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CORPORATE SUSTAINABILITY
A New Frontier
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DEFINITIONS
 Sustain
– To give support to
– Support the weight of
– Keep up or prolong
– To bear up under
 Sustaining
– Aiding in the support of an organization through
a special fee (sustaining member)
 Sustained yield
– Production of a biological resource under
management procedures which insure
replacement of the part harvested by regrowth
or reproduction (ca. 1905)
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What is Sustainability?
 “Meeting our society’s needs in ways that
don’t compromise the ability of future
generations to meet theirs.”
 “At its core, sustainability is about being
responsible with resources – people, land,
energy, water, materials and capital.”
Clark S. Davis, Vice Chairman – HOK, “A Green Convergence: Linking Environmental and
Organizational Sustainability,” Horizons, RubinBrown, Spring 2009.
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What is Sustainability?
 “The word sustainability is all too often confused with
simple survival in challenging economic conditions …”
 “Now is the time for the forward thinking
organization to assess the market, look at
competitors and evaluate its long-term plan.”
 “Keys to sustainability are customer satisfaction and
satisfaction of your personnel.”
John F. Herber, Jr., Horizons, RubinBrown, Spring 2009.
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Drivers of Sustainability
Economic considerations
74%
Ethical considerations
53%
Innovation and learning
53%
Employee motivation
47%
Risk management/reduction
47%
Access to capital/shareholder value
39%
Reputation or brand
27%
Market position/share
21%
Supplier relationships
13%
Cost savings
9%
Improved government relations
9%
Source: KPMG Survey
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Stakeholders
U.S. Public Organizations
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Financial
– Shareholders (Institutions -- Individuals)
– Bond holders
– Banks
– Employees (including
unions)
– Other capital sources
(venture capitalists)
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Customers
Alliance partners
Direct suppliers
Upstream suppliers
Contractors
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SEC
IRS
Occupation Health and Safety
FDA
EPA
Accounting standards (FASB, IASB,
PCAOB)
FCC
Political
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Supply chain
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Regulatory
Federal government
State & local governments
International governments
United Nations
EU
OPEC
NATO
Social
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Local communities
General public
Academia
Charitable organizations
Environmental & social organizations
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Corporate Sustainability Reporting (CSR)
 Beginnings – highly unstructured
– Corporate Social Responsibility reports
 1997 – Global Reporting Initiative
– Amsterdam-based nonprofit organization
– Increased rigor and comparability
• Extends from crafting a CSR to specific performance indicators
• Primary areas
 economic, environmental, social performance (labor practices)
human rights, society, and product responsibility
 Strongly supported and implemented in Europe
– Currently in Version 3 of Global Reporting Standards for CSR
www.globalreporting.org
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Profile of CSR
Sustainability Reporting Guidelines
(Version 3)
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Strategy and analysis
Organizational profile
Report parameters
Governance, commitments, and engagements
Management approach & performance indicators
– Reporting on trends
– Use of protocols
– Presentation of data
– Data aggregation
– Metrics
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Sustainability Reporting
Expanded Listing
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Integration to strategic planning – What is “strategic management?”
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External orientation
Focus on strengths
Prepare for unknown developments
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Ability to adapt
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Business Continuity Planning
Disaster Recovery
Data backup
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Economic/financial
Environmental
Social performance (labor rights)
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Human rights
Products & services
Product responsibility
Society (overall impact)
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Compensation and benefits
Diversity
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CSR
ASSURANCE STANDARDS
 Purpose = creditability of reports
 Flexible approach
– Internal systems (including internal audit)
– External assurance (published conclusions on
quality of the report and information contained)
 Processes for preparation of report
 Assess validity of quality of performance by organization
• Professional assurance providers (including but not
limited to CPAs)
• Stakeholder panels
• Others
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Qualities of External Assurance
 Competent external groups or individuals
 Systematic, documented, evidence based approach
 Assessment of reasonableness of CSR performance
evaluation
– Quality of data
– Selection of items covered
 Completed by individuals independent of organization
or stakeholders
 Report follows GRI Reporting Framework
 Results in written, publicly available opinion
– Also includes statement assurance provider about
relationship to the organization
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Final Thoughts
“… leading companies view social and environmental
responsiveness as an asset and an opportunity,
not as a liability or cost. They recognize that an
investment in the structures and systems to
ensure strong social and environmental performance
often pays dividends in terms of improved process
and production quality, improved production
efficiency and yields, improved innovation, lower risk,
improved reputation, and increased profitability.”
Marc. J. Epstein, “Implementing Corporate Sustainability: Measuring and Managing Social and
Environmental Impacts.” Strategic Finance, January 2009
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Final Thoughts
Continued
 “A lean strategy is the relentless pursuit to eliminate
waste in all business processes.”
– Traditionally used on the “plant” floor
– Today, throughout the organization
 “Companies that have implemented lean are finding
sustainability initiatives an easy extension of this
philosophy.”
Mike Lewis, Horizons, RubinBrown, Spring 2009.
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Examples of CSR
 Starbucks
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Reports have been issued since 2001
An extensive CSR report
Follows GRI guidelines (Version 3)
Includes prior goals and performance indicators
Includes independent assurance report
• Moss Adams, LLP (Accounting and Consulting firm)
 Since 2002
– Establishes 2015 goals
http://www.starbucks.com/sharedplanet
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Examples of CSR
 Royal Dutch Shell
– Reports have been issued since 1997
– An extensive CSR report
– Follows GRI guidelines (Version 3)
– Includes prior goals and performance indicators
– Assurance
• Internal controls established to validate
information
• External review committee report included in
the report (estab. in 2005)
Objective is to insure report is balanced,
relevant, and responsive
Independence is not clear
http://www.shell.com/home/content/responsible_energy/sustainability
_reports/dir_shell_sustainability_reports.html
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Examples of CSR
 Others