Three trends that will shape corporate sustainability in the future

by | Feb 15, 2017 | Blog

Phots: Flickr – mattwalker69

If one thing is constant in our modern world, it is that we are constantly changing.

The same can be said for the field of corporate sustainability. It feels like every day there is a new framework, a new ranking, a new concept that promises to change the field. What are the next generation frameworks and ideas that will shape the strategies of corporate sustainability leaders over the next 5 or so years? Looking into our crystal ball, we’ve identified a few – what do you think?

1. Beyond science based GHG targets

One trend gaining traction in the field of corporate sustainability is setting science based targets- GHG reduction targets (those in line with the level of decarbonization required to keep global temperature increase below 2°C compared to preindustrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)). Already this year, a number of companies have set new goals and strategy under the Science Based Targets Initiative (SBT), including Walmart, Tetrapak and Kering. While there is still a long way to go before this concept is commonplace, we’re looking to see what’s next.

  • Land and water targets: WRI and Mars Inc. have worked together to develop new science based targets around water and land use. Employing the SBTs GHG methodology, the targets into account the latest science on theglobal carbon budget, water stress and other ecological limits.[1]
  • Social impact goals: At the heart of SBTs is a desire to set goals that are based in fact and backed up by research. In the future, we expect to see this rigor applied to companies’ social as well as their environmental goals. As an example – research shows that the most gender diverse companies are 15% more likely to outperform the least gender diverse companies, while the most ethnically diverse companies are 35% more likely to outperform the least ethnically diverse.[2] In the future, will we see companies setting goals based on such research, aiming for the workforce balance that is show by research to correlate to higher performance?

2. Matrixed approach to impacts

In how companies set sustainability strategy and goals, organize their reports or communicate with stakeholders, ESG topics are often presented in silos. In particular, environmental issues are presented in isolation from their related societal impacts. But how companies understand and communicate on these topics is changing – a more complex, matrixed approach is emerging.

For example, the circular economy is most often presented as a framework for reducing use of non-renewable resources, including materials and energy. This model keeps products and materials at their most productive for as long as possible, circling what would have been “waste” back into a circular manufacturing cycle. But, the circular economy isn’t just about reducing resource use, it is about improving social and economic outcomes as well. This new model opens up new service economies in product repair and refurbishment and raises the income potential from waste collection and processing. By some estimates, potential revenues from recycled e-waste in the EU could total more than two billion Euros (2014 estimate).[3] And, of course, with less waste comes less environmental degradation, particularly in those communities that are often the recipients of this waste – such as China which, according to United Nations data, receives about 70% of electronic waste globally.

3. Radical transparency to radical collaboration

Over the last several years, we’ve heard a great deal about radical transparency – the idea that companies, rather than limit their communications to carefully crafted annual or quarterly sustainability publications, would throw open their doors and provide stakeholders with real time updates on the progress and performance of their sustainability programs. As an example, since 2013, H&M has published a full list of its suppliers down to Tier 2 fabric and yarn suppliers. The move was made to demonstrate that H&M has worked hard to develop transparent, strong relationships with suppliers, and the company intends to update the list every three months. This drive toward greater visibility into supply chains and operational performance is leading to new innovations that hold real promise – the new platform, “Trase” (TRAnsparence for Sustainable Economies) aims to bring “radical transparency” to global supply chains, tracking commodities from producers to end purchasers.

Over the next three to five years, we expect this trend toward greater openness and transparency to morph into what we are calling “radical collaboration.” In the quest for faster change, better results, more impact, companies will find new ways to partner with others to solve big challenges. The SDGs are a first step in this direction – providing common goals for multi-sector actors to rally around. Particularly as companies move into parts of the world with lower purchasing power and more constraints, we’ll see big corporations partnering with social entrepreneurs to learn how to do more with less and to innovate for new use cases. These collaborations will be bolder, more strategic and more integrated into the business than ever before, with a high potential for impact

What do you think will be the major trends shaping the future of corporate sustainability? Share with us @Context_Group on Twitter!

 

[1] http://www.wri.org/blog/2016/10/how-mars-and-wri-developed-science-based-sustainability-targets-climate-land-water

[2] http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters

[3] https://www.elsevier.com/atlas/story/planet/is-there-a-future-for-e-waste-recycling-yes,-and-its-worth-billions

Sustainable Development Goals: The New Corporate Holy Grail?‬‬

by | Feb 10, 2017 | Blog

End poverty and hunger. Educate every child. Promote decent work for all. Utopian? Yes. Impossible? No.

At least not according to some of the world’s leading companies and best-known brands. Somewhat surprisingly, given the lofty ambitions involved, they are embracing the 17 UN-led Sustainable Development Goals, adopted by leaders from 193 nations in 2015.  

 

While governments are responsible for national efforts to achieve the SDGs (and their 169 targets) by 2030, global corporations are also throwing their resources and influence into this unprecedented effort to solve the world’s social and environmental challenges. Several present and past Context clients are among those reporting or exploring how their sustainability and business strategies support the SDGs (also known as Global Goals). These early adopters view the goals as a way to marshal their approach to sustainable development, engage socially-conscious Millennial employees and potentially gain business benefit. For those who may like to join them, here is a primer on the state of play.

‪Who is on the bandwagon?

Unilever, PepsiCo, Sodexo and HP are among sector leaders incorporating the goals in their reporting, sustainability programs and/or business strategy and development. H&M, SAB Miller and Microsoft are members of the UN SDG Fund’s Private Sector Advisory Group. (The goals will cost a hefty $3 trillion a year to implement).

What approach are they taking? 

This varies significantly. Some companies emphasize and act on the Global Goals that tie closely to their products and operations. PepsiCo, for example, has committed to supply clean water to 25 million people in the world’s most water-stressed areas, supporting Goal 6 – clean water and sanitation for all. Others, such as HP, are starting out by mapping their business and sustainability activities against the SDGs for reporting purposes.

The most ambitious are tying their business strategy and vision directly to the goals framework. Beer maker SAB Miller, which recently merged with Anheuser-Busch InBev, compressed the 17 goals into five material sustainable development priorities for its business.

Unilever’s Sustainable Living Plan business strategy supports the SDGs, and the company links brands to specific goals. Lifebuoy soap, for example, aims to improve the hand-washing habits of 1 billion people by 2020 reducing childhood disease and death. Says CEO Paul Polman, “Every business will benefit from operating in a more equitable, resilient world if we achieve the SDGs.”

‪

How can interested companies learn more?

 

  • The UN Global Compact, a business forum, has produced actionable sector-specific briefs for each SDG, starting with the energy, food and beverages, financial services, healthcare and transportation sectors, among others. Corporate leaders looking to advance the SDGs through collaborative innovation can join Global Compact LEAD.

 

  • The SDGBusinessHub, run by the World Business Council for Sustainable Development, links to resources, tools and case studies.

 

  • Ethical Corporation has enlisted insights from sustainability leaders at Johnson & Johnson, Walgreens Boots Alliance and ING, for a big picture brief on integrating SDGs into business operations.

 

  • Contact us! Context is working with clients to orient their sustainability priorities and efforts around the global SDGs framework in bespoke ways that make sense for their business.

Telling the story of climate change

by | Nov 16, 2016 | Blog

Photo: Noemí Jiménez

Telling Story Climate Change

Our Associate Ashley delves into the age old question: what makes sustainability communication effective and engaging?

At Context, we know that progress on sustainability doesn’t happen by accident – it requires critical analysis, detailed strategies and coalition building across sectors and nations.

This week, global leaders are meeting in Marrakesh to determine how we move forward on climate change as a global community. They will review scientific analysis, produce reports and draft detailed policies. But what is the role of creative communications to educate, inspire and galvanize audiences on these topics? And how can companies leverage storytelling to gain support for their own sustainability efforts?

On Monday, we explored this very topic with the team behind National Geographic Channel’s Emmy Award-winning series, Years of Living Dangerously. Following an exclusive advance screening of an upcoming episode, our clients and friends were treated to a discussion with Executive Director, David Gelber and Director of the #PutAPriceOnIt Campaign, Page Atcheson. What emerged were a few key insights about how to make big, messy sustainability topics relevant and actionable for everyone, not just the experts.

 

Keep it simple

Years of Living Dangerously uses celebrities as citizen journalists to “ask the questions an intelligent lay person would ask.” In one episode, The Daily Show’s Aasif Mandvi travels to wildlife preserves in Kenya to see first-hand the impacts on endangered species; in another, actor Ian Somerhalder embeds with leading ocean scientists to investigate the future threat of superstorms. The narrators become translators, interpreting and delivering complex information in simple, clear language that is appropriate for the audience.

 

Connect emotionally

The best stories tug at our heartstrings and take us on an emotional journey. Years of Living Dangerously puts climate change in context by focusing on the experiences of real people. You would be hard pressed to find someone who isn’t touched by conservationist Nora Njeirini’s pain in watching elephants that she has worked with for thirty years die from extreme drought, or the angst expressed by families in low-income Miami as they see rising tides slowly encroaching on their neighbourhoods and homes. Telling the story of climate change through these human voices makes the topic tangible and compelling in a way that no chart or graph can.

 

A little laughter goes a long way

Climate change can seem like hopeless stuff. If you aren’t careful, audiences will reach their limit of “doom and gloom” and stick their fingers in their ears. Whether its Aasif Mandvi’s reaction to combing a mouse to collect fleas, or Jack Black’s series of tie-dyed, animal themed t-shirts, Years of Living Dangerously punctuates each episode with moments of laughter that keep audiences sticking around to hear the whole story.

 

Provide solutions

In the end, all of us are left with one question on climate change – “what can I do?” Whether it’s the #PutAPriceOnIt campaign, transportation innovations like electric and automated vehicle technology, or efforts to put a stop to illegal deforestation, Years of Living Dangerously shines a light on solutions that are having a real positive impact. Doing so leaves audiences with a sense of hope and a call to action.

 

Years of Living Dangerously stands as a reminder not to underestimate the power of strategic and effective communications. After the screening and discussion we’re once again fired-up and ready to tackle the future of climate change, one well-told story at a time!

 

_______________________________________________________________________________________________

 

Ashley has been interning in our New York office since late September. Though she has interned in the nonprofit, government and financial sectors, she has found her true passion in corporate sustainability. In May, Ashley received her undergraduate degree in Environmental Science and Policy with a minor in Cultural Anthropology. She plans on continuing to pursue her interest in sustainable solutions in the private sector and eventually earning a Master’s Degree.

 

 

To assure or not to assure, that’s the CR question.

by | Jul 28, 2016 | Blog

10 things you need to know about third-party assurance and deciding whether or not your company should get its corporate responsibility report assured.

It’s that time of year again. While we’re still feeling the summer heat, vacations are winding down and corporate responsibility (CR) leaders are thinking ahead to the fall. In late summer, we tend to get some questions, from novice and veteran reporters alike, about assurance. Unlike with financial disclosures, there aren’t any standards or requirements for assurance of CR disclosure, and there are many different ways to go about it.

GRI has a guide explaining the ins-and-outs of external assurance for sustainability reporting, but deciding whether or not to go through the process can be difficult. Companies can choose to assure one or two key performance indicators, every aspect of their reports, or anything in between. (Or forego it altogether). What’s a CR manager – who is charged with communicating to diverse audiences, improving performance, and managing a budget – to do?

We’ve started to look at some trends in CR assurance that may be useful.

Who’s getting assured?

  • Big firms: Larger firms and firms with higher capital expenditures (as a proxy for long-term planning or investments in projects with environmental impact[1]) are more likely to assure their reports. In 2015, 63% of the world’s 250 largest companies invested in some level of assurance[2] .
  • Firms with formal goals: Firms with clear CR goals are not only more likely to issue CR disclosures, but are also more likely to externally assure. Both disclosure and assurance are intended to show superior CR performance[3].
  • European firms: Of the world’s largest firms, all French and British companies assure their carbon data (it is mandatory in the UK that firms include GHG disclosures as part of their Annual Report and Accounts). 89% of German firms assure carbon data. This is compared to a global average of 62% and only 41% of US firms who assure carbon data[2].

What are they assuring?

  • Assured reports tend to contain “just the facts” information. They also focus less on community and social activities and more on measurable environmentally impactful activities[1].
  • Carbon data is the most common CR topic to be assured. Of firms who report carbon metrics, 62% get it assured[2].
  • Of companies who report CR information in their annual report, 50% have their whole annual report with CR information assured. 34% have specific CR indicators assured, 5% have only specific CR chapters assured, and 11% assure a combination of specific chapters and indicators[2].

What are the benefits?

  • CR assurance increases the likelihood of issuing firms being included in the Dow Jones Sustainability Index (DJSI)[3] .
  • Although not required, CDP gives points for data verification. There are specific verification requirements in order for a firm to qualify for the CDP A-list.
  • There is a positive association between CR assurance and both the number of socially responsible investments (SRI) and the percentage of SRI share holdings[3]. But keep in mind, correlation does not necessarily mean causation.

Who does the assuring?

  • Major accounting firms provide third-party assurance to two-thirds of the companies who decide to assure[4]. Boutique sustainability and engineering firms can also provide assurance. Researchers have not found any evidence that the type of assurer affects DJSI or investor perceptions[3].

 

So what should I do?

You might still be asking what the right approach for your company is, or whether to pursue any assurance at all. Context’s advice is to take a look at your audiences and understand their needs. Stakeholder engagement can be a great way to get the pulse from investors, NGOs and customers, but you can also start by reaching out to a few friendly voices.

We recommend asking yourself, and your team, a few questions:

  1. What are the most important audiences for your report? What do they ask us about or look for in our report? It’s important to know how your stakeholders use your report whether you’re thinking about assurance or not.
  2. Which kinds of information are our stakeholders looking for assurance on? If it’s only a few topics, consider prioritizing key performance indicators or focusing on your most material issues. You might also consider assuring different kinds of data from year to year as a quality check on your measurement systems.
  3. Which stakeholders are looking for assurance and why? How does it influence our relationships with them? You may go different directions if your major investors or customers require it or if it’s just one factor among many.
  4. What are the trade-offs? Assurance is an investment of time and money and choosing the right approach will help you maximize both.

 

Sources and additional reading:

1

 Not All CSR Reports are Created Equal: Report Quality and Voluntary Third-Party Assurance

2

 The KPMG Survey of Corporate Responsibility Reporting 2015

3

 Voluntary External Assurance of Corporate Social Responsibility Reports and the Dow Jones Sustainability Index Membership: International Evidence

4

 The external assurance of sustainability reporting

 

________________________________________________________________________

Co-author Monica Rowand

Monica is a summer associate intern in Context’s New York office. She is an MBA student at the University of Colorado, Boulder (CU) and president of the school’s Net Impact chapter.  She works as the program manager for Ralphie’s Green Stampede, CU’s award-winning sports sustainability program. CU uses fan engagement campaigns made possible by corporate partnerships to encourage behaviour change in its university fan base. Before joining the Green Stampede, Monica ran outreach and education programs at the non-profit organization Global Green USA.

 

Demystifying the Future of Materiality and Reporting

by | May 5, 2015 | Blog

Demystifying the Future of Materiality and Reporting

Context Conversation: April 25, 2015

Speakers:

Curtis Ravenel, Global Head, Sustainable Business & Finance, Bloomberg L.P.
Hilary Irby, Managing Director Global Sustainable Finance, Morgan Stanley

Last Tuesday sustainability experts gathered for a Context Conversation in our New York office to unpack and understand the future of materiality and sustainability reporting.

The discussion featured guest speakers Curtis Ravenel of Bloomberg L.P. and Hilary Irby of Morgan Stanley.

The discussion covered our shared experience navigating the sometimes confusing waters of reporting standards, including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC). Each spoke as reporting practitioners and industry contributors, and shared their perspectives on future reporting developments and requirements.

Participants from the financial services, healthcare, aerospace, food and beverage, and retail sectors weighed in and shared their own insights, pain points and questions.

Key takeaways

There were a few key takeaways from the discussion. First, as the landscape of materiality and sustainability evolves, companies need to understand the benefits and drawbacks of each reporting framework. Ravenel described SASB as the floor of materiality reporting, and GRI the ceiling, each one aimed at different audiences.

SASB aims to set the bar for minimum reporting in each sector based on the sustainability issues of greatest importance to investors and companies. GRI, on the other hand, aims to suit a wide range of stakeholders beyond the investment space, including employees, NGOs, communities, suppliers, media, academics, and more.

Both speakers agreed that for the foreseeable future, leading companies will likely be using a combination of both of these standards in order to satisfy the information sought by various audiences. Irby added that conducting a strategic materiality analysis looking at both standards will help companies enhance their sustainability overall and streamline reporting to focus on the issues most material to their businesses.

Second, Ravenel and Irby agreed that, on the whole, the proliferation of standards is a good thing as this means that the space is becoming more competitive, thus driving efficiency in reporting. In the long term, the speakers were optimistic that these standards will drive toward improving the consistency of reporting, and will increase awareness across audiences of which issues will drive the greatest impact. In the meantime, there remains a need for GRI and SASB, along with other emerging standards like the IIRC, to co-evolve and to develop a synergistic approach.

Finally, the discussion revealed that the audiences who are using this information are becoming increasingly sophisticated. Companies need to focus on effectively presenting sustainability internally and externally as a core strategic business driver, and not just a way to save costs or do the right thing.

Help integrate

CSR professionals should be working to help integrate sustainability into areas like product development, service enhancement, brand differentiation, and innovation. This will support materiality analyses and help the conversation evolve internally. With a stronger internal understanding of what’s most important, external audiences will begin to see sustainability as embedded in the company’s core business, making it easier to differentiate the company’s activities to a wider audience.

Future

Looking to the future, Irby and Ravenel agreed that it’s very likely we will see the integration of sustainability factors into regulated financial reporting. SASB and IIRC lay out a good baseline for companies to start preparing for this inevitable shift, but there is still much room to think about the ways companies should present sustainability storytelling to key stakeholders beyond the Form 10-K.

In addition to a high likelihood of regulated sustainability reporting, we expect to see companies increasingly communicating sustainability stories through social media, websites, and other interactive, engaging digital channels.

All in all, in a rapidly evolving materiality and reporting field. The future is bright!

In Context Spring 2015

by | Apr 2, 2015 | Blog

In Context Spring 2015