2Sustain

Here’s some welcome news: A new coalition promises to develop an independent, non-commercial framework for rating sustainability performance. If successful, this new Global Initiative for Sustainability Ratings (GISR) could

• eliminate market confusion,

• reduce conflicts of interest between rating agencies and the companies they survey and

• increase market and consumer confidence in how companies are rated in their environmental and social performance.

Launched last month, GISR is a joint initiative between Ceres, a national coalition of investors and public interest organizations, and Tellus Institute, one of the world’s leading sustainability research and policy organizations.

A more uniform framework is important because sustainability ratings have the ability to push capital and consumer markets towards companies that have embedded sustainability within their operations and supply chains. But, the proliferation of sustainability ratings over the past decade means that in some cases, companies can manipulate the results from various ratings systems and promote only the scores that put their company in a favorable light. Of course, those same companies also can “cherry pick” among results, avoiding the mention of other surveys that are less flattering.

Confusing matters further, some ratings offer little or no transparency about the methodologies used to determine their ratings, which blurs the line between the raters and the companies they rate.

Will this new, additional sustainability standard muddy the waters even more? (more…)

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In today’s global economy, it’s not enough for companies to perform only financially; they’re expected to be good corporate citizens, as well. Stakeholders are holding firms accountable with regard to social and environmental performance, and as a result, corporate sustainability reporting has become a mainstream business activity. What do I mean by “mainstream”? Consider this: last year, a survey by KPMG reported that nearly 80% of the largest 250 companies worldwide issued CSR reports.

As you would expect, investors have been a key driver in the trend towards improved disclosure of economic, social, and governance (ESG) performance. So, it only makes sense that companies today are eager to learn how to reach out to investors through sustainability reporting. In the best case scenario, ECG performance is correlated with a company’s overall business strategy, so that investors can clearly see how sustainability is linked to the financial bottom line. That sounds like a reasonable approach, I know. But since a CSR report contains information on multiple moving parts, it can be difficult to put even the most reasonable approach into actual practice.

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Today we offer another post from our distinguished co-sponsor, WSP, written by Josh Whitney:

On the heels of numerous recent conferences and wide-spread media attention on the energy impact and carbon footprint of consumer products, WSP recently hosted a breakfast seminar in Santa Clara. The workshop explored various methods and standards used to analyze products and sought to emphasize the value that product and supply chain carbon footprinting can provide to a company. Clearly the carbon market has arrived and it’s certainly here to stay. There’s money to be made, the winners and losers have yet to be identified, and for those who understand the business implications of carbon, first movers will be rewarded with clear advantages.

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