February 3, 2012
For most businesses, the question increasingly is not whether or not you should do a sustainability report. It has become: “Are you doing ongoing sustainability reporting and integrating your environmental efforts with your finances?”
For waste and recycling companies, it’s also increasingly becoming a way to show your customers how they can achieve those sustainability goals with your unique position as an environmental business.
“With the explosion of information services, I think it’s much better for the company if they take control of the information being disclosed and tell their own story,” says Amy Augustine, director, corporate program for the Boston-based Coalition for Environmentally Responsible Economies (CERES), a non-profit organization that promotes corporate sustainability, regarding the reasons to do a sustainability report. “It’s a way to really educate investors and stakeholders on how they progress.”
Darcy Hitchcock is co-founder of the Portland, Ore.-based International Society of Sustainability Professionals. “You get some organization to your sustainability efforts. It builds some accountability,” she says.
Larger companies often exert influence on their supply chain, says Hitchcock. “If we’re doing it and you’re one of our suppliers, then you need to do it too.”
Atlanta-based Coca-Cola Co. is one those companies creating a ripple effect. Coke estimates that the sustainable work done by one of its employees affects 10 further down the supply chain. “One of the things the reporting does is tell the power of that economic multiplier on a global scale,” says Allyson Park, vice president, corporate external affairs for the company.
“We do it for transparency,” she says. “What we’re doing, how we’re doing it, who we’re partnering with, challenges we have.”
It can help open up economic ideas and reveal new markets, innovation and cost benefits. “You end up saving a lot of money in ways you didn’t expect,” Hitchcock says. It can also be a management tool to help the team improve performance.
Waste Management Inc. approaches corporate sustainability reports as both a waste generator and an environmental services provider. “I’m trying to tell the world what we really do and how that positively impacts the environment,” says Lynn Brown, corporate communications vice president for the Houston-based company. “Sustainability is an ideal place to get in-depth on those things you can’t in a press release or an interview.”
Sustainability issues are of particular interest to the regulatory community, adds Sue Briggum, vice president of federal/public affairs for Waste Management. “It’s very important they know about it,” she says.
And for waste and recycling companies, sustainability reports can serve as a valuable tool to get business. Waste Management has set four sustainability goals to reach by 2020: Triple the amount it recycles; quadruple the waste-based energy it produces; improve fleet efficiency by 15 percent; and achieve 25,000 acres of protected wildlife habitat (which it has already surpassed). “If you look at each of those, they’re relevant to our business – recycling, energy, fleets, landfills,” she says.
The waste industry’s largest company shares its sustainability reports with its national accounts customers and puts them into proposals. “By the very nature of what we do, things that are in a sustainability report are a part of our business,” Brown says.
“In other reports we’re often identified as the partner that helps them increase their renewable energy or recycling,” adds Briggum. “We’re the service provider for other people’s sustainability goals, and we have to tell a broader story than some of the generators do when we do our reports.”
A Model Report
The gold standard for corporate sustainability reports is the Global Reporting Initiative (GRI). Developed in 1997 by CERES and the Tellus Institute, it is a framework for environmental reporting and an accountability mechanism for environmental conduct.
CERES spun the GRI off quickly as a separate entity. “We thought it was important to have a neutral reach,” says Augustine, noting that the GRI has taken off in popularity in the past four or five years. “Companies are realizing that it does provide a framework to disclose data that is becoming increasingly important to investors and other shareholders.” She says the GRI criteria will continue to be refined going forward.
The GRI is a good cross-reference even if you don’t follow it verbatim, says Hitchcock. It offers several levels of accountability, from audited to non-audited. The Swedish organization Natural Step also provides valid metrics to measure sustainability. Many of those metrics employ a “triple bottom line,” considering economic, environmental and social standards as intertwined concerns. “We strongly recommend using a credible framework for sustainability,” says Hitchcock. She warns that the downside with the triple bottom line is it “only tells you what the buckets are, it doesn’t tell you when the buckets are full.”
If it’s your first sustainability report, it’s not a bad idea to do the first one internally and work the kinks out before you go public, Hitchcock advises. Addressing smaller to medium-sized companies she says, “Figure out who your stakeholders are, what information they want and what’s your impact as an organization.” The degree of rigor associated with a sustainability report depends a lot on size, she says, and ultimately the effort might not be worth it for everyone. “If you are teeny tiny, maybe there’s not a lot of immediate value.”
For its part, Waste Management describes the process as a big team effort, with 100 people providing information or reviewing it. It can foster a team spirit, Briggum says.
It’s essential that the data presented be believable. “The best thing a company can do is have concrete performance metrics,” says Augustine. “Stakeholders have got to see relevant, credible data.”
The worst thing you can do with a sustainability report, all agree, is make it sound like a marketing piece. “It’s all glossy, all pretty, and there’s no information about anything bad they’re doing,” Hitchcock says. “That undermines your credibility.
“It’s so much more credible to say, ‘We’re doing pretty well here. We didn’t do as well here. We just haven’t figured it out yet.’” And don’t think that simply wasting less makes you fully sustainable. “You find a huge range,” she says, “from totally fluff to open and honest and transparent.”
Building on the Basics
About a year and a half ago CERES developed the CERES Roadmap, which establishes 20 expectations for sustainability for companies to implement. Augustine says it identifies four key areas for sustainability management: governance, stakeholder engagement, disclosure and performance. It’s a framework to help embed sustainability within a company’s business strategy.
It’s key to find out what the stakeholders believe is important. Do a “materialty analysis” to help determine what the key issues are for them, Augustine says. At Waste Management, Briggum says, they get feedback from investors, the community, legislators – a variety of sources. “If you’re listening, you’re getting feedback,” Brown says.
And it can help get things done. As the saying goes, “What gets measured gets managed, what gets managed gets done,” she points out.
Third-party review is a big help. Coke does it. “We have to be transparent and held accountable,” Park says. “Reporting allows our company to do that, especially where there’s a third party.”
Coke’s report has been evolving, Park says, to the point that now it is more than just an environmental report.
“I think it’s important to move from a report to reporting,” she says. Now Coke integrates announcements during the year to make the report more dynamic, so that it has become an almost monthly communication.
Mixing Green with Green
Sustainability reporting is increasingly being integrated with financial performance. “It really has to penetrate every decision you’re making,” Augustine says. Coke is doing a pilot program looking at integrated reporting. “We try to take a very broad view of our business and the impact we’re making and the challenges we have,” Park says.
Coke also is moving toward more customized reporting. The company distributes informational PDFs focusing solely on water, packaging and other components of their business. “One report is not going to be good enough in the future,” she says.
Park also emphasizes the importance of telling a company’s sustainability story across a range of communication mediums, urging the use of new technologies like QR codes and social media, rather than relying on print.
The length of a sustainability report can be an issue, especially when it spans hundreds of pages. Park says the sheer amount of content can be challenging. Hitchcock recommends designing the report so readers can easily see the big picture but also drill down to what they want, as Coke is increasingly doing. Remember that printing a lengthy report violates the very concept of sustainability.
Different approaches can be employed for internal and external use. Augustine points out that early reports were more narrative, but now, performance metrics have become more important. “For employees maybe there’s more of the story,” she says. “But investors focus more on quantitative performance. But there is a balance. Not every story can be told in numbers.”
End Product in Perspective
Brown says that Waste Management employees love the company’s sustainability report. “They use it because it’s a source of pride. It turns them into education ambassadors for us.”
The finished product can also be a valuable reference piece. Briggum says a lot of Waste Management’s customers need to verify work done with the company. And it can open eyes. She says the U.S. Environmental Protection Agency, for example, looked at Waste Management’s report and said, “Wow, we didn’t realize the scope of what you’re doing.”
The investment community is increasingly paying attention to sustainability reports. Last May, CERES worked with institutional investors to send a letter to the Russell 1,000 corporations, calling for additional disclosure of both environmental and financial risk. “These are financial risks as well,” Augustine says. “Investors are definitely increasingly looking at these reports for clear signals on how a company is managing these risks.” Hitchcock says the stocks of publicly held companies that are regarded as sustainability-oriented do 25 percent better financially.
Corporate sustainability reports have helped businesses become better environmental citizens. “I think it’s a good step in the right direction,” Hitchcock says. “That said, just doing sustainability reporting on its own doesn’t get you to sustainability. The question is, are we moving fast enough?”
Park says, “It’s a communication of what we’re doing. It’s not THE thing.”
Waste Management ties its sustainability goals closely to its business. “But there are things in the [sustainability] report that everyone should be talking about, whether you’re Coke, Waste Management or anyone else,” Brown says.
And it’s not all seriousness. Brown says there’s plenty of opportunity for creativity, and it can be a lot of fun.
“Don’t try to be something you aren’t in your sustainability report,” Brown concludes. “It’s about where you are, the goals you set and your progress on that journey.”
Allan Gerlat is News Editor for Waste Age and waste360.com.