Sustainability: Three Important Trends

Nov 6th, 2010 | By | Category: Sustainability

In our role as environmental and business consultants who assist global companies in developing and implementing sustainability strategies, we’ve noticed three important trends in sustainability programs relating to:

  • Transparency and reporting
  • Rankings, ratings, and standards
  • Whole systems life cycle thinking

Transparency and Reporting

Transparency has become the new norm of corporate responsibility. The number of companies that publish corporate social responsibility or sustainability reports is growing almost exponentially, and use of the Global Reporting Initiative (GRI) is becoming more established.  Another trend that relates to reporting is the steady increase in the number of companies seeking third-party assurance of their reports and data.

Whereas companies of the past could reasonably expect to control their reputations through carefully orchestrated public relations campaigns and corporate charity, advances in social media and changes in stakeholder expectations have complicated matters. In a world where nearly every person carries a camera phone with an Internet link to the rest of the world, bad news and rumors can be transmitted almost instantaneously to a mass audience. Even if the news report later turns out to be false, in many cases the damage is already done.

The following questions are at the forefront of business considerations:

  • How do you respond to unexpected news about your company?
  • Do you respond to every rumor and report, or do you pick your battles?
  • Where do you fight your battles—in courtrooms, in news media outlets, or on social networking sites?
  • How much time do you have to respond? Can you afford to delay your response until better data becomes available and everyone of importance weighs in on the response strategy?
  • Should you prepare communications strategies in advance?

The danger in the current information climate is that companies simply do not have the time to gather and evaluate data from a wide range of sources and respond with well-thought-out answers. They need to respond immediately.

Ratings, Rankings and Standards

What started out as a trickle of environmentally focused standards and simple reporting has turned into a flood of requests for increasingly detailed confidential business information. Rating systems ranging from the Dow Jones Sustainability Index to the Newsweek Green Rankings request information about an organization’s performance, while a new focus on product performance is evidenced by the Good Guide.  These requests have made companies collect and report data on energy, water consumption, waste generation, and environmental and supply chain performance. The greatest challenge is to decide which reporting regimes to respond to; turning down a request to participate in an important survey, or discontinuing participation in a survey that has become too time consuming or conflicts with the overall business goals and strategies of the company, may result in negative publicity.

An emerging concern among some companies is the very real possibility that governmental agencies will someday regulate an area where companies are currently making voluntary disclosures. Stakeholders are bound to compare the two data sets and will certainly publicize gaps in accuracy and consistency.

Whole Systems Life Cycle Thinking

We have observed a clear increase in the scope of issues and boundaries considered by companies managing their environmental performance. Traditionally, companies have focused on the parts of their value chain that they had most control over—manufacturing footprint and maybe logistics. Progressive companies are now looking to influence their entire value chain, from raw material suppliers through product use to ultimate disposal.  This increased scope has provided an opportunity to review and reduce environmental impacts and costs during the use and end-of-life phases of a product.

Considering environmental impacts associated with use and disposal of a product has also focused attention on the development of new products. It is now commonly recognized that by focusing on environmental impacts during the first 20% of the design process, product companies can address up to 80% of life cycle impacts. One global chemical company, for example, is seeking to introduce 1,000 new chemical products that benefit either people or the environment in one of six sustainability criteria without being any less beneficial in the remaining criteria.

Conclusion

Companies are facing a fast-changing operating environment with ever more demanding stakeholders, both internal and external.  The companies that are coping best exhibit some common characteristics.

  • Firstly, they have a good handle on their material issues (i.e., those assessed to be of greatest significance in terms of impacts across the life cycle and those seen as important to their stakeholders).
  • Secondly, they have robust data reporting systems with a clear definition of key performance indicators and data metrics, robust quality assurance processes, and third-party verification.  Data is clearly connected to organizational goals and performance improvement reporting, while performance information is proactively communicated to key stakeholders.
  • Finally, they have realized the value of integrating environmental, health and safety and social issues into their core business functions. The unity of purpose achieved through this integration leads to new sources of innovation and to improved business performance by demonstrating increased customer value, reducing supply chain risk and decreasing material costs.

About the Authors

Guy Roberts  is an associate partner at Environmental Resources Management (ERM) in Chicago, U.S.A. By providing sustainability and supply chain consulting services, Guy assists clients in maximizing the business value that they derive from EHS and sustainability management. He has more than 20 years of experience and has worked for clients across a wide range of industrial sectors including chemical, power, mining, metal, and general manufacturing. Guy is also a trained ISO 14001 Lead Assessor and an experienced compliance assurance practitioner who provides third-party opinion on sustainability data and performance reports.

Michael Bittner, CPEA, is an associate partner in the Boston, U.S.A. office of Environmental Resources Management  and editor of the EHS Journal. He has more than 20 years of experience in the EHS field, including 17 years of EHS consulting experience and four years as the corporate environmental manager for a U.S. Department of Defense contractor. Mr. Bittner specializes in global EHS solutions including

  • Compliance and management systems auditing.
  • EHS management systems implementation and design.
  • Sustainability solutions.
  • Mergers and acquisitions support.

He is a member of the Board of Directors for the Auditing Roundtable.

Photograph:   West Texas Sunset by Austin Lutz, College Station, Texas.

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