Accounting & Tax

Bottom-Line Sustainability Reporting

FedEx Kinko's and Bristol-Myers Squibb are just two of the many companies that are learning the value of sustainability development and reporting.
Russ BanhamOctober 18, 2004

The idea that a company should conduct its business in ways that benefit not just shareholders but the environment and society, too, is called sustainability, or sustainable development. FedEx Kinko’s is one of roughly 500 organizations that issue sustainability reports following the strict guidelines of the Global Reporting Initiative (GRI), an independent institution founded in 1997.

“To have a sustainable economic model — in other words, a business — one must realize that it is tied to the ecological systems that provide natural resources, clean air, and potable water to operate that business,” says Larry Rogero, director of environmental affairs for Office and Print Services at the Dallas-based company. “If people in regions of the world where you do not currently operate lack access to clean drinking water — and right now there are 2 billion people denied this fundamental right — or they lack a stable social fabric that includes law, order, and appropriate governance, then you will be closed out in terms of expanding your business into that market.”

Rogero adds that sustainability reporting is “bottom-line financial stuff. Businesses will not be sustainable without a commitment to the environment and human rights,” he argues.

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Bristol-Myers Squibb’s 2004 sustainability report (also written to GRI guidelines) lists goals it intends to reach by 2010, such as reducing water usage by 10 percent from its 2001 baseline year. In countries where water resources are severely stressed, the New York-based pharmaceutical company hopes to reduce usage by 20 percent from its 2001 baseline year. Bristol-Myers Squibb is further striving to reduce total greenhouse gas emissions by 10 percent from its 2001 baseline year, nonhazardous waste by 20 percent from its 2002 baseline year, and off-site hazardous waste disposal by 50 percent from its 2001 baseline year. These are but a few of the company’s plans. The most recent review was conducted by ICF Consulting Services LLC, which does a full audit of the annual report.

Andrew R.J. Bonfield, senior vice president and CFO of Bristol-Myers Squibb, believes there is business value in sustainability. “Many of the benefits of our sustainability efforts can be calculated, such as cost savings related to energy and waste reduction, and the benefits of protecting the health and welfare of employees and preserving the environment,” he says. “While there are other benefits that are more difficult to calculate, they are vitally important because they are core to our value as a company whose mission is to extend and enhance human life.”

Andrew Savitz, a partner in the governance risk and compliance group at PricewaterhouseCoopers, agrees that there is bang for the buck invested in sustainability development and reporting. “If you can drive down your occupational injuries, you will save a lot of money in terms of insurance and workers’ compensation,” he says. “If you are not measuring these on a systematic basis, you cannot reduce these costs. Same thing with measuring employee satisfaction [a GRI performance indicator]; turnover is a huge cost, since people are the heart of a service company. Nowadays, if you don’t have a policy on human rights or child labor overseas, the black eye will affect your stock price and the price of capital.” (For more, see “How Green Is My Company?”, part of CFO.com’s special report on corporations and the environment.)