Sustainability, innovation, cows, milk and reporting

As I prepare for my favorite event of the Sustainability Reporting year, this time coming up in London on 23rd February 2016, the edie Sustainability Reporting Conference, I always like to get to know some of the companies and speakers who will be taking part in the discussion and enriching our insights into the optimistic yet complex world of sustainability reporting. Coming up this year, our fifth, a fabulous line-up of speakers (again!) from GRI, WSBCD, CDSB, UNGC, Unilever, Nestle, Diageo, Novo Nordisk, Sky, BP, Whitbread, the Crowne Estate, Aviva, Biffa Waste, McNicholas Construction and Aurora Organic Dairy. Don't forget to drop me a note for a 15% discount on registration.

I'll be particularly pleased to welcome Craig Edwards, Corporate Sustainability and Innovation Manager, Aurora Organic Dairy, all the way from Boulder, Colorado. Aurora is the leading producer and processor of retailer brand organic milk and butter in the U.S., operating organic dairies, heifer and calf farms and an organic dairy processing plant. Employing around 550 people, Aurora raises close to 30,000 organic cows, calves and heifers and cultivates more than 10,000 organic acres for fodder crops. In addition, Aurora sources from more than 120 independent farmers who cultivate fodder crops on 70,000 acres of organic farmland. When you think that an acre is roughly the size of a football field, you can imagine that 80,000 football fields makes for quite a lot of organic farmland. If it were not used for farming, I bet it could house quite a few organic ice cream factories. 

Craig will share his experience as a first, and now second, time reporter and those early and never-so-easy steps on the reporting journey. You can read a little about that on the edie.net website in an article about Aurora Organic Dairy from the edie newsroom .

Aurora Organic Dairy was the overall winner in the First Time Reporter Category in the CRRA15 Reporting Awards  for its 2012 Corporate Citizenship Report published in 2013, and has since published a no-less impressive report in 2015. 

In Aurora's 2015 G4 core option report, targets and progress against targets are clearly laid out.

And there's a really interesting life-cycle analysis of organic milk.

Each half gallon of Aurora organic milk generates 4kg of GHG emissions. Cows generate 26% of these emissions.

Craig was kind enough to respond to a few more questions from me. Read on, his insights are refreshing.

How long have you been in your role? What is your background prior to taking this role? 

Craig:  My career is rooted in analysis and strategy, primarily in the financial services sector. After joining Aurora Organic Dairy (AOD) several years ago, I was asked to periodically assist with data and analytics around the company’s long-standing sustainability commitments. My informal involvement soon evolved into a new role, exclusively focused on sustainability and innovation.

What motivates you most?

Craig: Collaborating with passionate colleagues to address complex issues- and knowing that we are uncovering additional opportunities during the process- is incredibly motivating. As we explore potential solutions to achieve AOD’s CSR goals, I find inspiration in the fact that we are also working toward something bigger and unifying on the most fundamental level. 

Your title is "Corporate Sustainability and Innovation Manager" – what's the connection between sustainability and innovation in your view? 

Craig: In our experience, innovation has helped bridge the gap between “business as usual” and true progress. We’ve found that openness to exploring new methods and ideas is an essential element of our CSR journey. Often, innovative thinking within the organization is the first step forward, but we’ve long recognized that we don’t necessarily have all of the answers all of the time. This is why we value our ongoing tradition of partnering with universities, start-ups, and forward-thinking companies. Along with state-of-the-art technology, innovative solutions from these organizations help us continuously improve the sustainability of both our milk plant and farming operations. These sustainability benefits come in the form of greater efficiency and conservation of resources. 

What is your prime motivation for reporting on sustainability? 

Craig: Sustainability has been an important foundation of our business since AOD was founded in the late-1970s as a conventional dairy operator. Our CEO and founder, Marc Peperzak, always held the belief that we must care for our animals, respect our people and conserve our natural resources for future generations. Then we converted to 100% organic in 2003, and at the same time strengthened our commitment to responsible farming practices, animal husbandry practices and employee care programs. For AOD, sustainability reporting is partially about putting our practices, goals and results on paper and sharing them with our stakeholders. But more importantly, during this process of producing each of our reports, we thoughtfully revisit many important aspects of our relationship with our animals, people, and planet- a process that has led to continuous improvement. Finally, we find the reporting process to be an opportunity to listen. We incorporate stakeholder input, through which we discover other opportunities to further improve our overall CSR efforts. Over the years, we have learned that continuous improvement in our practices and transparency in our communications have been the most positive outcomes, and motivations for, publishing our CSR reports. 

What were the key challenges in delivering your 2015 report? How long was the reporting cycle from start to publication? 

Craig: Since our 2015 publication was our second report, we were already familiar with some of the basics. For example, similar to our report published in 2013, we were readily able to disclose our impacts - supported by primary data and standard accounting methodologies. However, one of the key challenges of our 2015 reporting process was related to the fact that it was the first time we were communicating progress versus our 5-year goals. The most challenging aspect was reporting on those goal areas where we were not demonstrating meaningful progress. Priority quickly shifted away from delivering the report itself so that we could instead focus on developing a more effective approach to address these goal areas and drive results. Another aspect of our 2015 report to note was the incorporation of GRI-G4 standards. Formally meeting the additional requirements was clearly beneficial for our company and stakeholders, but certainly demanded considerable planning and preparation. We report every two years. While our data tracking is ongoing, and we update the CSR information on our website annually, we typically spend approximately 9 months on actual CSR report preparation. 

How was your experience of transitioning to G4? Did this cause you to do any things differently? 

Craig: Of course, our transition to G4 necessitated additional planning, and it lengthened the reporting process, but it ultimately resulted in a more meaningful report and will help drive better CSR performance. For example, after formalizing our stakeholder engagement process and conducting a structured materiality assessment, we felt the need to add a new goal area around Worker Health and Safety. 

Who has taken an interest in your report? Have you actively shared it with stakeholders? 

Craig: We share our reports with our stakeholders via a master e-mail list, in meetings and presentations, and through publicly announcing the release of our reports. We have received positive feedback from our stakeholders and the CSR community on both our 2013 and 2015 reports. In fact, formally involving our stakeholders in the G4 reporting process generated considerable positive feedback from the stakeholders themselves- including retail customers, bankers and financial institutions, and suppliers. 

What makes a great sustainability report in your view? 

Craig: In my view, sustainability reports are defined by their substance. The best reports are able to tell the organization’s story while delivering a credible representation of their CSR efforts. I believe credibility is established through a balanced evaluation of measurable results and through clear disclosure of the plan for moving forward. Adhering to a protocol, such as GRI-G4, to transparently communicate the context of efforts and goals is essential to proving the efforts are meaningful. Of course, if the story and substance are present, attention to visual appeal is also appreciated.

I am looking forward to hearing more from Craig at the edie Sustainability Reporting Conference. Hope you will be able to make it.  

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz  

5 truths about Volkswagen and CSR

It's just incredible how everyone is jumping down the throat of sustainability and sustainability reporting as a result of the Volkswagen crimes against emissions. Is the sustainability movement so fragile that the deliberate fraudulent behavior of one corporation can disrupt the credibility of thousands of corporations that are making genuine efforts to act ethically, responsibly and ... wow, even legally? The first thing many people are saying now that Volkswagen is down the tubes is: "Aha, vindicated at last, that's the end of CSR. Just look at Volkswagen's last Sustainability Report. What a waste of paper. This just proves that CSR is all a big waste of time. It's about time we started refocusing on business and leaving out the sustainability PR stuff." 

A few examples from the flurry of writings over the past couple of days:

"Volkswagen takes down corporate social responsibility in its plunge to the bottom of the sea"
Linda Greer's blog on the NRDC likens Volkswagen's statements in its sustainability report to something out of a Hollywood script. She finds it incredible that environmental professionals actually believe anything that's written in self-reported glossy brochures and infographics. Now that Volkswagen is exposed, she says we have to reevaluate what other companies are up to.

"Volkswagen and the dark side of corporate sustainability"
Lauren Helper's post focuses on ratings and rankings, noting that the DJSI is now developing a new picture of public perception that will be factored in to DJSI rankings. The conclusion is foregone. DJSI will want to drop Volkswagen even faster than shareholders are dumping Volkswagen's stock. And then of course, the entire voluntary thing is now on the chopping table. If it's a voluntary disclosure, it must be rubbish. Henk Campher, a well-known PR player in sustainability circles actually says "I'm not surprised this happened!". Lack of regulation and paying too much attention to ratings and rankings are apparently among the root causes according to Henk.

"VW Scandal a Jolt to 'CSR' That Reaches Far Beyond the Auto Industry"
Leon Kaye's take on the Volkswagen impact, published on Sustainable Brands also makes the point that Volkswagen cheated = CSR is rubbish: "For too long now, CSR has focused far more on theatrics and less on tangible results.....CSR lens tends to focus on accolades and congratulate each other for stories well told ..Volkwagen’s struggles send a signal to the CSR and sustainability crowd that it must start changing its tone and set its sights on what it does best - helping organizations operate more sustainably.... " According to Leon, the sustainability movement risks "irrelevance" because one corporation has managed to get away with cheating the system for a few years.

"VW Scandal Exposes What Has Gone Awry with ‘CSR’"
Another article from Leon Kaye, this time on Triple Pundit, offers a similar take: "Unfortunately, while the ideals behind corporate social responsibility certainly have merit, the overall execution has been deeply flawed. The trend in CSR has been to focus more on goals and aspirations, and less on concrete and tangible results."

"The Volkswagen diesel deception - 5 key questions "
Rather than delivering their own diatribe denouncing CSR and Sustainability movement, Crane and Matten ask five questions about the "nature of corporate responsibility" that arise as a result of Volkswagengate. Top of the list - you guessed it. " How is it possible that a company committed to some of the core values of corporate responsibility could so blatantly cross the line into not only unethical but clearly illegal practice in a key area of its responsibilities? Is this just another greenwash case to fuel further cynicism about the CSR commitment of corporations?"

"Here's The Joke Of A Sustainability Report That VW Put Out Last Year"
Emily Peck at Huffington Post takes the well-traveled path, pulling holes Volkswagen's statements about values, commitment and ethics. She even counts the number of times the word "environment" appears in Volkswagen's last report. She calls it an absurd document.

Well, folks, let me set a few things straight. It's easy enough to get settled in on the CSR-bashing bandwagon. Instead, I offer five truths about the current discourse on Volkswagen and CSR.

ONE: The fact that a company is highly placed in rankings and ratings means not all that much.

In my view, rankings and ratings are designed in the best interests of the rankers and the raters. I believe they are rarely rigorous enough or balanced enough to be a reliable guide for investors or for any other stakeholder. Comparability among companies, even within sectors, remains nebulous. Ratings are designed to give the rankers and the raters a claim to fame and often, a revenue stream. Just look at how the same company can rank top in one system and bottom in another and pretty much everywhere on the spectrum in several others. Rankings and ratings are not necessarily a bad things (as long as we don't believe them). They play a role in framing a debate and generating some competitive interest. They can be a CEO hook. That can encourage companies to do better. On the other hand, rankings may encourage companies to appear to do better. Possibly the strive to be a supersector superpower partially fuelled the creative criminality at Volkswagen, who knows? The point is, just the fact that Volkswagen was a DJSI superstar is not directly connected to the set of actions that caused the current issue. And the fact that one company screwed up does not make the rankings and ratings any better or any worse than they already are.

I think my respected colleague Antonio Vives comes to the same conclusion. More or less. My Spanish is not that good. In his article about Volkswagengate, he concludes: "Esto también nos demuestra que las calificaciones, rankings y premiso de responsabilidad deben tomarse con mucha suspicacia." which Google translated for me as "This also shows that the ratings, rankings and permission of responsibility should be taken with great suspicion."


TWO: The fact that a company produces great sustainability reports does not mean it is perfect.

Oh dear!! Did I disappoint you? Did you think that Sustainability Reporting comes with a squeaky clean bill-of-health in the sustainable-company department? Well, it does come with a guarantee. But not the one you think. Sustainability Reporting comes with a guarantee that the information that is NOT reported is the information that is MOST relevant to stakeholders. Hah. Work that one out. The upside is that sustainability reporting adds value in so many ways and the information that IS reported often has value as well. But the fact that there was dirty dealing at Volkswagen does not means that every single word in its Sustainability Report was untrue, or that other sustainability reports of other companies are suddenly irrelevant. Sustainability reporting as a process adds value, it empowers people, it catalyzes performance and it enables dialogue. One dirty player doesn't change that. But it does remind us that, as stakeholders, we are the vigilantes. When was the last time you asked a company about something they published in their Sustainability Report? It's easy to sit on the sidelines and say the system doesn't work when you are doing nothing to make it work.

THREE: The fact that people break the law is a fact. It's not always preventable. That's not about sustainability. Sometimes it's just breaking the law. 

How many companies have Codes of Ethics these days? All of them? How many companies have people who work for them that break the law? All of them? How many companies say they value women in management? All of them? How many companies have less than 50% women in management? Nearly all of them? How many companies have teams of lawyers fighting legal breaches or misdemeanors? Most of them? The point is that there will always be differences between saying and doing and there will always be people who break the law. They may be your family, your friends, your neighbors, your colleagues, your employees or your bosses. If they want to break the law, there's probably nothing you can do to stop them. Unless you speak out. Why did no-one at Volkswagen speak out? That's the most interesting question of all. How many people were complicit in this crazy scheme and how many thought they were acting in their own best interests? I guess we will hear the sensational details sooner or later, but if I were in a CEO seat right now, I would start making whistle-blowing one of the top corporate values alongside reinforcing the values of trust, honesty, legal and ethical behavior. As we say in the Middle East, "Trust in Allah, but tie your camel."  But does the fact that people want to break the law and the corporate culture is not strong enough to prevent them doing so equate to CSR being an ineffective waste of time? Don't think so. That math doesn't add up. 

FOUR: More regulation will not prevent companies circumventing regulation. Voluntary does have value. 

Yeah, yeah, yeah, all this voluntary stuff is not what it's cracked up to be, the naysayers are naysaying. Time to change the laws, make more laws, don't let companies do just what they want. Well, truth be told, it's much of the voluntary work that is done by corporations in the field of CSR that has influenced and continues to influence greater lawmaking. Would Europe have passed a directive on mandatory sustainability reporting had not the largest companies in the world led the charge and undertaken to do so voluntarily? No way. And I could give a thousand more examples. Voluntary CSR has a way of raising the bar, paving the way for regulation to touch it up around the edges and level the playing field. What's the alternative? Sit around and wait for lawmakers to wake up? Look where that got us RIO+20. A corporate reality without voluntary CSR and sustainability strategies would be a far grimmer reality than the one we share today. And finally for the pro-regulators, this would not have prevented Volkswagengate. Regulation was in place. Volkswagen broke the law, systematically and deliberately. (See truth three above). Maybe we should pass a law saying that people in companies should not break the law. Now, there's a thought.

FIVE: The fact that Volkswagen is history does not mean that sustainability is too.

The sustainability movement will be around long after Volkswagen has been buried under the 11 million vehicles it may need to recall or pay compensation for. Thousands of companies around the world have been saying that sustainability in one form or another is one of the most important aspects of the way they do business for many years now. Some of them are winging it, PR-blurbing and greenwashing ... but many are genuinely genuine. Look at the CEO surveys over the last couple of years. Sustainability is the talk and many are walking the talk. No company has reached perfection. Everyone is still walking. Might be good if we picked up the walking pace to a light jog sometime soon, but what's been achieved so far is not cancelled by Winterkorn and team. That would be far overstating the power that Volkswagen can leverage both in the motor vehicle sector and in general. Watch this space. Sustainability will outlive Volkswagen.


Anyway, at least I don't drive a Volkswagen. I just hope Hyundai doesn't screw up some time soon.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise Guide to Next Generation Sustainability Reporting  AND  Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices . Contact me via Twitter (@elainecohen)  or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm).  Need help writing your first / next Sustainability Report? Contact elaine: info@b-yond.biz  

The proposed GRI G4 GHG Emissions draft - explained

The plot thickens. After presenting the G4 Exposure Draft available for comment between 25th June and 25th September, the GRI has now published what it's calling Thematic Revisions, for public comment between 14th August and 12th November. I think that's what they call eating the elephant in two easy slices. Of course, the CSR Reporting Blog is here and ready with our analysis of one of the two new Thematics  - Greenhouse Gas Emissions - to make your life a little easier.  The other one (Anti Corruption) will be the subject of my next post.

First, download the draft GHG Thematic document here. It's 55 pages. Get them all. You're gonna have your work cut out as you go through this document.

According to the draft, the proposed revisions align with the GHG Protocol, jointly released by the World Resources Institute and the World Business Council for Sustainable Development, and the ISO 14064 Standard. The proposed GHG Emissions Indicators are fully aligned with the GHG Protocol’s grouping of emissions into three subsets (Scopes 1, 2, and 3), as well as the ISO 14064 grouping. Energy Indicators have been modified to align with the GHG Emissions Indicators and intensity Indicators were added for both energy and GHG emissions. More about intensity later....

Specifically the draft contains:

• New disclosures and guidance for the Energy and Emissions Aspect (Environmental Category)
• Edits to Indicator EC2 (Economic Performance Aspect, Economic Category)
• Edits to Indicators EN3 – EN7 and Indicators EN16 – EN20 (Energy and Emissions Aspects, Environmental Category)
• New indicators under the Energy and Emissions Aspects, Environmental Category

Before discussing the changes in detail, it might be worth listing the new EC2, EN3-7 and EN16 -20 and new indicators proposed in this section. First point to note is that 11 indicators now becomes 13 indicators, and this includes two intensity measures, energy intensity and GHG emissions intensity. As promised, more about that later.

• CORE EC2: Financial implications and other risks and opportunities for the organization’s activities due to climate change
• CORE EN3 Direct energy consumption
• ADD EN4 Indirect energy consumption
• CORE G415 Energy intensity
• ADD EN5 Reduction of energy consumption
• ADD EN6 Reductions in energy requirements of products and services
• CORE EN16 Direct greenhouse gas (GHG) emissions
• CORE G416 Energy indirect greenhouse gas (GHG) emissions
• CORE EN17 Other indirect greenhouse gas (GHG) emissions
• CORE G417 Greenhouse gas (GHG) emissions intensity
• ADD EN18 Reduction of greenhouse gas (GHG) emissions
• CORE EN19 Emissions of ozone-depleting substances (ODS)
• CORE EN20 NOx, SOx, and other significant air emissions

So what's different? Intensity, as we've seen.  But more about that later.

GHG Protocol framework

A key difference is the clarification in definitions for energy and emissions reporting. The GRI has aligned itself with the leading carbon reporting standard - the GHG Protocol in which direct and indirect energy are classified into three scopes of emissions.

• Direct Energy > Scope 1 emissions
• Indirect Energy > Scope 2 emissions
• Other Energy > Scope 3 emissions

You probably already know this, but for those of us who are not environmental experts, it does take some getting your mind around. Scope is a classification of the organizational boundaries where GHG emissions occur.

• Direct (Scope 1) refers to emissions are created by sources owned or controlled by the organization. For instance, a coal-powered power plant which makes electricity.
• Indirect Energy (Scope 2) refers to emissions resulting from the generation of the electricity, heating, cooling, and  steam that is purchased by the organization. Scope 2 emissions occur at facilities which are owned or operated by other organizations. For example, using electricity purchased from the coal-fired power plant (probably via a national grid) is classified as Scope 2, because the emissions were generated in producing the electricity and not in your organization.
• Other Indirect  Energy (Scope 3) refers to emissions resulting from the organization’s activities, but are not created by the organization. This includes emissions from outsourced activities, such as the transportation of goods by haulage companies using vehicles that are not owned or controlled by the organization.

In other words, most companies report fuel and coal as direct energy sources and purchased electricity as an indirect energy source. In environmental reporting, the  energy source and what you do  with it is less important than where you do it. If the emissions occur in your factory, cue Scope 1. If they occur in someone else's factory, cue Scope 2 and if they happen on the bus to work or on a truck to China, cue Scope 3 (provided you don't own the bus or the truck).  

The John Lewis Partnership CSR Report for 2011 contains a good graphic that makes this all crystal clear:

Which emissions to account for: Control or Equity
The key to defining what to count is the precise scope of where emissions occur. On the face of things, it sounds straightforward, but in practice, there are two definitions are available: the equity or control method.

The control method calls for a company to account for the total GHG emissions from operations over which it has control, whether this be financial or operational control. It does not account for GHG emissions from operations in which it owns an interest but has no control. In other words, if you lease a factory, and you run it, and all the people working there are your employees, and all the materials used in the factory are sourced by you, and the final output is your products, then you have control.

The equity method calls for a company to account for GHG emissions from operations according to its share of equity in the operation. For example, if you have a 51% financial share in an operation, or even a lower financial share but full management control, you would report your emissions proportionately, according to the percentage share, and not full control.

This is an important distinction and must be applied consistently throughout the entire reporting spectrum. It could significantly change the level of emissions reported, so watch for the fine print when you are reading reports.

Alignment is Good
Closer alignment with the GHG Protocol (which is also used as the basis for CDP reporting) clearly makes sense, and hopefully will encourage greater comparability in energy and emissions reporting. At present, there are still wide variations but some do it well. ENEL, the energy company, for example, reports  for 2011 in classic textbook G4 style:

ENEL 2011 reporting EN3

ENEL 2011 reporting EN4

ENEL 2011 reporting EN16 Scope 1 Emissions

ENEL 2011 reporting EN16 Scope 2 emissions

ENEL 2011 reporting Scope 3 other emissions

Oh, did we mention intensity ?
G4 includes two new indicators relating to Energy Intensity (G415) and GHG Emissions Intensity (G417). This is a way of normalizing consumption and impacts to a common denominator which may be financial ($ of revenue), human (per person), physical (per square meter of factory or office space, or per vehicle) or per product (units sold, units produced) or, in fact, any other factor that you can imagine which is relevant to your business (or which makes your numbers look better than the absolute numbers). In most cases, my experience tells me, the intensity figures will always look better than the absolute figures - companies use more and more energy and generate more and more emissions, but on a per something basis, they proudly show a major reduction.  Take these examples:

Air China reports in the 2010 Corporate Responsibility Report on fuel consumption and carbon emissions by PTK (per ton/kilometer), stating that they have achieved "remarkable results" as they have reduced fuel consumption PTK by 6.6% in 2010 versus 2009. We do not know what the total fuel consumption was during this period.

Delhaize, the Belgian supermarket chain, shows fabulous energy intensity results per m2 sales in the company's 2011 CR Report. A 7.5% percent reduction over three years. (It is not clear whether this is all three Scopes, but I assume just Scope 1 and 2)

Delhaize 2011 reporting on emissions intensity

Delhaize does not disclose the total number of carbon emissions. Delhaize also reports to the Carbon Disclosure Project and you can access their report (after several clicks and registration on the CDP website) but you will find that the 2011 report covers 2010 data, and is therefore not comparable to the CSR Report 2011 period. After a quick calculation, I note that Delhaize absolute Scope 1 and 2 emissions increased by 3%, using 2008 as a baseline. Turning an increase into a decrease is the power of the intensity measure. This might have been achieved by increasing some prices, changing the sales mix or recording some currency adjustments and wow, suddenly the carbon emissions performance looks actually quite positive.

NH Hoteles 6th's CSR Report includes both absolute emissions and intensity rates per guest per night. Absolute emissions fell by 8.82% while intensity emissions fell by 11.9%.

What did NH Hoteles choose to highlight in its reporting narrative ? Intensity, of course.

 

 

CapitaLand's Sustainability Report for 2011 also shows a similar picture, in one handy graph.

Again, you can see that on an absolute basis, there is an increase of emissions by 39% since 2008 but intensity on a square meters basis reduces by 11.1% since 2008. CapitaLand's emissions target is an intensity target reduction of 20% by 2020, but there is no absolute target.

BT uses yet another model for calculation of emissions intensity and that is emissions per GBP million value added - which is EBITDA plus employee costs.  This formula is what BT has called its Climate Stabilization Intensity Target - a measure of carbon emissions in relation to its (financial) value added as a company and the contribution it makes to a country's GDP. Hmm. Make more profit, improve your carbon emission performance. BT's absolute emissions reduced 53% versus their 1997 baseline, and intensity improved by 61%.

What would be interesting to know is what specific factors contributed to this intensity improvement. BT report that they have improved energy efficiency, invested in renewable energy generation and purchased low-carbon energy. Wonder how much of what went into that 61%? And how much was a change in profit and employee costs?

Ericcson, on the other hand, report a different type of intensity. According to Ericcson's 2011 CSR Report, the carbon dioxide emissions associated with the lifetime operation of delivered products totaled approximately 24 Mtonnes in 2010. This is the measure used for carbon intensity. Don't worry about the fact that while carbon intensity was reducing every year, absolute emissions were increasing by 8% between 2008 and 2011.

Procter and Gamble have a lofty goal, stated in the P&G 2011 Sustainability Report: of powering their plants with 100% renewable energy. In the past few years, however, total carbon emissions (Scope 1 & 2, Scope 3 is off the radar) have increased  by 5% in 2 years. This doesn't prevent  P&G from proudly displaying the intensity figures:

As you can see, P&G refers to intensity per unit of production. Hmm. Now would that be a 5kg pack of washing powder, or a tube of Crest toothpaste, or a pack of Eukaneuba for dogs Denta Defense®, a type of micro-cleaning crystals that help reduce tartar by up to 55%?

Enough of intensity. By now you get the picture. Carbon emissions can be normalized to practically anything at all, depending on what a company wants to manage or what it wants to show to the world. In almost every single case you can find, intensity measures will always beat absolute measures. If only the planet would respond to intensity and become more sustainable. If every company were emitting carbon emissions relative to the number of expense claim-forms submitted, or the value of bottle-caps sold or the number of emails sent per hour, we might find carbon reporting much more interesting but it would hardly be saving the planet. If only we could become more sustainable by becoming less intense.

Why would the GRI choose to add two intensity measures to the G4 reporting framework? The GRI says this: "In combination with an organization’s absolute GHG emissions, disclosed with Indicators EN16, G416, and EN17, GHG emissions intensity helps to contextualize the organization’s efficiency, including in  relation to other organizations."
 
Normalizing energy consumption or carbon to financial values - turnover, sales or profit - or to other operational values - may be a way of comparing the performance of companies of different size in a similar sector. The carbon footprint of a cellphone is comparable whereas the manufacturers of cellphones may be very different in size and scope of operation. This might help investors (the ones who understand) to make decisions. Similarly, whatever the normalization factor, if a company consistently uses this to benchmark its own performance, it can be a management assessment and decision making tool. However, the trick is in the selected normalization factor. If such a factor has no direct relationship to whatever causes or influences the level of emissions, it may simply be a way to present good-news numbers. If my operations are the same size and my turnover increases because of a price-hike, or a change in currency exchange rates, I may still be generating equal or more carbon emissions but all of a sudden, my intensity plummets. We will have to be vigilant of the way that intensity measures are used in reporting, and ensure they are never  a replacement for absolute measures.

Some Less Intense General Points
The environmental disclosures as with, I think, all other disclosures in the proposed G4 framework are not time-specific. This means that the reporting company could report data only for the declared reporting period. I believe it would make sense to require organizations to present 5 years data on these critical data points. Of course, those who do not have 5 years data cannot do this. But of the many companies who have been producing sustainability reports over the years do have the data available (and several already include this). As we look at sustainability with a long-term lens, it is often frustrating when companies report only current and prior year data. We should require a little more perspective in G4.

Similarly, I believe that the G4 could be tightened up by requiring explanations of how performance has been achieved. For example, it would make sense, if energy consumption has decreased by 20%, to know what the organization has done to reduce this. The G4 proposals  in the updated EN5 (Reductions in energy consumption) and EN6 (Reduction of energy requirements in products and services) require listings of the reductions achieved but not a full explanation for HOW they were achieved. Adding such information would be helpful both for internal review and for external stakeholders. Companies who have made serious efforts to reduce carbon emissions should be able to say what actions caused the reduction. Unless it was all a lucky strike!

The Last Word (it's not intensity)
Overall the new GHG Reporting Thematic Revision tightens up environmental reporting and makes several aspects both clearer and less overlapping. G4 also ups the stakes a little (a lot). The G4 framework requires reporting on all three scopes of carbon emissions as core indicators (EN16, EN17, EN18). This is also the case in G3 (EN16 and EN17), but in G3, companies had the option to report at Application Level B or C, reporting Scope 1 and 2 emissions under EN16 and avoid Scope 3 emissions in EN17. With G4, every company which includes climate change as a material issue will be required to report all three Scopes in order to be In Accordance with the G4 framework. Sounds like there's gonna be a lotta scrambling around for data going on, and suppliers of goods and services to In Accordance reporters are going to feel the heat.

Whew! Glad that's covered. I hope  Anti-corruption is not so complicated. Watch this space.
   

 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   on Twitter or via my business website www.b-yond.biz (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Go online - save lives

When you use online tools to manage your daily tasks, you may be saving someone's life. Sound a bit far-fetched? A bit surreal? A little like bluewash? Read on.

This week, I had the pleasure of facilitating a webinar on the subject of how everyday business and household activities can contribute to a low-carbon economy. The study that prompted the webinar was conducted by the Global eSustainability Initiative (GeSI), performed by John "Skip" Laitner of the American Council for an Energy Efficient Economy (ACEEE) and sponsored by some major telco's, including Verizon. The webinar was organized by CSRwire.com and presented the findings of this study, the bottom line being that, if we fully utilize the potential of broadband to engage in a certain set of online activities (teleworking, downloading music and books, taking educational courses, reading news, receiving online bank statements and billing and using email), in just 6 countries (U.S., France, Germany, UK, Italy, Spain), we can save 2% of carbon emissions in these countries, enough to take 55 million cars off the road.  55 million cars. That's some collective impact.

In this post, I wanted to reflect a little on the ways in which our online behavior is changing. For many, the main motivation of going broadband may not be to save the planet, but this study shows that doing more online in order to save our own time, money and endless pressure to get things done, also conserves the planet's resources.

I would consider myself an early adopter of online technology - way back in the mid 1990's, before anyone had conceived of Facebook and Twitter and many of today's online tools, I used to play bridge online at Yahoo with people from all over the world. That was just for fun. Today, I use online tools for a million other tasks, business, personal and pleasure: conference calling via VOIP; downloading books to Kindle; managing my personal and business bank accounts; reading Sustainability Reports; delivering lectures to MBA students and companies; downloading software; connecting with friends via Facebook; blogging; tweeting; learning through webinars and courses and generally staying up to date with what's going in on in the world. I work from home more and more, instead of driving to the office, and my latest recruit to Beyond Business is a teleworker.  Broadband has certainly changed my life and enabled me to build my consulting practice as a global business, serving international clients, in a way which would never have been possible in the "old" pre-broadband world. I have a broadband lifestyle because it works for me. My motivation was not green. I suspect most of us have drifted into broadbandland for the same reasons. However, for those of us who also like to be green, this new study shows that we are making a powerful contribution to a low-carbon economy. And it's not just about our own actions. There is a broader, more global effect.

By utilizing broadband, we are funding the future growth of broadband technology. The increase in uptake of broadband enables the ongoing development of technology which will provide greater opportunity, greater choice and greater positive green effects in the future. How is this saving lives? Consider this (from Verizon's online Sustainability Report):

"Each year more than 200,000 people in the U.S. die of chronic diseases that are both treatable and preventable. Among the causes of these deaths is lack of ready access to medical care, because of such barriers as distance, geography, or simply the availability of doctors and nurses. Verizon is currently deploying and developing wireless services that will overcome these roadblocks, using the Verizon 4G LTE network, smartphones, tablets and advanced video technology to enable virtual visits between patients and health care providers."

This telehealth technology is transforming access to healthcare data and services, reliability of data and the speed at which life-saving information can be transmitted to the right healthcare professionals. As we do more on line, we are helping to make these solutions possible, going beyond green and addressing real social needs. This is just one example of the new potential of broadband technology. No wonder, then, that Verizon, in the Company's recent published online  Corporate Responsibility Report, Verizon first and foremost emphasizes the "Shared Success" of  building a "truer connection between business and real social needs".

Another social cause that Verizon has put its broadband weight behind is the issue of domestic violence. One in four women is affected by domestic violence, and Verizon's Hopeline which collects no-longer-used wireless phones, batteries and accessories in any condition from any service provider to donate to victims and survivors of domestic violence - so far, Verizon has collected more than 8.9 million mobile phones. This is in addition to raising awareness and supporting education to end domestic violence, including the "Telling Amy's Story" documentary, about a young woman killed by her abusive husband, funded by the Verizon Foundation. Take a look at the vid - none of us are unaffected by tragedies such as these. 

But the power of ICT to save lives and advance social causes is not the only aspect of corporate responsibility that we should expect from telco's. Behind all of this social and environmental impact, there is a large, complex business, employing, in Verizon's case, nearly 200,000 employees, which must control and manage its own direct operations in a responsible, accountable and transparent way.

Verizon's online report shows a commitment to environmental sustainability, and a clear set of performance progress updates and new goals in the format that Verizon has adopted in its reporting for the past few years: "What we said we'd do, what we did, what we'll do next". For example, Verizon's carbon-intensity goal reduction by 2020 is 50% versus a 2009 baseline, and this includes exceeding 2011 target with a 17.45% reduction from 2010. Other goals including increasing alternative-fueled vehicles as part of the Verizon fleet to 15% by 2015, achieving 250 Smart Buildings by 2015 and expanding the Verizon Green Team membership to 10,000 employees by end 2012 (6,000 members in 2011).  Verizon's key performance indicators and metrics in all areas of Corporate Responsibility performance demonstrate clear targets and achievements in all areas.

Clearly, telco's also have other serious responsibility issues to address, such as conflict minerals, digital safety, pricing and much more. They are not perfect, and positive impacts don't cancel out negative impacts. The negative impacts must still be addressed. However, facilitating this webinar on energy savings through greater use of broadband, and researching Verizon's programs and transparent sustainability performance, as well as chatting to Verizon's Director of Public Policy and Corporate Responsibility, Chris Lloyd, prompted me to think about my own lifestyle, and the broader impact of online activities.

It seems that, the more we do online, the more we contribute to a more equitable, safer, healthier, connected, transparent society, in an energy efficient way. We even have the potential to save lives. The chances are that if you are reading this post (online), then I am preaching to the converted, so thanks for bearing with me in my online ramblings.

I think it's time for me to go and place my online order for today's ice cream. I just hope they don't deliver it via broadband. 

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices  Contact me via www.twitter.com/elainecohen   on Twitter or via my business website www.b-yond.biz  (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

Lower carbon intensity – yeah, right

I am no environmental expert, but I shudder every time I read CR reports by businesses that they are bending over backwards to reduce carbon emissions and extolling the praises of every single carbon-emission-reducing project, and in the next breath we read that their absolute carbon emissions have increased. Am I just naïve or is there something wrong with this system? Do all these businesses who are growing and increasing their carbon footprint year on year think they are positively contributing to climate change just because their emission levels per store, per truck, per refrigerator, per hamburger, per trip, per cup of coffee, per banana, per printed CR report or per pair of underpants is less than it was a year ago ? I mean, who do they think I am? Dumbo? (ok, they're not sooo far off). Who are we kidding here?

Take a quick look at Tesco in the UK. 2009 CR report. This sentence: Over the past year our net sales area grew by 16.4% while our carbon footprint increased by 3.7%. This means we cut our carbon intensity by 10.9% year-on-year. I did a little research. In the last two years their sales area has grew by 16.2% % and carbon emissions increased by 14.7% . This is almost no carbon intensity reduction. Who cares about carbon intensity anyway? We should care about absolute emission levels.

OK, so who else?

IKEA provide a comprehensive breakdown of total carbon emissions in their latest CR report for 2008 and show that carbon emissions have INCREASED YEAR ON YEAR EVERY YEAR for the past 4 years. But here is how IKEA present this: "The total amount of carbon dioxide emissions directly related to IKEA operations increased in FY08. However, in relative terms, the development is positive. When one examines carbon dioxide emissions per total products sold, we see an overall positive improvement compared to FY05. " Positive ? Is "relative" going to save the planet?

One more:

DANSKE BANK. Carbon emissions increased from 54.1 to 65.2 ktons 2008 vs 2007.An increase of 20% and from 2.9 to 3.5 tonnes per FTE. In a section entitled "Continuing to improve our impact" and full of green jargon such as "towards a low-carbon future" , "carbon neutrality" and "1 tonne less" campaign" , the actual results of all these words and efforts is exactly opposite.

CR reports are very valuable for assessing carbon management performance. I applaud all the above and thousands others who report, and who are making efforts to support climate change. But the focus has to shift from words to clear decisive actions which result in absolute lower carbon emission levels. Sadly, we are still caught up in the intensity of it all and cowering behind the relativity of ghg statements. Maybe we should be relatively more intense and focus on relatively more results?

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm . Visit our website at: www.b-yond.biz/en

The Lóreal paradox..for better and for worse....

The paradox of corporate responsibility is that there are companies that can be both soooo positive and soooo negative at the same time. What does it take to say a company is corporately responsible ? That the critical mass of good things outweights the bad things ? Or that there are only good things ? Or that there is just an absence of bad things ? Should we accept that all corporations are basically irresponsible and not accountable for all their impacts. But that some have embarked on a route to address and account for some of them. The case in point featured in this post is the cosmetics giant L'Óreal. You've heard of L'Óreal, right ? Two news items about L'óreal. First. the good news:

L'Oréal Sets Green Goals and Promotes an Eco-Responsible Business Model

L’Oréal has renewed three long-term environmental targets for the period 2005-2015, applicable to its factories and warehouses:

• Halve its greenhouse gas emissions: In 2005, the total CO2 emissions were 230.3 thousands of tonnes.
• Halve its water use per unit of finished product: In 2005, the water consumption was of 0.72-litre per finished product.
• Halve its waste generated per unit of finished product. In 2005, the waste generated per unit of finished product was of 32.2 grams.

What i like about the GHG target is that it is a firm commitment measured in absolute terms against the Company's own performance. Not per employee, not per site, not per unit. The total GHG's unrelated to business growth. Water and waste targets are per unit... which i find frustrating as L'oreal produces so many units of so many product types and sizes that this target doesnt say much about the Company's total impact. I looked at L'óreals 2008 CR report to see where they were 2 years after the original targets - 20% of time gone (2 years out of 10):

• GHG emissions : 2005 - 229.7 ktons, 2007 - 218.2 ktons - 5% reduction
• Water consumption per finsihed product: 2005 - 0.72 litre, 2007 - 0.65 litre - 10% reduction
• Waste per finished product: 2005 - 32.1 gram , 2007- 29.9 gram - 7% reduction

Seems that there is still some way to go. Total GHG and water reduced over this period, total waste remained static. Interesting thing is that nearly 30 grams of waste is generated for each finished product. I wonder if that includes the packaging. Probably not. But in any event, for a cosmetics company whose products are mainly low weight, 50, 100, 500 grams .... this seems like a helluvalotta waste, no ? but good consistency in reporting regularly against these good aspirational targets. So good news for L'óreal.

And now for the BAD news:

French cosmetics giant L’Oréal guilty of racial discrimination

L’Oréal was " found guilty of racial discrimination for considering black, Arab and Asian women unworthy of selling its shampoo" brand named Garnier .The court ruled that Adecco, the temporary recruitment agency who hired the hostesses, was also guilty of racial discrimination. The Paris Appeal Court fined both L’Oréal and Adecco €30,000 (£25,500) and ordered them to pay a further €30,000 each in damages to SOS Racisme, the anti-racist campaign group, which brought the case. The court was told that Garnier’s hostesses were ordered from the recruiting agency and told be aged 18 to 22, wear size 38 to 42 clothes (British sizes 8 to 12) and be “BBR”. BBR, for the uninitiated is "bleu, blanc, rouge" or the colors of the French flag.

Now, L'Oreal declare that diversity is a basic value and their commitment is "To promote the self-fulfilment of its employees within a multicultural, stimulating community, rich in diversity and talent, to which all individuals contribute their creativity and enthusiasm." Heart-warming, right ? L'Óreals 63,500 staff is made up of 62% women of and 56% managers are women. 35% of mamagement committee members are women, quite a high level amongst reporting companies. Additional data on diversity from the CR report for 2008 is :

• 21% of managers are from minorities
• 34% of the total workforce are from minorities
• 32% of new managers recruited in 2007 were from minorities
• Increased spend with women and minority owned firms.
• Over 3,000 employees have completed diversity training.

So what went wrong ? The whim of the Garnier brand manager? The lack of judgement of the Adecco manager ( a woman!) who determined the specification for the models? Profit before values ? Hard to say... L'oreals CR report, and its credibility, does provide some balance for this pretty damning incident, which is reflective of the draconic practices in the beauty industry with the creation of supermodels and idealization of women, causing great negative impacts on the position of women in our society.

So L'oreal, pay up and shape up. Not the BBR way, the ECITR way. Which for the unititiated means :every color in the rainbow.....

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at: www.b-yond.biz/en

Buzz No 3: COP this !

We've gone Beyond, we've been through complicity … now it's time for … coffee… nope, not yet …it's time for COP. Lots of buzz about COP in Istanbul. Actually, there are two types of COP. There is COP, or even notable COP. And COP15. (Don't ask me about COP 2 – 14). So let's make a start with plain ole COP and then move upstage to 15.

COP = Communication On Progress
This is what participants do once they have confirmed their participation in the Global Compact of the United Nations. You all know the Global Compact, right? It's a framework of 10 principles relating to the responsibilities of business to uphold human rights and labor standards, and to work to improve environmental impacts and anti-corruption. The UNGC has over 5,000 participants from all over the world and is supported by a web of networks who advance active application of the principles. It was in this context that I joined the Human Rights Working Group meetings last week in Istanbul. A COP is a mandatory annual communication for participating companies to publish the ways in which they are advancing the UNGC principles. Guidance on how to write a COP can be found here. A "notable" COP is one which the UNGC team finds to be particularly comprehensive and clear, and a model for others, for example here. Finally, businesses which do not communicate get kicked out. Which is as it should be, right ? COP is a kind of voluntary corporate disclosure, i.e. a report, which means that COPs fit perfectly into this reporting blog. Might just do a little COP analysis over the next few weeks. Once i get past the buzz.

COP15 = Copenhagen 15
This is way the climate-connected refer to the meeting which will take place in Copenhagen (COPenhagen .. COP … get it ? ), the United Nations Climate Change Conference on December 7 to December 18, 2009. It's a kinda climate change annual hot spot (geez, that pun thing again). The Kyoto Protocol, which was adopted in 1997, sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas emissions at the rate of an average 5% against 1990 levels between 2008-2012. At the 13th conference in Bali it was decided to work towards an agreement for the subsequent years. This agreement is to be negotiated in Copenhagen in 2009. Stakes are pretty high, it seems, as the influences on emission reduction decisions are dominated by economic-geo-political decisions, especially relating to China and India. By now, if you follow my blog, you will realize that I am not terribly competent about things environmental, so I contented myself with a quick look at the conference guide. Connie Hedegaard, the Danish Minister for Climate and Energy says : “We must move the world from an era of talk to an era of change” In this spirit, it is important to know that attending Heads of State will be offered eco-friendly transportation, and other conference travel will be offset. Towels in hotels will be shared on a one-to-four-rooms basis, and specially constructed conference seating will enable participants to peddle in-situ to generate energy to power their laptops. (so what if I got a little carried away). Follow the conference on Twitter , Facebook , take the climate quiz (I got 7 out of 10, which proves that this quiz was designed with first graders in mind, and it helps if you are Danish). I can't help being impressed with the locations of all these climate change conferences: Berlin, Rio, Kyoto, Bali, Copenhagen, New Delhi, Poznan, Marrakesh, Milan, Nairobi, Montreal etc … how about next year in Darfur, Mogadishu, Gaza, Karachi, Teheran or Baghdad ? Anyway, you have until Dec 7 to place your bets on COP15 outcomes. Cop that?

What else was buzzing in Istanbul ? Stick around to find out. It was a really buzzful week.

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at: www.b-yond.biz/en