Saturday, June 12, 2010

Warren Buffett on sustainability. Not.

I often get asked about how many of the Fortune 500 companies report on sustainability. I haven't seen a definitive number anywhere, so I thought I would check this out myself, perhaps starting with an analysis of the Fortune 100. I was happily working my way down the list, please to find in general that our leading business entities all have some level of CSR reporting, when I came accross Berkshire Hathaway Inc. whose website looks like it was built by a 6 year old some time in the 1920's. This company, as many of you may know, was founded and is run by the 80 year old Warren E. Buffett, the current chairman and CEO, one of the richest men in the world and, apparently, one of the most successful investors of all time. The Berkshire Hathaway company turns over about $30 billion and employs 287,000 people. It owns a long string of Companies, 10 of which are in the insurance sector, and the other 60 or so in a diverse range of sectors including textile and apparel, jewellry, furniture, gas, electricity, steel and many more. And now the moment you have all been waiting for:  ESG, CSR, citizenship, sustainability, responsibility or any from of similar non-financial disclosures are conspicuously absent from any of Berkshire Hathaway's communications. The number 11 company on the Fortune 500 list is transparently non-transparent. Apparently, the company seems to be sustainable, since, from its beginnings in 1965, the book value of the company has grown by 20.3% compounded annually, whatever that means, but it sounds successful. Will the Company be sustainable after Warren Buffett ceases to manage it ? Who knows. But in the meantime, he appears to have led a very successful financial venture. In a A Special Global Pulse Report for the Boston College Center for Corporate Citizenship Corporate Reputation and Social Responsibility Rankings of The Most Respected U.S. Companies 2008, Berkshire Hathaway was ranked 9th out of a total of 203 companies anlysed. These rankings are not based on self-reported corporate information but over 20,000 ratings from people familiar with the company across the United States. What I want to know is: how do they know enough about Berkshire Hathaway to rate its workplace, governance, community contribution and leadership performance? (apparently environmental issues do not count in this index). Hmmm.

Some of the Berkshire Hathaway owned companies do mention CSR, sustainability or even produce a report on CSR.

Clayton Homes has a webpage on giving back, and offers eco-environmentally friendly e-homes. 

but the jewel in the crown of Berkshire Hathaway companies is... tarararara........

Interestingly, there is an opening message from, yes, you guessed it, Warren E. Buffett, though he doesn't say anything remotely connected to the concept of sustainability. The report is a first report and nicely done.

Well, all I wanted to say, really, is that it astounds me that there are still leading, influential, financially successful businesses such as Berkshire Hathaway, with the potential to do so much to engage 257,000 people in over 70 companies in a sustainability mindset and don't. Even some basic things such as a common sustainability charter for all Berkshire Hathaway businesses, or attention to very basic direct impacts would be a good start, let alone the potential to develop business opportunity and advantage.

Is Warren E. Buffett missing a trick here ? Or is he cleverer than most? Is his financial leadership so powerful that it blinds all stakeholders to all other aspects of doing business ? I dont know the answer. But it just makes me a little sad that we don't see sustainability leadership from the direction of the Buffett empire.

elaine cohen is co-founder and co-CEO of Beyond Business, a leading social and environmental consulting and reporting firm. Visit our website at


Unknown said...

Elaine, this is so powerful. It is very much aligned to support something I have been ruminating on for about 10 days now. There are glimmers of a new eco-system of thought emerging around us right now and you are contributing to this wave.

Thank you.

Natalya Sverjensky said...

Hi Elaine, what a great catch! It never ceases to surprise me either, the number of highly influential companies who either make no attempt at CSR communications or maintain extremely basic (yes, childlike) websites that achieve next to nothing. I'm thinking this is one of two issues that are affecting CSR reporting right now, the other being that, often among the companies that are most proactive about CSR communications, the strategies are becoming extremely self-referential. So many companies are only benchmarking based on their competitors' efforts, which means a lot less impact on sustainable development. What do you think?

elaine said...

Thanks Lavinia and Natalya for commenting. Yes, good CSR communications is a tough balance to achieve and it is also an area in which competitive forces play a role. I agree that Companies should be considering impacts first, competition second. But then, I always awas a little naive :) elaine

Unknown said...

What is wrong with the simple website? All the website needs is to convey the messge to people. Don't be fooled by extra decor. Have you learned that already in life? You think that company with a CSR report or some CSR messages means that it cares about CSR. Look deeper. Don't just fish at the surface.

elaine said...

hello lally111,thanks for your important comment. I quite agree that nice websites and CSR reports are not the only way of getting to the true sustainability practices of companies. And I agree there are many sides to every story. However, in the absence of any information about Berkshire Hathaway's CSR practices on their website, and in the absence of any other report that is publically available (after a search), How exacly are we expected to know what is actually happening? I believe a company's accountability demands a certain level of transparency and yes, this is exactly why I look on the surface. What we see what's there, we can probe further. If I see nothing on the surface, I can only assume there is nothing underneath. PLease do point me in the direction of any other information you might have re Berkshire. I would be happy to learn that there is more than meets the eye!

warm regards, elaine

Anonymous said...

Will you be updating this post? Still limited reporting at the Berkshire conglomerate level but check out subsidiaries such as Johns Manville and Lubrizol not covered by this post.

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