A blog focused on sustainable business issues and challenges

EY & Boston College Issue Study on the Value of Sustainability Reporting

May 25, 2013 | No Comments »

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 benefits of reporting include:
  • Better reputation: a 2011 survey on corporate reputation found that expanding transparency and reporting positive deeds were the two most important ways to build public trust in business. The 2013 Boston College Center for Corporate Citizenship and Ernst & Young survey revealed that more than 50% of respondents issuing sustainability reports reported that those reports helped improve firm reputation.
  • Meeting the expectations of employees: a 2011 survey conducted by Ernst & Young and GreenBiz found that employees were a vital audience for sustainability reporting, with 18% of reporters citing employees as a report’s primary audience. More than 30% of reporters in the 2013 Boston College Center for Corporate Citizenship and Ernst & Young survey saw increased employee loyalty as a result of issuing a report.
  • Improved access to capital: recent research found that reporting firms ranked highly for sustainability have Kaplan-Zingales Index scores that are 0.6 lower than the scores for low-sustainability companies. A lower score signifies fewer capital constraints.
  • Increased efficiency and waste reduction: in a 2012 global survey of sustainability reporters, 88% indicated that reporting helped make their organizations’ decision-making processes more efficient.

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.

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Sustainability to Play Important Role in Supply Chains of the Future

May 15, 2013 | Comment (1)

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.

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Six Countries Lead the KPMG Green Tax Index

May 06, 2013 | Comment (1)

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 US tops the ranking primarily due to its extensive program of federal tax incentives for energy efficiency, renewable energy and green buildings.
  • When green tax penalties alone are considered, the US drops to 14th, indicating that US green tax policy is weighted heavily in favor of incentives.
  • Japan is ranked 2nd overall but, in contrast to the US, scores higher on green tax penalties than it does on incentives. Japan also leads the ranking for tax measures to promote the use and manufacture of green vehicles.
  • The UK ranks 3rd and has a green tax approach balanced between penalties and incentives. The UK scores most highly in the area of carbon and climate change.
  • France occupies 4th place in the overall ranking and is also unusual in that its green tax policy is more heavily weighted towards penalties than incentives.
  • South Korea ranks 5th overall and, in common with the US, has a green tax system weighted towards incentives rather than penalties. South Korea leads the ranking for green innovation which suggests that South Korea is especially active in using its tax code to encourage green research and development.
  • China ranks 6th with a green tax policy balanced between incentives and penalties and focused on resource efficiency (energy, water and materials) and green buildings.
  • The US uses green tax penalties less than other Western developed nations, apart from Canada. The only countries in the Index that impose fewer green tax penalties than the US or Canada are emerging economies such as Brazil, India, Mexico and Russia. China and South Africa are both more active than the US or Canada in imposing federal green tax penalties.

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.

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Recycling & Sustainability Survey Reveals Consumer Attitudes

April 23, 2013 | No Comments »

Bridgestone Americas and Bridgestone Retail Operations (BSRO) recently released the findings of the companies’ Earth Day 2013 Consumer Recycling and Sustainability Survey, revealing U.S. consumer attitudes toward recycling and sustainable behaviors in 20 cities.

The survey found that the majority of consumers are holding companies and corporations accountable for the environmental sustainability of their products and processes. Individuals are cognizant of “being green” as they shop, as 92 percent indicated a manufacturer’s operational sustainability or a product’s sustainable attributes have some impact on their purchasing decisions. According to surveyed consumers, the top three ways companies can show they are environmentally responsible are:

  • Creating a product design that minimizes energy and water usage
  • Minimizing generated waste
  • Minimizing carbon emissions tied to waste

According to the survey results, Seattle, Wash., and Minneapolis, Minn., were home to the most recyclers, with 97 percent recycling either curbside or at a recycling center. Riverside, Calif., residents were the most serious recyclers with 63 percent committed to recycling everything they can, even if they have to take it to a recycling center themselves.

On the whole, recycling is on the rise, as 52 percent of consumers recycle more now than they did two years ago. Overall findings about U.S. consumer recycling habits indicate that 86 percent of those surveyed recycle, with more than one-third of respondents identifying themselves as serious recyclers (36 percent), recycling everything they possibly can even if it means going to a recycling center. Half say they recycle as long as curbside service is provided. Three quarters of respondents have a curbside service provided by their city or county.

In addition to recycling habits, the survey measured consumers’ opinions about ease of recycling a number of items, including motor oil, consumer electronics, tires, mattresses and household/office waste. Sixty percent of consumers surveyed found it difficult to recycle mattresses, which were seen as the most challenging item. Large appliances followed, with 51 percent scoring refrigerators, washers, dryers, stoves and microwaves as “difficult” or “very difficult” to recycle. Thirty-seven percent regarded tires as difficult to recycle.

To find out more about Bridgestone’s sustainability initiatives, including our Spent Tire Program, visit: www.oneteamoneplanet.com

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MetalMiner Announces Conflict Minerals EDGE Conference – May 6, 2013

March 28, 2013 | No Comments »

Conflict Minerals continues to be a hot topic as evidenced by Aravo’s recent joint webinar with EY: “Conflict Minerals – Will You be Ready for 2014 Reporting?” At 650 registrations, it was our largest online event ever! Another great venue for Conflict Minerals information and idea exchange is coming up in May. MetalMiner, the leading authority on everything “metals” (except perhaps “heavy metal”, although I do occasionally detect a strong bass beat in their coverage) is planning a conflict minerals conference as part of their Edge series. Here’s what Managing Editor Lisa Reisman has to say about it:

“Without a doubt, conflict minerals have taken center stage for thousands of buying organizations across the United States. And the more we write about conflict minerals, the more questions seem to come up. The most basic questions – including, ‘do my finished parts contain conflict minerals and/or does the stainless steel grade that I buy in my sub-assemblies contain conflict minerals?’ – may not seem like simple questions. In fact, we tried to pull together a Conflict Minerals webinar for later this month only to come to the conclusion that we’d have to offer several webinars on many different subjects to begin to scratch the surface of the myriad questions readers have sent our way.

Instead, we have opted to organize an event for May 6, 2013, in Chicago to provide readers with the opportunity to ask their most challenging questions of some of the industry’s most knowledgeable conflict minerals experts.”

Read More here: Conflict Minerals Edge.

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