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CORPORATE SUSTAINABILITY
A New Frontier
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DEFINITIONS
 Sustain
– To give support to
– Support the weight of
– Keep up or prolong
– To bear up under

 Sustaining
– Aiding in the support of an organization through
a special fee (sustaining member)

 Sustained yield
– Production of a biological resource under
management procedures which insure
replacement of the part harvested by regrowth
or reproduction (ca. 1905)
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What is Sustainability?

 “Meeting our society’s needs in ways that

don’t compromise the ability of future
generations to meet theirs.”

 “At its core, sustainability is about being

responsible with resources – people, land,
energy, water, materials and capital.”

Clark S. Davis, Vice Chairman – HOK, “A Green Convergence: Linking Environmental and
Organizational Sustainability,” Horizons, RubinBrown, Spring 2009.
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What is Sustainability?

 “The word sustainability is all too often confused with

simple survival in challenging economic conditions …”

 “Now is the time for the forward thinking

organization to assess the market, look at
competitors and evaluate its long-term plan.”

 “Keys to sustainability are customer satisfaction and

satisfaction of your personnel.”

John F. Herber, Jr., Horizons, RubinBrown, Spring 2009.

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Drivers of Sustainability
Economic considerations 74%

Ethical considerations 53%

Innovation and learning 53%

Employee motivation 47%

Risk management/reduction 47%

Access to capital/shareholder value 39%

Reputation or brand 27%

Market position/share 21%

Supplier relationships 13%

Cost savings 9%

Improved government relations 9%

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Stakeholders
U.S. Public Organizations
 Financial  Regulatory
– Shareholders (Institutions - – SEC
– IRS
-- Individuals)
– Occupation Health and Safety
– Bond holders – FDA
– Banks – EPA
– Accounting standards (FASB, IASB,
– Employees (including PCAOB)
unions) – FCC
– Other capital sources
(venture capitalists)  Political
– Federal government
– State & local governments
 Supply chain
– International governments
– Customers – United Nations
– Alliance partners – EU
– OPEC
– Direct suppliers
– NATO
– Upstream suppliers
 Social
– Contractors – Local communities
– General public
– Academia
– Charitable organizations
– Environmental & social organizations
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Corporate Sustainability Reporting (CSR)

 Beginnings – highly unstructured

 1997 – Global Reporting Initiative
– Amsterdam-based nonprofit organization
– Increased rigor and comparability
• Extends from crafting a CSR to specific performance indicators
• Primary areas
 economic, environmental, social performance (labor practices)
human rights, society, and product responsibility
 Strongly supported and implemented in Europe
– Currently in Version 3 of Global Reporting Standards for CSR

www.globalreporting.org
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Profile of CSR
Sustainability Reporting Guidelines
(Version 3)

 Strategy and analysis

 Organizational profile
 Report parameters
 Governance, commitments, and engagements
 Management approach & performance indicators
– Reporting on trends
– Use of protocols
– Presentation of data
– Data aggregation
– Metrics
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Sustainability Reporting
Expanded Listing

 Integration to strategic planning – What is “strategic management?”

– External orientation
– Focus on strengths
– Prepare for unknown developments
• Business Continuity Planning
• Disaster Recovery
• Data backup
– Ability to adapt

 Economic/financial
 Environmental
 Social performance (labor rights)
– Compensation and benefits
– Diversity
 Human rights
 Products & services
 Product responsibility
 Society (overall impact)
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CSR
ASSURANCE STANDARDS

 Purpose = creditability of reports

 Flexible approach
– Internal systems (including internal audit)
– External assurance (published conclusions on
quality of the report and information contained)
 Processes for preparation of report
 Assess validity of quality of performance by organization

• Professional assurance providers (including but not

limited to CPAs)
• Stakeholder panels
• Others
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Qualities of External Assurance

 Competent external groups or individuals

 Systematic, documented, evidence based approach
 Assessment of reasonableness of CSR performance
evaluation
– Quality of data
– Selection of items covered
 Completed by individuals independent of organization
or stakeholders
 Report follows GRI Reporting Framework
 Results in written, publicly available opinion
– Also includes statement assurance provider about
relationship to the organization
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Final Thoughts

“… leading companies view social and environmental

responsiveness as an asset and an opportunity,
not as a liability or cost. They recognize that an
investment in the structures and systems to
ensure strong social and environmental performance
often pays dividends in terms of improved process
and production quality, improved production
efficiency and yields, improved innovation, lower risk,
improved reputation, and increased profitability.”

Marc. J. Epstein, “Implementing Corporate Sustainability: Measuring and Managing Social and
Environmental Impacts.” Strategic Finance, January 2009
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Final Thoughts
Continued

 “A lean strategy is the relentless pursuit to eliminate

waste in all business processes.”
– Traditionally used on the “plant” floor
– Today, throughout the organization

 “Companies that have implemented lean are finding

sustainability initiatives an easy extension of this
philosophy.”

Mike Lewis, Horizons, RubinBrown, Spring 2009.

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Examples of CSR

 Starbucks
– Reports have been issued since 2001
– An extensive CSR report
– Follows GRI guidelines (Version 3)
– Includes prior goals and performance indicators
– Includes independent assurance report
• Moss Adams, LLP (Accounting and Consulting firm)
 Since 2002
– Establishes 2015 goals

http://www.starbucks.com/sharedplanet
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Examples of CSR
 Royal Dutch Shell
– Reports have been issued since 1997
– An extensive CSR report
– Follows GRI guidelines (Version 3)
– Includes prior goals and performance indicators
– Assurance
• Internal controls established to validate
information
• External review committee report included in
the report (estab. in 2005)
Objective is to insure report is balanced,
relevant, and responsive
Independence is not clear

http://www.shell.com/home/content/responsible_energy/sustainability
_reports/dir_shell_sustainability_reports.html
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Examples of CSR

 Others