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)

Part Two: Sustainability: What the Numbers Tell You

Since my recent Sustainability: What the Numbers Tell You post was so resoundingly successful, I have decided to maintain the momentum and  take a look at some more numbers. This time I am going to look at environmental metrics that were covered in the Sustainability Practices 2012 Edition, which I fairly glossed over in my previous (resoundingly successful) post. The Report covers a range of environmental metrics including those relating to: emissions, energy, water, waste, recycling, packaging, purchasing and spills and fines. Let's start with this number:

39%

of companies in the Bloomberg ESG 3000 Index report having a Climate Change Strategy. This compares with only 26% of the S&P 500 and 16% of the Russell 1000. (Just to remind you, the Bloomberg ESG 3000 covers a range of global companies while the S&P and Russell indices cover large-cap U.S. companies. So when the Bloomberg is higher than the S&P/Russell, it means that the world is doing better than the U.S.) In this case,  U.S. companies have not yet caught up on climate change as something they need to be making decisions about.

Many people probably don't know the difference between a climate change strategy and reducing energy consumption. In the Sustainability Practices Report, a climate change strategy is defined as: "a set of risk management procedures designed to mitigate the impact on business operations of climate change". Typically, as defined in the report, such a strategy will include: an assessment of the energy efficiency of the business, a commitment to capital investment in environmentally preferable technologies and a search for new sources of capital through commodity trading of GHG emissions or government subsidies for GHG emission reductions. 71% of big companies (over $100 billion revenues) have apparently given this some thought as they do have a climate change strategy. Only 22% of companies under $1 billion have done the leg-work in this area. The rest of them either they have a policy and are not disclosing (unlikely) or they don't have a policy and they are ostriching (likely). That's a shame, because "if you think mitigated climate change is expensive, try unmitigated climate change", (a quote from Dr Richard Gammon) .

And now for a little quiz: How many of the Bloomberg ESG 3000 actually report their total carbon  emissions?
A: 83%
B: 72%
C: 65%
D: 48%
E   34%
F:  21%

Yes, great, you were either wrong or right. The correct answer is:

 34%

That's it. Just over a third of the world's leading companies disclose their total carbon emissions. But this is not really the world's companies - it's Japan. In the Bloomberg 3000, there are 644 companies from Japan of which 80% disclose CO2 emissions, which is required by law. In the U.S., for example, only 8% of the 70 U.S. companies in the 3000 Index disclose CO2 emissions, which is the lowest rate of disclosure across a range of countries. The Netherlands and Sweden do better at 70% and 62% respectively, but France and the UK are lagging with 39% and 30%. This might be changing fairly soon in the UK with new legislation which will require large listed UK companies to disclose GHG emissions.  But disclosure is one thing and sustainable performance is another.  Think about this next number:

16,536,533

which is the average total CO2 emissions in tons from the 36 disclosing companies in the S&P 500 Index. This is a whopping 5 times higher than the total emissions from the 1,033 disclosing companies in the Bloomberg ESG 3000.  Utilities and energy companies reported the highest level of emissions, as you might expect. It takes energy to produce energy, apparently. Double whammy. When normalized per employee, we find that the utilities sector produces 1,473 tons of CO2 emissions per employee (median, not average). This is equivalent to emissions per employee resulting from powering 167 homes with electricity for a full year, or running 262 passenger cars for a full year. Wonder if all those employees think about that on their morning commute: "Hah, wonder how many cars on the road the carbon emissions resulting from my working today will equate to?" Perhaps this could be the next stage in sustainability-driven Employer Branding. It might work for the Financial Services Industry, where CO2 emissions are a mere 3 tons per year per employee (median). "Do you feel you have a personal responsibility for protecting our planet? Come and work for us. Your work will generate only 3 tons of carbon emissions per year, which is less than the equivalent of keeping one car on the road. You can manipulate interest rates with hardly any impact on the environment".  

But, enough of CO2, let's go deeper and look at energy efficiency. Consider these numbers:

 1,933  -  249  -  321

These are the actual numbers of companies in our three reference indices of 3,000, 500 and 1,000 companies which declare that they have an energy efficiency policy. 64%, 50% and 33%. I find that incredible. Forget sustainability, just think about energy costs. Heck, we even have an energy efficiency policy in our home! (Well, I admit, it's not a written policy, but if the kids leave the lights on in their bedrooms, they know there will be unpleasant consequences). Why wouldn't businesses have an energy efficiency policy? Ah, you might say, "companies which are primarily office based have more significant sustainability impacts to think about and more important cost considerations". Ah, I might say back to you, "and pigs can fly".  Even the financial sector, primarily office based as it may be, has a higher rate of energy-efficiency policy disclosure at 52% of companies than the energy sector itself at 46%. Energy efficiency is the second most material issue for companies everywhere, based on a study that was done last year on materiality issues. So how come so few have a policy? Possible they are just doing it because it's in their DNA. (A friendly reference to Oliver Balch, who tweeted "Please, one piece of advice to all companies: ban the phrase 'In our DNA' from your corporate lexicon"). Consider this number:

5%

which is the percentage of companies in the Bloomberg ESG 3000 which report using renewable energy. That's just 164 companies. For all the others, renewables are apparently not yet in their DNA.

Moving on to water consumption, consider this:

3.72

is the ratio of average water consumption in the U.S. based S&P 500 to the average in the Bloomberg ESG 3000. The average water consumption per S&P company in the U.S. sample (104 companies disclosing) is 3.72 times higher than the global sample (1,111 companies disclosing). Clearly, size does matter, as the bigger companies have higher water consumption.  Yet still only 74% of the companies in the $100 million revenue category disclose total water consumption, despite the fact that the median water consumption for this group is over 35 million cubic meters in comparison to a $1-10 million revenue company which uses 1.4 million cubic meters per year. With water scarcity becoming the number one resource issue globally, it seems incredible that disclosure for such large corporate users should not be mandatory, leaving 26% of the largest companies in the world to decide for themselves whether to manage water consumption transparently or not. But it gets worse. Consider this:

2%

is the number of companies which report that they use recycled water. 74 companies in a sample of 3000. But it gets worser. Waste is also one of the big drags on our economies and quality of life, not to mention sustainability. Here's another number:

31,739,944

is the average waste in tons generated by companies in the materials sector (which is made up of companies that manufacture chemicals, construction materials, containers and packaging, paper and forest products, extractives etc) which is more than the total average waste of all the other sectors added together, yet only 36% of companies in this sector report on the total levels of waste generated. Waste is cost. More often than not, it's unnecessary cost. How are investors using this information? Companies which are generating so much waste are also wasting investors' money.  Which brings us to the next number:

$997,299

which is the average amount that companies in the Bloomberg ESG 3000 spend on environmental fines each year. In the S&P 500 index, this becomes a whopping $2,224,831.

I could go on, but I won't. The Sustainability Practices 2012 Edition Report is an encyclopedia of data and comparative numbers. I have given you a jump start. You'll have to do the rest of the leg-work yourself :)  

By now, I think you get the picture. It's one of desperately poor levels of disclosure. Despite the growing momentum of voluntary disclosure and Sustainability Reporting, frameworks, measures, surveys, CEO commitments, investor pressures and all the hype that this brings with it, the picture on transparency is still bleak. Most of the largest companies in the world are barely disclosing most of the most important sustainability metrics. And this low level of disclosure gets proportionally lower and lower as company size decreases. In the U.S., performance is generally lower in comparison to the rest of the world. So it's fabulous that the U.S. is now leading the Medals League Table at London 2012 (39 Gold Medals as I write), but sooner or later, even that performance will not be sustainable without stronger and more transparent behavior by American corporations.

There is something about numbers. They clarify our reality. In this review of environmental sustainability and transparency-by-numbers, that reality is rather depressing, because there is a stark realization that, for all the talk, the results are pretty shameful and perhaps, voluntary disclosure is not all it's cracked up to be. Self-regulation is more self than regulation. When the authors of this Sustainability Practices benchmark report maintain that "there is significant room for improvement", I think we can safely agree that this is more than a mild understatement. With Paragraph 47 not promising to be massively instrumental in driving change in transparent disclosure, we have to wonder just what will propel corporations around the world into a different paradigm, before something else propels them out of ostrichland.

An eternal optimist, I believe change will happen. As a realist, I see it's painfully slow. As a pragmatist, I accept that we have to move on and, as the amazing Pema Chodron says, Start Where we Are. As an icecreamist, I know there is always comfort just around the corner.

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)

Sustainability Reporting for Renewable Energy Companies

This is a rare CSR Reporting Blog guest post. I am usually a bit picky about guest posts. Very picky, in fact.  But in this case, I have made an exception, because my guest is not really a guest. He's more like family, in a business sense, that is. Joshua Basofin is the newest member of Beyond Business, the little sustainability consulting firm that makes a BIG impact.


Joshua Basofin has worked in the environmental field for over ten years as an attorney, sustainability expert and writer. Most recently he was the California Representative for Defenders of Wildlife. In that capacity, he partnered with businesses and government agencies to reduce impacts on wildlife and natural resources. He was also the Freshwater Program Manager for Environment Now. Joshua holds a Bachelor’s Degree in English and Environmental Studies from the University of Wisconsin-Madison. He received his law degree, with honors, from Chicago-Kent College of Law. While in law school, he earned a certificate from the Program in Environmental and Energy Law and served as President of the Environmental Law Society.

Joshua will be expanding our portfolio of environmental sustainability services to corporations around the world, including our current clients, with an offering which includes environmental strategy development; creation of policies, performance and procedures; environmental mapping and auditing; environmental risk assessment; carbon reduction strategies and carbon footprinting; environmental training; Green Office and Green Team support;  environmental data-collection for Sustainability Reporting and research and benchmarking in different environmental disciplines and for Sustainability Reporting.  Joshua has particular expertise in the renewable energy sector and will be serving clients in this fast-growing industry.

Here is Joshua's inaugural post:

Green from the Ground Up: Sustainability Reporting for Renewable Energy Companies

Should companies whose services make the environment cleaner publish Sustainability Reports?

The answer is a resounding YES! In addition to assisting users of energy to manage their carbon footprint through the supply of clean energy products and infrastructures, renewable energy companies, in order to assure their own sustainability, must manage their own impacts, reduce their own footprint and demonstrate social and environmental accountability. A few renewable energy companies have risen to that challenge.

Carbon emissions are at unprecedented levels and the scientific community has long reached consensus that climate change will affect our planet in drastic ways. Renewable energy companies have responded by developing solar and wind facilities. These clean energy sources help meet increasing demand and will soon replace coal, oil and natural gas generators.

Solar companies in particular are increasingly ramping up production on photovoltaic and concentrated solar power systems. Governments eager to assist this development have provided subsidies and expanded renewable energy transmission grids. With a little innovation and strategic planning, more communities around the world will receive their energy from renewable sources. But the industry faces sustainability challenges just like any other. And Sustainability Reporting is vital to its success.

For example, solar companies have submitted over 200 applications to build facilities in California’s Mojave Desert. On the one hand, the Mojave is a vast sun-drenched area, stretching across 29 million acres. It has the potential to accommodate much of this solar traffic. On the other hand, it is an intact and fragile ecosystem, providing habitat for rare plants and animals. The Mojave’s water reserves are located in scarce underground aquifers. And it is riddled with Native American and other cultural artifacts. The solar companies that carved out sites (some stretching more than 6,000 acres) in the Mojave must address these resource issues.

Additionally, solar companies face challenges in greening their supply chains. Tremendous amounts of energy, water and raw materials are used in manufacturing and building solar infrastructure. During operation, maintenance crews must frequently wash panels or mirrors to ensure maximum effectiveness. That means a lot of water. And workers use large machinery that disturbs air quality and erodes soil.

One solar company that has embraced the task of creating a sustainability strategy is SunPower Corporation. Its California Valley Solar Ranch is currently being constructed on nearly 2,000 acres of land in California’s Carrizo Plain. SunPower is an industry leader and commands much of the U.S. market share. Thus, it is no surprise that SunPower was the first of its peers to publish a first Sustainability Report for the fiscal year 2010/2011.

  

The report, entitled “Sustainability by Design”, is comprehensive. It lays out concrete goals in the areas of products, operations, people and communities. Under the products category, SunPower puts forward an innovative LEED-certified “poly to panel” concept to improve transparency in the supply chain and ensure that all suppliers of raw materials adhere to the same sustainability principles. This will be encompassed in an industry-wide Code of Conduct  under development in collaboration with the Solar Energy Industries Association,  covering the following categories:

• Health and safety
• Labor
• Ethics
• Environment
• Management systems

Additionally, SunPower’s “Return, Reuse, Recycle” program guarantees that solar panels will not go to a landfill after their life cycle (25 years or more) has ended. This is a great development in curbing the company’s waste stream.

SunPower tackles resource issues head on. The report affirms a commitment to minimizing the company’s footprint, including ecological impacts like those in the Mojave Desert mentioned earlier. The company halved water use at five key facilities between 2007 and 2010 and targets to reduce this even further.  SunPower also commits to responsibly treating discharges resulting from chemical use.

Suntech, another solar energy leader and the world's largest producer of solar panels, with 20,000 employees, also published a first Sustainability Report recently. It deserves an honorary mention. Of particular interest is Suntech’s whopping 87% reduction in water use from 2002 to 2010 as well as a 90% electricity consumption reduction per MW of cell production in SunTech's largest facility in China between 2002 and 2010.

Future clean energy - photo reproduced from Suntech's Sustainability Report

Both SunPower and Suntech used the Global Reporting Initiative (GRI) Framework as a baseline for information disclosure -  SunPower  references the GRI, while Suntech includes a partial GRI Index without declaring an Application Level (10 indicators are reported on).

As renewable energy markets grow (according to SunPower, worldwide solar capacity reached 23 GW in 2009, the equivalent capacity of more than 40 coal-fired power plants),  regulators and the public will scrutinize renewable energy generators more and more. The industry provides a great service by replacing oil and coal dinosaurs and offsetting carbon emissions. But that is not a “get out of jail free card” on other important areas of sustainability. When a solar company’s “cradle to grave” operation has minimal impacts, it will truly be green.

Kudos to SunPower and Suntech for starting what hopefully will be more than an single ray of sunshine in the rapidly expanding solar market.

***

Of course, Joshua might have made a cone award to Sunpower and Suntech, but he's not (yet) been converted to ice cream (which is not (yet) a condition of hiring at Beyond Business).

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)

39 CSR reporting keywords

The Business Civic Leadership Center of the US Chamber of Commerce is celebrating its 10 year anniversary, and has put together a series of interesting videos in their TEN campaign  linking the number 10 with core CSR themes. The 10 most common words they selected got me thinking a little. The 10 most common words in CSR today according to the BCLC  are

1.  Sustainability

2.  Stakeholders
3.  Green
4.  Value Add
5.  Core competencies
6    Best Practices
7.   Leverage
8.   DNA
9.  Philanthropy
10. Accountability

Now, you might find some of these a little surprising, as I did, so I thought I would do a little check of my own. I analysed 12 CSR recently published CSR reports (listed on CorporateRegister.com) for a selection of 39 keywords, including the 10 that the BCLC selected. With interesting results.

These 39 keywords appeared a total of 12,648 times. Here are the additional 29 words I looked at:

**award ** biodiversity ** carbon ** climate ** community ** consumption ** customer ** dialogue ** diversity ** emissions ** energy ** engage(ment) ** environment ** employees ** ethics ** feedback ** governance ** impact ** leadership ** materiality ** offset ** partnership ** recycle ** risk ** target ** volunteer ** waste ** water ** women **


My analysis  of the top ten words are:

1.  Environment (1,288 times, 10% 0f total)
2.  Sustainability  (1,194 times, 9 % of total)
3.  Employees (989 times, 8% of total)
4.  Customers (875 times, 8% of total)
5.  Energy (806 times, 7% of total)
6.  Community (651 times, 5% of total)
7.  Impact (545 times, 4% of total)
8.  Waste (510 times, 4% of total)
9.  Emissions (486 times, 4% of total)
10. Water (450 times, 4% of total)

Clearly the environmental agenda is dominating CSR report content, though employees and customers, and, pleasingly, impact, are up there with the waste, water and emissions.

The BCLC ranking in my analysis works out like this:

Rank 2.  Sustainability (Hurray! we agree on one word!)

Rank 14.  Stakeholders
Rank 17.  Green
Rank 34.  Value Add
Rank 39.  Core competencies
Rank 36    Best Practices
Rank 38.   Leverage
Rank 37.   DNA
Rank 35.  Philanthropy
Rank 33. Accountability


Most of the top ten words the BCLC selected rank jut nowhere in twelve 2010 published reports, appearing less than 50 times each in a total of 1054 keywords per report on average. Wonder how the BCLC made their selection.

My analysis yielded some disappointments : "women"  appeared only 161 times (rank 23) and materiality appeared only 61 times (rank 31) and "leadership appeared only 152 times (rank 24). Stakeholders were mentioned  only 366 times, less than 3% of the overall total keyword usage.


Within the numbers, there are some interesting facts:


The top 25% (10) words account for 61% of all mentions of the 39 keywords. That's kind of Pareto-ish, right ?

Ten of the twelve reports analysed had environment as their most used word amongst the keywords

Two reports had no mention of "dialogue", 6 reports had no mention of "materiality" and one report had no mention of "customers" 

But apart from  a little fun in crunching the numbers, what does this tell us about the status of sustainability reporting? Can the focus of the organization be correlated to the frequency of keywords used?  Can we tell from an organization such as The Cooperative Group, whose top 5 keywords are sustainability, customer, employees, community and diversity, that they are more social-centric in their approach to CSR versus Ball Corporation whose top keywords are enviro-centric  sustainability, energy, employees, water and recycle ?  What about the approach to sustainability of BAE Systems who is the only one of the 12 companies who has "leadership" in the top 5 keywords? or Provident Financial, where the keyword "customer"  accounted for 32% of this Company's keyword usage, more than any other report of those analysed ? And what does it tell us that Kinross used the keyword community  for 16% of its total keyword usage, double that of any other report?

So maybe there's a case for keyword analysis of CSR reports, which reveals more about where the Company is placing its focus than the actual commentary? Of course, my analysis is a little rough and ready and relies on a consistency of language which is not always available - many companies refer to employees as colleagues, associates, team members or other such encouraging terms, so a search for employees might not reveal the true picture. But, on the whole, maybe CSR reporting keywords are a predictor of a Company's CSR mindset.

However, if you want to prove my analysis is totally screwy, all you need to do, when you are writing your next report is add this sentence at the start of each section:


Our award for best practices in biodiversity, relies on our DNA and  core competencies related to the management of carbon emissions, energy, waste and water, which we recycle, in order to provide value add for customers, whom we engage in dialogue about the climate and the environment, because they are stakeholders, and we target to get their feedback, which is in line with our governance and ethics principles, and our desire to be a green company with high impact and leverage in matters of high materiality, in order to mitigate risk and offset high consumption, so that our community can benefit from greater diversity, and sustainability, and our employees can volunteer in philanthropy activities in partnership with our leadership, which is composed mainly of WOMEN, because we value accountability.

NB: for info, the 12 reports I analysed are:

** USG corporation  **  Tamro Group ** Kinross Gold ** Provident Financial ** Barilla Group ** The Co-operative Group ** Network Rail ** Johnson Matthey ** Ball Corporation ** Premier Farnell ** AEP **

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