Eric Block On Responsible Branding

“In some cases, companies have substantially accelerated and broadened their sustainability efforts. These companies are providing real leadership and demonstrating that sustainability isn’t a luxury, but rather an essential strategy for building long-term shareholder value.”  

In a new research tracking the progress of more than 600 corporations worldwide on broad ranging sustainability measures, Ceres and Sustainalytics are reporting that scientific and economic realities have shifted substantially from just a decade ago challenging companies to innovate and transform.

These are new leadership challenges that rise to the top at companies and demand the attention of top-level executives and Boards of Directors.  Among the findings of the report.

• Boards of Directors are not taking enough responsibility for overseeing sustainability efforts. Thirty-two percent (198) of the 613 companies’ boards of directors formally oversee sustainability performance—up from 28 percent in 2012.

• A growing number of companies are incorporating sustainability performance into executive compensation packages. Twenty-four percent of companies (146) link executive compensation to sustainability performance—up from 15 percent in 2012. Yet only 3 percent (19 companies) link executive compensation to voluntary sustainability performance targets, such as greenhouse gas (GHG) emissions reductions.

• Companies are increasingly engaging investors on sustainability issues. Fifty-two percent (319 companies) are engaging investors on sustainability issues, up from 40 percent in 2012. The three percent (20 companies) in Tier 1 are using multiple tactics to engage investors including the integration of sustainability information into mainstream investor communications, highlighting sustainability performance and innovations at annual meetings, and directly engaging with shareholders on sustainability topics.

• Stakeholders are not consistently involved in the sustainability planning process. Only 36 percent of companies (219)—up from 29 percent in 2012—are disclosing information on how they formally engage stakeholders on sustainability issues. The seven percent (45 companies) in Tier 1 engage stakeholders in the materiality assessment process and disclose the insights gained from stakeholders.

• More companies are actively engaging employees on sustainability issues. Forty percent (248 companies) have some programs in place to engage employees on sustainability issues—an increase from 30 percent in 2012. The six percent (37 companies) in Tier 1 go further by systematically embedding sustainability into company-wide employee engagement.

• Companies are not doing enough to address water risks, especially in stressed regions.  Of the 103 water-intensive companies evaluated, 50 percent assess water-related business risks, a slight decline from the 55 percent in 2012. Only 26 percent (27 of 103 companies) are prioritizing efforts in water stressed regions.

• Additional innovation is needed to drive sustainable products and services.  Of the 419 companies evaluated for this expectation, 14 percent (57 companies) have formal programs to invest in and promote sustainability products and services, compared to 10 percent in 2012.

About the report partners:

Ceres is a non-profit organization advocating for sustainability leadership. We mobilize a powerful network of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy.

Sustainalytics is an award-winning provider of environmental, social, and governance research and analysis. We support investors around the world with the development and implementation of responsible investment strategies. Sustainalytics also partners with institutional investors that integrate ESG information and assessments into their investment decisions.