Creating more sustainable businesses will pave the way to a better economic future overall. Although responsible business practices that respect the environment and integrate positive social practices haven’t always been first and foremost on many investors’ minds, more and more long-term shareholders see the important connection. Sadly, most corporate managements are way behind the curve on this common sense, even survivalist, strategy. Ceres, a sustainable investment advocacy organisation, held its 2012 conference this week: “Igniting Innovation, Scaling Sustainability.” In addition, and in conjunction with environmental, social, and governance (ESG) research firm Sustainalytics, Ceres released a report revealing 600 publicly traded companies’ sustainability progress — or lack…
You can continue reading this story now by entering your email below
Creating more sustainable businesses will pave the way to a better economic future overall. Although responsible business practices that respect the environment and integrate positive social practices haven’t always been first and foremost on many investors’ minds, more and more long-term shareholders see the important connection.
Sadly, most corporate managements are way behind the curve on this common sense, even survivalist, strategy.
Ceres, a sustainable investment advocacy organisation, held its 2012 conference this week: “Igniting Innovation, Scaling Sustainability.” In addition, and in conjunction with environmental, social, and governance (ESG) research firm Sustainalytics, Ceres released a report revealing 600 publicly traded companies’ sustainability progress — or lack thereof.
Moving forward in the new century
First things first: despite some heartening areas of corporate progress, there’s still a long way to go in constructing what Ceres has called “the road to 2020” and the creation of the “21st Century Corporation.” Ceres’ threw down the gauntlet in 2010, outlining the importance of corporate strategies that allow for survival and success in a low-carbon, resource-constrained future economy.
- Why we might be wrong about Bernie Madoff
- ASX gold stocks are getting hammered
- 4 ASX stocks that jumped more than 15 per cent last week
Ceres and Sustainalytics point out the benefits of better sustainability processes and planning from both economic and social standpoints: “We see it as a world of opportunity for companies to improve competitiveness, realise large savings through energy efficiency, invest in their workers, strengthen their supply chains and, in many sectors, reap the benefits of the enormous investment opportunities in clean technology and clean energy.”
These moves sound like perfect common sense. However, common sense is not so common, as the old saying goes, especially when so many corporate managements and boards are too often stuck on this quarter or next quarter alone.
Unfortunately, two years in, a measly 26% of the 600 corporations evaluated have integrated sustainability into their governance and management processes. Only a quarter are disclosing details about supply-chain monitoring and performance, and just a third are setting specific goals for slashing greenhouse gas emissions.
Hall of fame
Although it’s clear many corporations are just starting out or remain clueless about the importance of long-term sustainability planning, some companies are ahead of the game in integrating these concerns into their business plans. The report called out Intel (Nasdaq: INTC) and Alcoa as two of the 157 companies that have proven themselves trendsetters for their overall governance strategies on sustainability.
Some highly specific areas are either relatively weak or relatively strong in terms of corporate action and attention.
Nearly half the evaluated companies have some kind of supplier code in place. On the other hand, only 10% of the 600 companies specifically reference International Labor Organisation guidelines. Nike (NYSE: NKE) and Hewlett-Packard (NYSE: HPQ) are among the 25% of the companies that publicly disclose supply-chain monitoring and performance information.
On the other end of the spectrum, a woefully small percentage of the companies ranked address human rights issues in a systemic way. Only 13% gained Ceres’ highest “Tier 1” or “Tier 2” rankings on this metric, which evaluates policies covering discrimination, working conditions, and other human rights issues. 3M (NYSE: MMM) , General Electric (NYSE: GE) , and Hess were among the very few lauded on the human rights measure.
Although only a third of the companies evaluated have specific goals for slashing greenhouse gas emissions, there is some good news. Nearly half — 47% — of the companies are at least making some progress in cutting electricity usage, using renewable energy resources, and increasing energy efficiency.
Looking for leaders
According to the data gathered by Ceres and Sustainalytics, very few corporations are leaders in sustainability measures. That’s unfortunate, and doesn’t bode well for a healthy economy or healthy investments in the far-flung future.
Given America’s reputation for ingenuity, American corporations can do better than this, and hopefully this data will spark more movement by more companies in these areas.
As for those of us who are investors, let’s keep a close eye on whether our stocks show signs that they’re ready for the new century. If they’re not, they may not make it to 2020 and beyond.
If you’re looking in the market for some high yielding ASX shares, look no further than “Secure Your Future with 3 Rock-Solid Dividend Stocks”. In this free report, we’ve put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.
The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691).
A version of this article, written by Alyce Lomax, originally appeared on fool.com