2Sustain

Spending in the US market on energy, environment and sustainability initiatives by large corporations will grow at just 5% per annum until 2017, according to a new market size and forecast study from independent analyst firm Verdantix. Based on the proprietary Critical Moments® methodology, interviews with 500 energy and sustainability budget-holders and an analysis of more than 1,000 corporate initiatives, the model forecasts the US market will grow from $34.6 billion in 2012 to $43.6 billion in 2017.

The Verdantix market size and forecast model provides a rich data-set to help commercial leaders understand spending by more than 2,856 firms with $1 billion revenues in the US. The analysis tracks spending on 29 initiatives grouped into energy management, environment, health & safety, sustainability innovation, sustainable transport, strategy and risk management, and human capital. Highlights from the study:

• Three industries dominate spending. In 2013 the oil and gas, utilities and retail sectors will account for 42% of total spend by US corporations on energy, EH&S and sustainability initiatives representing $15.4 billion. Technology, industrial engineering and pharmaceuticals are all $2 billion markets.
• Energy management is the largest category of spend. US corporations will spend $13.9 billion on all aspects of energy management in 2013, compared with $13.1 billion on EH&S management, and $5.3 billion on sustainability strategy, branding and risk management.
• Hidden spend on employees tops $12 billion. Cash-strapped firms are keeping a lot of activity in-house resulting in a $12.1 billion wage bill for energy, environment and sustainability management. The consulting market represents $6.8 billion and program management $10.2 billion.
• Few industries will increase spend above 5%. Compound annual growth rates for virtually all industries are trapped in a 4% to 5% bracket for the 2012-2017 period. Only automotive (7%), food and beverage (6%) and chemicals (6%) will grow above the overall trend.

“CEOs love to talk about their commitments to sustainability, environmental protection and energy efficiency, but press releases are not followed up with extra cash commitments” commented David Metcalfe, Verdantix CEO. “Weather impacts in 2012 like Hurricane Sandy and the drought in the mid-West were wake up calls without being cash calls. For spending growth to reach double-digits the US economy would need to expand at more than 4% per annum, Congress would need to pass new regulations on energy efficiency and environmental compliance, and corporations would need to compete more intensively on sustainability innovation. We do not forecast that will happen.”

It looks like “Green-washing” is alive and well, unfortunately. Visit Verdantix website for more.

G4 was unveiled before an audience of 1,600 thought leaders and practitioners from around the globe at GRI’s 2013 Global Conference. Experienced reporters welcomed the publication of the Guidelines as a major step forward in the evolution of sustainability reporting.

The latest evolution of the GRI Guidelines – part of the most widely used comprehensive sustainability reporting framework in the world – enable all companies and organizations to report on their economic, environmental, social and governance performance. G4 has been significantly revised and enhanced in order to reflect important current and future trends in the sustainability reporting landscape.

By placing an even greater emphasis on the concept of materiality, G4 will encourage reporting organizations to provide only disclosures and indicators that are material to their business, on the basis of a dialogue with their stakeholders. This will allow reporting organizations and report users alike to concentrate on the economic, environmental, and social impacts that really matter, resulting in reports that are more strategic, more focused and more credible, as well as easier for stakeholders to navigate.

The launch of G4 marks the culmination of two years of extensive stakeholder consultation and dialogue as part of a strict and transparent due process. Working Groups from across the world, comprising 120 specialists from constituencies as diverse as field experts, labor, business and civil society, have contributed. Two public consultation periods in 2011 and 2012 generated a total of more than 2,500 responses.

In addition to enhancing the relevance and quality of standalone sustainability reports, G4 will be a powerful tool for generating material sustainability information for inclusion in integrated reports.

Other key enhancements in G4 include increased user-friendliness and greater accessibility for those new to reporting, and harmonization with other important global frameworks, including the OECD MNE Guidelines, the United Nations Global Compact Principles, and the UN Guiding Principles on Business and Human Rights.

It is clear that sustainability reporting is here to stay. Environmental, social and governance (ESG) company data scroll down thousands of trading terminals. A full 95% of the Global 250 issue sustainability reports. Firms continuously seek new ways to improve performance, protect reputational assets, and win shareholder and stakeholder trust. The evidence is all around us.

The benefits of sustainability reporting go beyond relating firm financial risk and opportunity to performance along ESG dimensions and establishing license to operate. Sustainability disclosure can serve as a differentiator in competitive industries and foster investor confidence, trust and employee loyalty. Analysts often consider a company’s sustainability disclosures in their assessment of management quality and efficiency, and reporting may provide firms better access to capital. In a review of more than 7,000 sustainability reports from around the globe, researchers found that sustainability disclosures are being used to help analysts determine firm values and that sustainability disclosures may reduce forecast inaccuracy by roughly 10%.

The study was produced as a joint effort between Ernst & Young LLP and the Carroll School of Management Center for Corporate Citizenship at Boston College. The comprehensive survey covered various aspects of an organization’s ESG reporting. Topics included the cost and benefits of reporting, as well as making connections to financial performance. Respondents’ companies did not have to report in order to participate in the survey. See the entire report here.

PwC’s 2013 Global Supply Chain Survey provides new insight into the role of sustainability in supply chain management. This year’s global supply chain survey shows how Leaders are moving ahead of the pack. They’re tailoring their supply chains to customer needs and investing in next-generation capabilities, including sustainability considerations, while keeping the focus on supply chains that are both fast and efficient.

More than two-thirds of all respondents say sustainability will play a more important role in the supply chains of the future. A number of companies have already started (1) investing in technologies to reduce their carbon dioxide emissions and (2) excluding any supply chain partners that don’t adhere to the highest ethical standards. But such examples are not yet widespread — aspirations tend to exceed action unless there is a clear cost reduction benefit or regulatory requirement being met.

To date, most firms have done very little on the sustainability front, but demand for sustainable products manufactured with sustainable raw materials is increasing; indeed, it now outstrips supply. Investors’ expectations are also rising, and manufacturing regulations are getting tighter. At the same time, greater use of low-cost and best-cost country sourcing is making it more difficult to control sustainability through the entire supply chain. And though a company can outsource specific business activities, it can’t abdicate responsibility for them.

At present, respondents see four main reasons for investing in sustainable supply chain management: to manage the risk of unintended environmental or social damage, to manage their company’s reputation and the expectations of its shareholders, to reduce costs and realize productivity improvements and to create sustainable products, thereby increasing revenues and enhancing the corporate brand.

The US, Japan, UK, France, South Korea and China – were recently named by KPMG International as the most active in using tax as a tool to drive sustainable corporate behavior and achieve green policy goals.

The finding is contained in the first KPMG Green Tax Index, launched at the 2013 KPMG Asia Pacific Tax Summit in Shanghai. The KPMG Green Tax Index explores how governments are using their tax systems to respond to global challenges including energy security, water and resource scarcity, pollution and climate change. It analyzes green tax incentives and penalties in 21 major economies, focusing on key policy areas such as energy efficiency, water efficiency, carbon emissions, green innovation and green buildings.

The KPMG Green Tax Index is intended to raise corporate awareness of the rapidly evolving and complex global landscape of green tax incentives and penalties, and to encourage tax director sand sustainability chiefs to work together to factor green tax considerations into investment decisions.

The ranking shows:

The KPMG Green Tax Index attributes scores to green tax incentives and penalties according to arguable value and potential to influence corporate behavior. Scores should be taken as indicative, not absolute, in providing a view of governments with the most active and developed green tax systems in place.