We know corporations are good at publicizing their sustainability goals and achievements. But how much progress are they really making toward addressing pressing sustainability issues such as climate change and human rights?
A new report by Ceres and Sustainalytics concludes that while there are encouraging pockets of sustainability leadership in the U.S. business community, far too many companies merely are taking small, incremental steps to address sustainability issues that could affect their bottom lines – and the future of our planet.
“Given the acceleration of environmental and social challenges globally – floods, droughts and workplace tragedies – most U.S. corporations are not keeping pace with the level of change,” said Mindy Lubber, president of Ceres, a Boston-based sustainability advocacy group. “Those that step up to the challenge will be best-positioned to thrive in the rapidly changing, resource-constrained 21st century economy.”
The report, which assesses the sustainability performance of 613 of the largest publicly traded companies in the United States, tracks corporate performance against 20 key metrics, including governance, disclosure, labor standards and greenhouse gas emissions reductions. Among the findings:
- While many companies are taking action to reduce greenhouse gas emissions, few have set time-bound targets. More than two-thirds of the companies evaluated (438) have activities in place aimed at reducing greenhouse gas emissions, but only 35 percent (212) have established time-bound targets for reducing emissions. In terms of renewable energy, 37 percent of companies have implemented a program, while only 6 percent have quantitative targets to increase renewable energy sourcing.
- More companies are setting clear sustainability standards for suppliers. Fifty-eight percent of companies (353) have supplier codes of conduct that address human rights in supply chains, compared with 43 percent in 2012. However, only a third (205 companies) have some activities in place to engage suppliers on sustainability performance issues, up from 27 percent in 2012.
- A growing number of companies are incorporating sustainability performance into executive compensation packages. Twenty-four percent of companies (147) link executive compensation to sustainability performance – up from 15 percent in 2012.
“The findings of this report should inspire companies to examine their own progress and identify where they stand on the path to sustainability,” said Michael Jantzi, CEO and Founder of the research firm Sustainalytics. “This is about more than how companies stack up against their peers – it’s about how innovation is driving performance from the corporate boardroom throughout the entire supply chain.”
The report, “Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability,” was released at the 2014 Ceres Conference in Boston. In addition to assessing the sustainability efforts of companies, the report provides information to shareholders about how the companies in their portfolios are performing in key areas, such as disclosing material issues and engaging with stakeholders, according to Ceres.
“This report is critical for investors because it reveals how well-prepared – or in many cases, how poorly prepared – individual companies are to thrive in an economy being profoundly shaped by sustainability risks and opportunities,” said Anne Stausboll, CEO of the California Public Employees’ Retirement System.