 goals “provide a common language for everyone to combine their strengths. According to the head of B Lab, business’ role is to participate in delivering on the SDGs, use the power of business to solve the world’s most urgent problems, and inspire others to do the same”.

(View Source)

Read more about the UN’s 75th anniversary through Faye’s work with IISD here.

Read more about the UN’s 75th anniversary here.

Mark October 24 on your calendar. That’s the day we commemorate the UN’s official founding after WW II (on 24 October 1945). We invite you to think about how you can support the UN moving toward the century-of-service mark in 25 years (2025) – and what ideas you can share to help this organization of the family of nations to address 21st Century challenges!

TOP STORY

Moving The World Forward Toward a More Sustainable Future: The Member Nations of the United Nations, Working Collaboratively For Progress in the 21st Century

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

“The United Nations” began as a World War II-era strategy as President Franklin D. Roosevelt talked about the allies of the United States of America partnering in the fight to save democracy and collectively battling the regimes of fascist dictators in Europe and Asia.

On January 1, 1942, 26 nations “united” in Washington DC to coordinate the battle with the “Axis” powers.  (“Axis” – the axis line, said President Roosevelt, ran from Berlin (Germany) through Rome (Italy) and to Tokyo (Japan) – the clear linkage in his mind of the fascist leadership.)

In February 1942 the president addressed the nation in his 20th “fireside chat” (broadcasting nationwide on “the radio”) to talk about the progress of the war.

The U.S. was coming from far behind in terms of preparedness for a global battle, and so an important part of the progress in this, the start of the first year of U.S. involvement in the global conflict, President Roosevelt explained to the nation of 125 million souls:

“The United Nations constitutes an association of independent peoples of equal dignity and equal importance. The United Nations are dedicated to a common cause. We share equally and with equal zeal the anguish and the awful sacrifices of war. In the partnership of our common enterprise, we must share in a unified plan in which all of us must play our several parts, each of us being equally indispensable and dependent one on the other.

“We have unified command and cooperation and comradeship. We of the United Nations are agreed on certain broad principles in the kind of peace we seek. The Atlantic Charter applies not only to the parts of the world that border the Atlantic [Ocean)] but to the whole world; disarmament of aggressors, self-determination of nations and peoples, and the four freedoms – freedom of speech, freedom of religion, freedom from want, and freedom from fear.”

The leader of the free world of that era envisioned an global organization that could bring about a new world ordering, to assure greater peace and prosperity to many peoples of the world.  President Franklin Roosevelt passed away in April 1945; soon the global conflict ended; and then what he long envisioned became the possible:

On October 24, 1945, 50 nations gathered in San Francisco to sign on to the “United Nations Conference on International Organizations” – and the UN as we know it today was launched.  (We celebrate UN Day on 24 October in commemoration of that historic event.)

Today the UN has 193 members – sovereign states that have equal representation in the UN General Assembly. The UN is the world’s largest intergovernmental organization – a forum for governments, not a world government.  And within the organization are important initiatives that have been shaping corporate responsibility, corporate citizenship, sustainability, and for capital markets, as well as for sustainable investing.  These are agencies, programs, institutes, global collaborations, and other entities.

You know some of them as the UN Principles for Responsible Investing (PRI); the UN Global Compact (UNGC); the UN Sustainable Development Goals (SDGs); the work of the UN Environmental Programme (UNEP).

Today we are hearing quite a bit in the corporate sector and in the capital markets about the Universal Declaration of Human Rights (adopted 1948); the UN has been the driving force behind 80-plus “human rights laws”.  Consider:  the declaration has been translated into 380 languages to date, says the UN High Commissioner for Human Rights..

We are sharing with you three recent highlights from the UN universe.   First, an update from the UNGC CEO Lisa Kingo, stressing that now is the time for society to invest in the 1.5C future…”there never has been a time”, she points out, “like today for coming together and jumpstarting a worldwide transformation towards a more inclusive and sustainable net-zero economy.”

Also from the UNGC, news of the launch of the Ocean Stewardship 2030 Report – to be a roadmap for how ocean-related industries and policymakers can jointly secure a healthy and productive ocean by 2030.

We are now in the Decade of Action on the Global Goals (the SDGs). The UNGC is an initiative of the UN Secretary General, a call to companies everywhere to align their operations and strategies with 10 universal principles focused on human rights, labor, environment and anti-corruption.

The Global Reporting Initiative (GRI) is today an independent global foundation that was birthed by the United Nations, building on the principles advanced for corporate responsibility by the NGO Ceres (based in Boston). An organization known for a philosophy of “constant improvement”, GRI recently organized an Agriculture and Fishing Project Working Group that will lead the work to create a new sustainability standard for ag & fishing.

This is part of the work of GRI’s New Sector Program – a multi-stakeholder group will move forward the initiative to help companies with ag and fishing in their value chains promote transparency and accountability, and better understand their role in sustainable development.

It’s almost 80 years now since President Franklin Delano Roosevelt – one of the most progressive leaders in U.S. history – conceived of the “united nations”, as a necessity to bring together the resources of other nations to fight a war on all of the continents, whose outcome was then uncertain.  And then to assure the peace and work to end wars, or at least settle disputes peacefully.

In November 2010 Secretary General Ban Ki-Moon noted:  “Sadly, FDR never saw the fruits of his efforts.  He died weeks before the founding conference. Yet his vision lives on in the UN Charter’s collective commitment to peace and security, economic and social welfare, tolerance and fundamental human rights.  Franklin Roosevelt’s Four Freedoms. This legacy of multilateral cooperation guides us today…”

Well said!

Top Stories

OOPS
In the June 8th issue of our newsletter (Highlights), with headline “Will We Ever See SEC Rules/Guidance for Corporate ESG Disclosure and Reporting?  The Question Hangs in the Wind..”  We incorrectly identified the corporate reporting regulations being reviewed by the Securities & Exchange Commission – should have said “Reg S-K” (not Reg F-D).  Sorry for the any confusion caused.  A more complete commentary on all of this is here on our blog.

The Young People Move to the Streets to Protest Slow or Lack of Action on Climate Change Challenges…

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

When our young people take to the streets in significant number, there is usually a revolution of some type in store, history tells us.  Revolutions belong to the young, we can say with some certainty if history is our guide. 

Think: Young “Minutemen” in the American Revolution, youngsters on the barricades in the French Revolution, counter-sitters and marchers in the Civil Rights protests in the American South. 

Dramatic change followed these protests. And now, we watch the young men and women in the streets of Hong Kong.

So what to make now of at least four million young men and women flooding into the streets and plazas of large cities and local communities around the world to “protest” their views of “inaction on climate change challenges” by those adults in charge (government and business, especially).

In New York City, Rome, Amsterdam, Tel Aviv, Madrid & Barcelona, Montreal, Berlin, Vienna, and many other of the world’s cities, on September 20th hundreds of thousands of young people rallied in protest and called on leaders to protect our planet. 

There were marches, music, signs of all sorts, speeches, and other public expressions intended to draw attention to the dangers posed by climate change.

A real crisis in our time and a dangerous threat to the young men and women and their younger peers in the decades ahead!

As symbol of the moment, climate activist Greta Thunberg (at age 16) boldly sailed over the seas from her home in Sweden (rather than take a jet airplane) to get to New York City for the celebration of Climate Week and the gathering of leaders at the United Nations General Assembly).

In interviews she commented that she does not understand why world leaders — including the President of the United States — would mock children and teenagers for acting on science that advances evidence that climate change is real – and dangerous for humanity and our planet.

But business is responding – and investors and the public sector, too. 

In one of the focus features we bring you this week, in the Harvard Business Review author Andrew Winston tells us what 1,000 CEOs really think about climate change and inequality. (We know Winston from his best-seller, “Green to Gold”.) 

He reminds us that nearly 200 CEOs working through the Business Roundtable (BRT) declared that business is no longer just about maximizing shareholder profit.

Many more hundreds of CEOs are in agreement and many are focused on climate change.  Are we moving fast enough? 

A report from UN Global Compact and Accenture (“The Decade to Deliver: A Call to Business Action”) presents the views of more than 1,000 global executives on their views of sustainability.

All of the large-cap company CEOs interviewed believe that sustainability issues are important to the future success of their enterprises.  The biggest challenge is climate change. 

This week our Top Stories (plural) are presented as snapshots of where we are as consumers, investors, government leaders and yes, business leaders, focus on sustainability and especially climate change matters.

An appropriate footnote:  in rural Southwest Montana, a participant in the local rally by mostly young people had this to say in a letter to the editor of the Bozeman Daily Chronicle in response to criticism of the young peoples’ rallies:  

“Climate change is not a political issue. It is a life or death issue. Our children are asking in what way school matters when our future is disintegrating before our eyes. 

“Children have as much right and reason to march anyone.  They march because they can still see possibility, opportunity and reasons to fight four just futures. 

“Next time, maybe you should join us to understand what our kids are marching for.”

Our offerings for you this week:

After strikes, youth climate activists keep pressure on leaders
Source: Reuters 

What 1,000 CEOs Really Think About Climate Change and Inequality
Source: Harvard Business Review

Business leaders join the UN Global Compact Leaders Week to address climate crisis and advance the SDGs
Source: UN Global Contract

Banks worth $47 trillion adopt new UN-backed climate, sustainability principles
Source: UN News 

Markets face major risks over lax climate forecasts, top investors warn
Source: Reuters 

The second-largest gift to a US university was pledged to Caltech. It’s being used for climate research
Source: CNN 

Climate Activism Requires More Than Just Sustainability Statements From Brands
Source: Ad Week 

Most of world’s biggest firms ‘unlikely’ to meet Paris climate targets
Source: The Guardian 

Lead on global climate change and sustainability
Source: St. Peter Herald 

Editorial: Climate Week 2019
Source: Advanced Science News 

Climate crisis seen as ‘most important issue’ by public, poll shows
Source: The Guardian 

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

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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

GRI Linkage Document For EU Sustainability Mandate Released! Linkage Documents Can Help Cure Some “Survey Fatigue”

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By Louis D Coppola @ G&A Institute..

Do you have “survey fatigue” from all the various sustainability reporting frameworks?  Well.. GRI Linkage Documents may be the answer to your prayers.

A while back you may have read my earlier blog posts as we were monitoring the developments of the new EU directive for Non-Financial and Diversity Disclosure.  As most of you know by now the Directive entered into force in December 2014.  The directive will impact over 6,000 large public enterprises that operate in the European Union and mandate them to report on certain sustainability matters.

You can read some frequently asked questions about the directive here.

https www.globalreporting.org resourcelibrary GRI_G4_EU Directive_Linkage.pdf

The good news today is that GRI has released a “linkage document” which links the GRI G4 indicators to the specific requirements of the EU directive.  This document is the latest addition of these very useful linkage documents created by GRI.

For those of you who are worrying about “survey fatigue” or the growing number of sustainability reporting / data collection organizations that you must reply to – you should be aware of these linkage documents.  In a nutshell these linkage documents allow a GRI reporter to utilize their GRI report and content index to disclose to several major important reporting organizations with only one report.

The linkage documents currently include guidance for using GRI reports as one stop report to respond to several important reporting organizations / frameworks like ISO 26000, Carbon Disclosure Project (CDP), United Nations Global Compact (UNGC), IFC Sustainability Performance Standards, The Earth Charter, and now the new EU Directive for Non-Financial and Diversity Disclosure.

Imagine that! – You can use your GRI report to help respond to all of these important sustainability groups at once.  Another reason why you should be reporting using the GRI framework.  The globally recognized (over 6,000 companies utilizing GRI) de-facto standardized format of disclosure that you have when reporting using the GRI framework allows for these types of alignment / synchronization, and can help you to answer more important stakeholders information requests, with less time invested, more accuracy and more efficiency.

As an example of how this would work take a look at the GRI Content index for ArcellorMittal where they use one index for UNGC and GRI here.

Another example is GAP where they have combined GRI, UNGC, and CDP into one GRI index here.

You can see all the GRI linkage documents listed here.

You can access the announcement and the new EU linkage document here.

If you have any questions please contact me (lcoppola AT ga-institute.com) and let me know – about this or any other sustainability topics.  Think of G&A Institute as your sustainability think tank.  Over the past ten years we have designed research, systems and services to help you get more out of your sustainability efforts, and I would be very excited to tell you more about how we can help.