Business and Operations
Sustainability – how do you rate?
June 16, 2009 By Kathryn A. Cooper
There’s a new auditor in town and he isn’t looking for your HACCP plan,
Environmental Health and Safety program or financial statements. He
wants to know what you are doing about your social, environmental and
economic footprint, and he is starting to make buying decisions based
on your answers.
There’s a new auditor in town and he isn’t looking for your HACCP plan, Environmental Health and Safety program or financial statements. He wants to know what you are doing about your social, environmental and economic footprint, and he is starting to make buying decisions based on your answers.
It starts with a telephone call to your sales department. Your customer wants information about your environmental management programs, your carbon footprint or maybe your policy on sustainably sourced ingredients such as palm oil, spices, nuts, cocoa or fruit concentrates and purees.
Increasingly, sustainability and Corporate Social Responsibility (CSR) programs are tools for realizing and communicating corporate environmental, social and economic achievements. In May, Safeway’s U.S. CSR report boasted that the company achieved an 85 per cent waste diversion rate, redirecting 500,000 tons of garbage from landfill to recycling and reuse. It also achieved a reduction in greenhouse gases of 11 per cent, two years and five per cent ahead of the original six per cent target. This is the environmental and social silver lining to the recessionary economic cloud, and it is driving investment.
Not surprisingly, as food retailers and food service companies put their CSR and sustainability houses in order, they are turning to their supply chain to do the same. The ripple effect through the industry is leading to a confusing explosion of sustainability reporting, ranking and rating systems. Today there are more than 100 ways to rate the sustainability of your product, packaging and company.
So, when you get that call from your customer, how should you report or rate your sustainability or CSR efforts? Which rating or eco-logo should your company pursue? And exactly how green is green enough?
|Issues such as climate change and air pollution are affecting how companies view their performance. |
Sustainability and CSR Reporting
In business, what gets measured gets done; sustainability reporting is no different. Measurable targets, transparency and accountability are at the heart of the various sustainability reporting standards such as the Global Reporting Initiative (GRI), Corporate Social Responsibility – such as ISO 26000 – and other forms of triple bottom-line reporting.
GRI alone has attracted more than 1,500 of the world’s largest companies with its mandate to elevate sustainability reporting practices worldwide.
“All the leading companies are using GRI,” says Walter Kraus, senior director of environmental affairs at George Weston Ltd. and Loblaw Companies Ltd. “It provides a level playing field.”
Kraus says his company has received numerous surveys from investment houses, nearly all asking for the same information.
“Most of them said that we wouldn’t need to complete their surveys if we filed a corporate social responsibility report based on GRI. In the long run a GRI-based CSR report is going to save an enormous amount of time.”
If the GRI is the destination for sustainability reporting for many companies, CSR is often the point of departure. Canadian Business for Social Responsibility (CBSR) assists its members in implementing corporate social responsibility programs. Loblaw recently released its second CSR report with the assistance of CBSR.
The result is a 32-page CSR report based on five key pillars: 1) Respect the environment; 2) Source with integrity; 3) Make a positive difference in our community; 4) Reflect our nation’s diversity; and 5) Be a great place to work.
According to CBSR membership director Barb Steele, companies choose the CBSR approach because it is grounded in a solid understanding of business and CSR issues, and can be tailored to the individual needs of each organization.
“Our approach is based on the most current research and emerging thinking, complemented with years of experience working with and in-depth understanding of international best practice,” Steele says.
At CBSR a typical CSR strategic approach includes such phases as: 1) assessment (where are you today?); 2) benchmarking (where are competitors?); 3) stakeholder outreach (what is material to your stakeholders?); 4) commitment and target setting (where do you want to be?); and 5) communication (how can you be both accountable and transparent?).
Other evolving sustainability and CSR reporting templates include the ISO 26000 voluntary guideline for social responsibility and the Management Discussion & Analysis (MD&A) guidance document under the Canadian Institute of Chartered Accountants (CICA).
CICA, a founding member of the GRI standard, has recognized that social and environmental responsibility, including climate change issues, are key performance drivers that should be identified and measured under the MD&A section of a company’s financial report.
For public companies, reporting can lead to critical investment rankings for sustainability, social and ethical investors. The Dow Jones Sustainability World Indices exclusively capture the top 10 per cent of the largest 2,500 companies worldwide. Current food industry leaders on this index include Unilever, Sainsbury and Heineken.
Global corporate leadership has set the tone for Unilever’s highly ranked sustainability programs, but with a local pay-off, according to Stan Reid, manager of the company’s Becel manufacturing plant in Rexdale, Ont. He notes that aggressive corporate greenhouse gas reduction targets have been one of the key drivers of energy efficiency initiatives at the facility.
“Unilever is committed to reducing CO2 from energy by 25 per cent by 2012,” Reid says. “This goal, in conjunction with rising energy prices between 2004 and 2007, really focused our eco-efficiency efforts.”
In 1999, the plant was spending more than $5 million per year on energy, approximately 15 per cent of its total operating costs. Programs implemented between 1999 and 2005 resulted in an accumulated saving of more than $5 million and significantly reduced the plant’s environmental footprint. Today the plant is more economically competitive, adding new production and jobs, thanks to these sustainability initiatives.
Product ratings and eco-branding systems
Even small and medium-size enterprises (SMEs) cannot escape the call to sustainability and CSR systems. For SMEs, customers and consumers, not shareholders, are the principal concerns.
According to the recent Boston Consulting Group study “Capturing the Green Advantage for Today’s Consumer Companies,” consumers are continuing to look for ways to reduce their own social and environmental footprint and they want your help to do it. Key for consumers is the ability to differentiate between “greenwashed” products and those manufactured in an authentically sustainable manner. In response, a flood of eco-ratings and customer-based scorecards have hit the global food industry.
Eco-labels are another trend offering transparency for sustainability initiatives.
More than 99 food industry eco-labels are listed on ecolabelling.org, an international clearinghouse for product-based eco-logos. Rainforest Alliance certification is one example. Kraft Foods has been a partner of the Rainforest Alliance for coffee beans and cocoa since 2003. As the largest buyer of coffee beans from Rainforest Alliance-certified farms in the world, Kraft has at least eight coffee brands carrying the Rainforest Alliance seal. Likewise, Unilever has pledged to source all of its tea from sustainable and certified sources by 2015 using the Rainforest Alliance system.
In Canada, Loblaw and Coca-Cola have aligned with the World Wildlife Fund (WWF) Canada. As part of WWF Canada’s Climate Saver Program, Coca-Cola has set water conservation targets of 20 per cent water efficiency by 2012 and a five per cent absolute reduction in greenhouse gases by 2015.
More recently, Loblaw committed to diverting one billion grocery bags from its stores by the end of 2009. It will provide WWF Canada with partial proceeds from its charge on plastic grocery bags to mobilize one million Canadians to “do what they can for the environment through simple everyday actions.” In return, Loblaw will enter into a marketing relationship with WWF Canada while leveraging greater behaviour change for sustainable consumption.
“We recognize that business is a big part of the impact on the planet,” says WWF Canada communications director Joshua Laughren. “By working together we can achieve much more meaningful change and impact than either organization could accomplish alone.”
Regardless of the eco-logo, ranking system or reporting method you use, being green takes planning. Companies need to establish a business case, select a sustainability framework, conduct an impact assessment, set metrics and develop an implementation strategy.
A true test of your sustainability strategy is how integrated it is in your business model. Another test is how many people in the company, including frontline employees, know about it or the metrics that are important to it. Your guide to the content of your sustainability and CSR program is the reporting framework, ranking or scorecard that is relevant to your business.
But how you rate is tied to the unresolved question, “How green is green enough?” This is a question that Joel Makower, author of the “State of Green Business 2009” report, has often asked. After studying hundreds of mainstream businesses and cataloguing a plethora of sustainability initiatives, he reports that companies are barely scratching the surface. According to Makower, as much as companies have done to clean up their act, they have a long road ahead. The endpoint of “green enough” is a relative and evolving target, with most companies simply nibbling at the edges and many more yet to get on the scoreboard.
Elements of the Global Reporting Initiative standard
- Strategy & Profile
- Economic Performance
- Market Presence
- Indirect Economic Impacts
- Emissions, Effluents & Waste
- Products & Services
- Social (many aspects under each performance indicator)
- Labour Practices & Decent Work
- Human Rights
- Product Responsibility
Kathryn A. Cooper (B.Sc., MBA) is a sustainability practitioner at EcoHorizon Consulting and a sustainability and manufacturing researcher at York University.
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