Growth Strategies

Public Companies Earn Poor Grades in Sustainability

More U.S. companies are tying executive compensation to sustainability targets, but efforts to reduce carbon emissions and use renewable energy are...
Public Companies Earn Poor Grades in Sustainability

While many U.S. publicly held companies are integrating sustainability into their decisions and business systems, some interest groups say they are not moving fast enough. A new report from nonprofit group Ceres and research firm Sustainalytics finds that in some areas companies aren’t taking sustainability concerns very seriously.

A story by Fast Company on Wednesday listed a number of disappointing data points about the sustainability efforts of 613 of the largest U.S. public companies. For example, only one in three companies told Ceres that they have target deadlines for reducing their carbon emissions, and only 6 percent have quantitative targets for increasing their use of renewable energy sources.

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Many companies in water-intensive industries, such as beverages, are also not doing enough to address water risks, especially in “stressed regions,” the report said. In addition, very few companies have formal programs to “invest in and promote sustainable products and services” they produce. 

sustainabilityThe good news in the report is that some companies have made substantial progress in other areas of sustainability. Nike, for example, is an outlier in integrating sustainable design into product development and recently introduced a “materials sustainability index” for the fashion industry; Hewlett-Packard is exemplary in climate and energy initiatives; and Coca-Cola has made big strides in water efficiency.

On a broad scale, Ceres found that 58 percent of companies have human-rights standards that suppliers must meet. Forty percent of the companies also said they were enlisting employees directly in sustainability efforts.

One of the most surprising findings to the Ceres study was related to the compensation of top executives. Almost a quarter of the companies link executive pay packages to sustainability performance, up from 15 percent in 2012. Ceres said the increase largely came from industries that have to follow strict environmental and safety standards. When it comes to voluntary sustainability performance targets, like greenhouse-gas emissions reductions, executive compensation was linked at only 3 percent of the companies.

Finally, Ceres said that boards of directors are not taking enough responsibility for sustainability efforts — boards oversee sustainability performance at 32 percent of the companies, up from 28 percent in 2012.

Source: Are The 613 Largest U.S. Public Companies Actually Working On Sustainability? | Co.Exist | ideas + impact

Image: Arnold Paul, cropped by Gralo, GNU Free Documentation License