2Sustain

Earlier this month, Ceres, a coalition of investors, environmental groups, and other public interest organizations, issued a report analyzing climate change governance practices at 63 leading consumer-facing companies. While we all know that many businesses are making progress in confronting the challenges posed by climate change, this comprehensive 318-page report (complete with company profiles) makes it clear that there is still much more that needs to be done.

The report, titled “Corporate Governance and Climate Change: Consumer and Technology Companies,” was authored by RiskMetrics Group, and it takes a look at firms across 11 different industry sectors. Companies scored points based on how they are addressing climate change through board of director oversight, management execution, public disclosure, GHG emissions accounting, and strategic planning and performance. Out of 100 total possible points, here’s how the various sectors ranked in terms of average climate change governance:

•    Technology (59 points)
•    Pharmaceutical (57)
•    Semiconductor (56)
•    Beverages (43)
•    Personal and household goods (40)
•    Apparel (35)
•    Grocery and drug retailers (35)
•    Big box retailers (33)
•    Travel and leisure (27)
•    Real estate (27)
•    Restaurant (17)

Considering Aravo’s focus, I was particularly interested in the report’s findings regarding corporate governance of sustainable supply chains. This discussion begins on page 43, and the authors do a nice job outlining how several of the evaluated companies are beginning to address GHG emissions embedded in their supply chains. Specifically, the report lists three ways that industry leaders are tackling low-carbon supply chain management. These companies are:

•    Analyzing product life cycles to measure GHG emissions across the supply chain.
•    Re-establishing supplier standards and supplier engagement tactics to address energy efficiencies and other climate-related issues.
•    Maximizing efficiencies by thoroughly evaluating distribution and other logistics processes.

About one-third of the companies in the report are initiating steps to incorporate carbon reduction in their overall supply chain management, and the authors are right to predict that the others are likely to follow suit soon. Remember: most of a company’s carbon footprint is embedded in its supply chain. So, it only makes sense to look to factors like logistics, materials/packaging, and supplier engagement when you’re working to reduce carbon exposure.

What’s more, by focusing on supply chain efficiencies and supplier engagement, companies can also reduce costs and better manage risk across a wide range of issues. The report provides several examples of companies (Dell, adidas, Staples, Nike, to name a few) which are doing just that –further proof that sustainable supply chains are quickly becoming fundamental to business success.

"Many companies, especially technology and pharmaceutical firms, are doing a better job of integrating climate change into their business strategies," says Mindy S. Lubber, president of Ceres, in a press release. "But the overall responses among these companies are very spotty, especially in the restaurant, real estate and travel & leisure sectors where climate change is barely on their radar. With or without a recession, climate change is a core business issue that all consumer and tech companies should be focused on.”

Be sure to spend a few minutes with this Ceres report. It includes comprehensive company profiles that offer fascinating insights into how some of the world’s leading corporations are responding to the risks –and the opportunities –presented by climate change.