Corporate Sustainability

Editor's Notes

• #2: Good afternoon. I’m Bruce Harrison. I’m from Washington, DC, and I’m here to help you. Let me briefly qualify myself. My corporate experience was at Freeport McMoran—as vice president for public and government relations. My practice since 1973 has concentrated on corporate environmental and energy issues. For several years, I’ve worked with Navistar, developing green diesel technology… This session is about corporate positioning on climate change and sustainability.
• #3: I’ve written a book, and I’ll draw on it heavily for this presentation. Corporate Greening 2.0 is an attempt to assess how companies are confronting the large, game-changing condition where energy is linked to environment in an extraordinary new way: control of carbon emissions, reduction of energy derived from fossil fuels, Which impacts and to some large extent overwhelms How companies have managed environmental health and safety. I want to provide you with some insights on company strategies as seen in their messaging… based on a qualitative study by my consulting firm.
• #4: Our analysis was on company positioning on climate change and sustainability — as shown through their communication On the Internet — We wanted to understand both the rationales for supporting government climate change programs and the strategies [or: what we called positioning attributes] used by leading companies. A little about our very simple methodology…
• #5: We drew almost entirely on what’s on the Internet because that’s every company’s front door and it’s the first place any stakeholder, media, government goes to look into company positions. We scanned approximately 200 company websites between July 2007 and June 2008, looking for benchmarks on climate change and sustainability positioning and messages Using broad filters—key words, government interactions and recognitions, various private sector associations— we narrowed the universe to 42 companies. I’ll refer to several of these companies as examples of positioning attributes. If I don’t mention your company or one you admire, it doesn’t mean it was NOT bench-markable. I’ve had to condense considerably to fit today’s time frame, and you may find it in the book. We found seven strategies or positioning attributes most frequently used by the 42 companies, And I will go through these strategies for you now…
• #6: Top management commitment is a critical component of the benchmark companies . Messages from CEOs are prominent on the websites. DuPont’s CEO goes into detail on company goals— cut greenhouse gas emissions 15% by 2015— and coupling this green message with an economic message— looking for $2 billion in new revenues from energy efficiency and GHG reductions. Deere and Navistar emphasizing advanced technology. Wal-Mart and ExxonMobil ceos giving major speeches – both in London – one at the Prince of Wales sustainability conference and one at a Royal Institute conference – The point is that top executive commitment is step one for any program on sustainability.
• #7: Companies leading on sustainability are not sustaining any debate on global warming. They either accept the scientific validity or they accept the political reality that the scientific debate has been overtaken by events. They are making this clear in their most public communication. Rio Tinto says, “people and companies are contributing to climate change” and “we must play our part” in reducing impact. Shell says on its website: “the scientific debate is over” and adds that company action can be a business opportunity. Procter & Gamble says something similar: “growing scientific evidence”…”action is justified.” In the book, I call this getting with the program. And that leads to taking a public policy position.
• #8: Leading companies make it clear they want a seat at the climate policy table. Their public communication recognizes that politicians—Congress—will act on climate change with or without business involvement. Approximately two thirds of the websites of the 42 companies spelled it out. The US Climate Action Partnership was organized to get engaged in congressional deliberations. Caterpillar, Duke Energy, more than a dozen companies helped to write the climate change bill that was reported out of the House Energy & Commerce Committee. Here are the kinds of messages you will find from our benchmarkers: Caterpillar says there needs to be a comprehensive federal approach. Duke gets behind an economy-wide mandatory GHG program BP proclaims, as do other companies, we will be involved, influencing policy…working toward a level playing field.
• #9: Companies use the web postings to let stakeholders—especially investors— know their proactive green position is good business strategy. Coca-Cola: ‘climate protection is a key component of our business strategy”— linking to the company’s water stewardship and packaging programs GE: Ecomagination—bundling energy efficient and clean technology into sustainable products & services Honeywell: processing vegetable oils to produce “ green” diesel fuel—among several initiatives And certainly among the more hopeful in looking for the gold, this statement on Ford’s site in 2008: ‘ Some see (climate change and energy security) as yet another burden on an already stressed industry; but we see…innovative business opportunities…”
• #10: Again, our survey’s focus was not on the data but on the availability—the transparency—of information. Our benchmark companies were open, specific, they supplied validation and ways for stakeholders to track their green progress. Many referred to their environmental reports, available on the web, and their reporting responses to groups such as the Carbon Disclosure Project. A few examples: PG&E: third-party certification by California’s Climate Action Registry Hewlett-Packard: verifying via World Economic Forum’s Global GHG Registry UPS: chart that outlines 2002 baseline data, 2006 status and 2007 goals (at the time of our survey) for each business area. The chart opens up to show details in each category. I’ve heard transparency described as the OPEN KIMONA policy
• #11: Virtually every company lists its leadership achievements. They reference recognitions received for energy and climate progress. FedEx: EPA’s Green Power Leadership Award; Harvard recognition for ‘Environmental Partnership’ with Eaton and Environmental Defense Fund to create hybrid delivery truck Abbott: Recognition as first Fortune 500 company to commit to going carbon neutral; and being named to the Dow Jones Sustainability World Index. The point of course is validation—to display any earned green halos.
• #12: To meet government and public expectations and to beat the competition, leading companies have to influence others to get with the program. An obvious example is influence along their green supply chain. Wal-Mart, of course, with its huge outreach, leads the way. At the time of our survey, the Wal-Mart website linked to the Fortune magazine article with CEO Lee Scott on the cover, with this quote: ‘ The company is so big, so powerful, it could force an army of suppliers to clean up their acts too.’ Wal-Mart points to its partnerships for greening the supply chain, starting with the Clinton Climate Change Initiative. Monsanto describes its work with farmers in no-till agriculture—which involves minimal plowing of farmland to sequester carbon in the soil Shell notes that its customers emit far more CO2 using its carbon products than the company does, and so the website bears now on efficient energy use . Many of the sites noted their collaborations, as we mentioned on the previous slide, as ways to influence green behavior. It’s interesting to me to note that Wal-Mart is so linked to Environmental Defense Fund in this regard that EDF has set up an office in Bentonville, Arkansas, near Wal-Mart headquarters. So companies emphasize their progress, recognition and good works. What about lack of progress?
• #13: We found an increased number of sites where companies tell the good and the bad. Narratives where companies explained shortfall. An example of showing the whole story: Johnson & Johnson describes its 15-year EHS commitment, and shows the GOOD – staying on its goal to cut CO2 emissions by 7% from its 1990 base year by 2010, reporting a 16.8% decrease as of 2006. AND…J&J also shows shortfall in reducing Fleet-total-CO2-emissions-per mile by 30%-- stating that while some 500 hybrid vehicles were in use at year-end 2006, ‘ as yet…(no) overall improvement in emissions per distance driven.’ Hewlett-Packard acknowledged GHG increases of 3% in 2006, and goes on to explain that protocol factors provided by international organizations to measure GHG had changed, resulting in higher numbers. Similarly, changes in electricity conversion factors accounted for increases in emissions per unit of floor space. These are the kinds of transparency that help put to rest charges of green-washing, and tends to build trust. This is another indication of the substantial change from early years of green sites that were more feel-good, warm and fuzzy.
• #14: Websites reveal a range of collaborations, with other companies, with government, and with NGOs. We found many examples on the sites of surveyed companies: Intel: Joined with a group of companies, the World Wildlife Fund (and a dozen others) to form Climate Savers Computing Initiative. Siemens: Touts its green transportation program undertaken with the Clinton Climate Initiative. PG&E: Describes its hookup with 46 international companies and groups to form the organization ‘Combat Climate Change’ leading up to the UN climate negotiations meeting in Bali in 2007. US Climate Action Partnership: The House climate change and energy bill is a product of direct collaboration among companies and NGOs. The USCAP engaged a dozen leading companies plus Environmental Defense, NRDC, others My observation is that never before have companies come together with activists as they have done on climate change and sustainability. This is the new middle ground. Companies getting with the climate program are doing it with partners.
• #15: DUKE ENERGY IS A LEADER IN USCAP HIS QUOTE DESCRIBES THE RATIONALE FOR COMPANIES SO AGGRESSIVELY INVOLVED IN CLIMATE CHANGE AND SUSTAINABILITY. SO… THOSE ARE THE SIX OR SEVEN ATTRIBUTES. WHAT ARE THE STRATEGIC IMPLICATIONS OF THESE…?
• #16: Companies are accepting the inevitable. The science debate is effectively over, overtaken by events Companies must get into the policy game. They need a degree of certainty, rational goals and timetables. They want a level playing field. Collaboration is the key both in achieving reduction goals within business sectors and in achieving workable public policy. Beyond collaboration, companies need to control or influence what impacts them, leading to major emphasis on the supply chain. With all the environmental good that can be achieved, with all the challenges of the war on carbon, companies are must make money and compete successfully. They must focus on beating competitors with a changed business case. I’ll close by mentioned a simple formula for corporate sustainability that is the theme of my book…
• #17: CORPORATE SUSTAINABILITY Is a new and focused formula for top management, especially of larger companies like those cited in this study: And that is the alignment of Economic, Social and Political factors relevant to the company’s success. I suggested that successful corporate sustainability now requires a slightly revised triple bottom line. Corporate sustainability means balancing Economic (or financial) and Social (including environmental) and Political accountabilities over time. The process itself must be structured to be sustainable, Which brings us back to the attributes in this presentation. With this, with any time remaining, I’ll be glad to try to answer Any questions – or to talk to you after we conclude here. And…I thank you.