As a graduate of the University of Waterloo’s Environment and Business program, I was taught that by going green businesses can create value for themselves while benefiting society and the planet. While there are certainly many publications on this subject, it is interesting to look at how far corporate citizenship and sustainability has come since I began my studies almost a decade ago. My old textbooks are almost laughable in many instances. Discussions of proactive environmental actions and taking advantage of the “low hanging fruit” have progressed toward entirely different conversations.
Companies like Interface were sustainability pioneers. Others have taken notice and are moving quickly to become industry leaders. Corporations may represent our best hope of reducing society’s environmental impacts, especially in the face of political gridlock. They possess vast amounts of capital, influence public policy and government, and most of us work for them at some point in our careers.
There are many organizations which track corporate environmental performance and release annual lists of top performers. Of interest to Canadians are lists like the Top 30 Canadian Green Companies by Maclean’s and Corporate Knights’ Top 50 Corporate Citizens in Canada lists. Newsweek provides an extensive review of both America’s and the World’s Greenest Companies, broken down by sector, as well as an embarrassing list of the Least Green Companies. These rankings aren’t perfect (you’d be hard pressed to find companies on these lists that are in the energy or manufacturing sectors which are more difficult to “go green”) but they provide a measure of corporate environmental performance and help consumers make informed decisions.
The emergence of new technologies has certainly helped improve performance during the past decade. When examining those companies featured in the Maclean’s 2012 list, many are taking advantage of new emissions/energy tracking software or the increased ability to recycle what was previously considered waste. Another key motivating factor for green performance is increased public scrutiny. In many highly competitive industries a companies’ reputation can become a significant competitive advantage. Negative publicity, whether it is fines levelled against Plains Midstream Canada ULC for a 2011 spill or Loblaw’s Joe Fresh recent factory collapse in Bangladesh, quickly makes the (social) media headlines and is instantly damaging.
Interestingly, corporate behemoth Wal-Mart is being hailed for its new supplier Sustainability Index. As written by author Alisha Staggs, “With over 100,000 suppliers, Wal-Mart has the ability to use the Sustainability Index to move entire industries to go beyond what is required by law, benefiting consumers, workers and the planet.” These efforts will trickle down throughout the economy and Wal-Mart’s efforts have been praised by the Environmental Defence Fund. Another example is the Home Depot, which has operated its Eco Options program for almost a decade. The rapid adoption of the ISO-14001 environmental management system standard, Fair Trade products, and eco-labels are also proof that business as usual is no longer acceptable for many businesses and their stakeholders.
Professional services provider Deloitte recently released its 2013 Review titled Finding the Value in Environmental, Social and Governance Performance. The Review links harmful environmental incidents and risks to corporate financial performance, stating that “an organization’s environmental, social and governance (ESG) performance can directly and indirectly impact the organization’s market valuation.” Deloitte’s rival PriceWaterhouseCoopers echoes that message and recommends that companies use sustainability to drive growth and value. As managers take note of these reports and relate environmental performance to the value of their enterprises we can expect to see more initiatives such as the Sustainability Index.
One area that companies will look to improve on is Scope 3 greenhouse gas emissions. In May the Greenhouse Gas Protocol released its Scope 3 Accounting and Reporting Standard. Scope 3 are those emissions that are indirectly produced through activities and processes not owned or controlled by the company; therefore they have typically been difficult to track and make GHG reductions. This new standard is touted as being “an important tool in evaluating performance, creating value, and achieving impact in carbon and GHG emissions strategy.”
There are obviously strong arguments surrounding corporate sustainability. This blog post doesn’t take into account the need for introducing ecological economics into business decisions, the issue of constant growth and consumerism, green-washing or the “tragedy of the commons.” There will always be a need for government regulation of some extent and companies cannot be allowed to proceed unchecked.
Two points lend themselves to the argument for corporate involvement in moving society toward sustainability. Unlike governments, companies must respond to the wants of the customer or perish, and customers are increasingly demanding organic, Fair Trade, eco-certified products. GreenBiz.com reports that businesses are struggling to provide customers with the environmentally-friendly products they yearn for. Secondly, if we are to meet our global environmental challenges – keeping CO2 under 450ppm, oceanic pollution, conserving biodiversity, limiting desertification and deforestation – we will need to bring the vast power, knowledge and resources of the business community into the green conversation.
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