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The Business of Sustainability
Understanding the innovation of corporate responsibility
SungGil Hong
suhong@ucsd.edu
February 25th, 2010
Senior Research Project
Submitted in partial satisfaction of a BA in
Urban Studies and Planning,
University of California, San Diego
Abstract
Environmental issues have been ever present since the Industrial Revolution, but it is now
that closer scrutiny is placed on the full impacts of industrial practices. The sustainability
of business has grown in the U.S., not from government regulations, but from
competition to become a business of sustainability. This paper addresses the influences
and authority of business sustainability amidst the lack of government sovereignty.
Governance of sustainable reporting and regulation for businesses is split between
internal, Corporate Social/Sustainable Responsibility/Report (CSR) and external,
nongovernment organizations (NGOs). A study of 10 corporations operating in
California was compared to a reference framework developed through international
standards in order to uphold the highest scientific standard. Each corporation’s CSR was
analyzed by scope and depth of each sustainable governance system and systematically
compared by the presence of supporting and organizational NGOs. Sustainability scope
and depth was measured through respective reporting methodologies, and initiatives in
response to reporting, for Greenhouse Gas Emissions (GHGE). A typical survey of the
glut in NGOs that corporations are subscribed to would suggest the utmost commitment
to sustainability, but this paper argues that many of these NGOs exist more out of
marketing value rather than environmental concern.
Key words: informal sustainability governance, greenhouse gas emission (GHGE)
reporting, sustainably direct initiative (SDI), sustainably indirect initiative (SII)
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Introduction
There is no doubt that “going green” has become commonplace as evidenced by
lobbying, competition, or even social media such as Al Gore’s film, “An Inconvenient Truth.”
Falling short of an apocalyptic omen, the legitimacy of sustainability has recently received
support from all three sectors: the public, government, and business. Though there is some
measure of support from all three sectors, it usually presents itself in a fragmented manner. It
was not until recently that a common decision was reached by the top 120 U.S. companies’ chief
executives at the Business Council. At their October 2009 gathering, “no one among the group
was arguing the science of climate change… [but agreed it would] require an effort on the part of
mankind to respond to this challenge” (Reuters 2009). Though a statement of unification, it was
more flash than substance as no collective efforts for sustainability were made. In a profit-driven
economy it would seem that the environmental good takes second seat to revenue.
For many companies, the full realization of sustainability as economic, environmental,
and equitable, proves to be mutually exclusive or simply dismissed as “going green” or being
“hippy.” This misconception only perpetuates that there is a lack of standards and enforcement
within the U.S. to address the importance of sustainability and climate change. As such, the
predominant scientific means of calculating sustainability is through greenhouse gas emission
(GHGE) footprinting. Though the U.S. Environmental Protection Agency has set out its
“Mandatory Reporting of Greenhouse Gases” in October 30th, 2009, it is limited to only the
largest emitters of green house gas emissions (GHGE) and does not address other factors of
sustainability (U.S. EPA 2009). Similar environmental laws exist nation and statewide as well.
Though these government laws are steps in the right direction, they often cross over
jurisdictional boundaries or are misguided in scope. Many of these laws are created with the
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intent of jurisdictional application (special districts) by self-interested lobbying by corporations,
or with “uncertainty in ecological knowledge [which] causes difficulties when this knowledge is
used for regulatory purposes” (Ludwig, Mangel, and Haddad 482). Though special district laws
have produced results such as reducing direct polluting in local environments, many of these
laws that are put into effect do not take into account the full scope of sustainability, scientifically
and regionally, and can also add unnecessary red-tape for a uniform sustainability standard and
accountability. The end-framework for sustainability regulations and standards in the United
States resembles putting together a puzzle with fragmented pieces of differing sizes and shapes.
On the international scale, regulations are predominantly based off of sustainability
standards set by international regulation NGOs. The International Organization for
Standardization (ISO) markets widely used regulatory and reporting guides from calibration of
laboratory technology to life cycle assessment. Even though these procedural documents are
sold at a subscription fee, it still prevails as one of the largest databases for providing standards
for business, government, and society across the globe. Although nearly all the world’s
developed countries are member nations and contributors to ISO, not all of their standards are
necessarily put into practice by the countries that help develop the standard. In regard to
sustainability data reporting, verification is optional, not mandatory. Corporations will either
choose to subscribe and adhere to NGO regulations or create their own methodology if at all.
Taking a survey of pertinent environmental laws and the evolution of sustainability regulation
and governance, this study explores the revolution of green initiatives by corporations: how they
are reported, what actions result from the GHGE footprint, and who drives sustainability.
Green initiatives can be placed into two groups: sustainably direct and indirect.
Sustainably Direct Initiatives (SDI) make reductions from within the process such as innovation
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and efficiency improvements. Sustainably Indirect Initiatives (SII) make reductions through
compensating for the byproducts of the process. Amongst SII’s are carbon offsets such as
carbon sequestering or reforestation, recycling programs, or corporate philanthropy. Though
they do help, their impact is better suited as a marketing agenda rather than a sustainable
initiative. Despite this blatant sell-out of the “green cause” it is already apparent that green
changes must be made to ensure the provision of resources in the future, as the mantra of
sustainability dictates. Whereas the European Union has made strict regulations in curbing
greenhouse gas emissions (GHGE) and promoting sustainability, the United States, led by the
Environmental Protection Agency (EPA) is still in the infancy of reaching its goal of limited
GHGE reporting by the year 2011. With this lax atmosphere, green initiatives are delineated as
either meeting the bare requirements of “official regulation” or a true commitment to
sustainability. This study focuses on comparing the effectiveness between sustainable regulators
and reporters whether they are non-governmental or private entities.
The intent of this study is not to serve as an exposé or scandal sheet. To an extent, the
implementation and regulation of sustainable practices in the corporate realm has been met with
many possible solutions, but with no unifying standard or authority. By approaching this study
through the lens of scholarly texts as well as empirical data collection from corporations that
participate in said possible solutions, this project identifies any trends that are present within how
businesses operate in a sustainable mind-set environment. The research that follows reveals the
lack of authority in keeping businesses accountable for sustainability reporting while exploring
the behavior of informal corporate sustainability practices. The data draws a comparison of
multiple mainstream reporting methods and business sustainability organizations in conjunction
with NGOs and third party verifiers.
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Literature Review
The term “sustainability” is one that has been coined for over 30 years “introduced by
Lester Brown in 1981, as the challenge to satisfy our needs without diminishing the chances of
future generations” (Capra and Pauli IX). When it comes to initiating a lasting and effective
change towards sustainability it is necessary to have a holistic viewpoint of interdependence.
Rather than just seeing business as the marketing of products, “the principle of interdependence
implies a shift of perception from objects to relationships” (Capra and Pauli 3). By using
greenhouse gas emissions (GHGE) as the standard of measurement, the relationship between
different business practices can be gauged by the accumulated GHGE impact on the
environment.
Though this study will particularly look only within the United States, namely California,
it is still important to gain a global perspective since sustainability knows no boundaries or
political lines. Along with business, public, and government entities as the main players, Capra
and Pauli explore the roles of non-governmental organizations as well as the role of social
monitors in exercising regulation and oversight. The work further outlines a set of suggestions
for more sustainably oriented businesses such as dialogues with forward-thinking customers,
adequate information, benchmarking, systemic planning, and individual and collective learning.
Current self-reporting of businesses is mainly through the institution of Corporate Social
Responsibility (CSR). The CSR form of corporate accounting is built directly into a company’s
business model. The ideal of a CSR is to function as a monitor and self regulator in order to
ensure the well-being of the triple bottom line (People, Planet, and Profits), but realistically can
be biased with self-interest. As argued by Auld, Bernstein, and Cashore, this system must
undergo changes from “largely focus[ing] on corporate philanthropic activity… [to] internalizing
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the externalities produced by a firm’s core business activities” (Auld, et al. 2008). This is
represented by the juxtaposition of Sustainably Indirect Initiatives and Sustainably Direct
Initiatives.
Opposition to this work argues for a stronger presence of governmental or nongovernmental social monitoring to avoid corruption and collusion. The plan that is outlined by
Auld, et al. in 2008 contended that a new CSR be based on “individual firm efforts, individual
firm and individual NGO agreements, public-private partnerships, information-based
approaches, environmental management systems (EMSs), industry association corporate codes
of conduct, and private-sector hard law known in the scholarly literature as non-state marketdriven (NSMD) governance” (Auld, et al. 2008).
The adoption of these innovations would
better streamline the information gathering by corporations to better initiate sustainability
programs. Due to many conflicting scholarly opinions regarding the nature of Corporate Social
Responsibility, it is essential to attain works and data to evaluate and understand current
practices and policies (corporate and governmental). Bergin et al. contends that “awareness of
the need for cooperative solutions” needs to be realized in the government (Bergin et al. 29).
Due to the costs of GHGE management, leaders need to be able to make the financial
commitment for pollution control.
The globalization of the economy has also been a powerful resource for firms to increase
the influence and network of their operations. Within the scope of globalizing businesses is the
need for an internationally recognized standard of regulation. David Vogel in 2008 asserted that
global social activism prompted highly visible firms to adopt “voluntary regulatory standards to
avoid additional regulation and/or protect their reputations and brands” (Vogel 2008). He further
characterizes the impact of civil regulations on global firms such as multi-stockholder codes
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(governance shared by firms and NGOs) and how they “address but [do] not resolve the
challenge of making global firms and markets more effectively and democratically governed”
(Vogel 2008). Despite being able to address problems, a clear line of authority is necessary in
directing focus of initiatives and vision casting for the company.
Global civil regulations first arose from the assumption of regime theories amongst world
affairs which included businesses. Spheres of influence created an informal set of rules that were
loosely followed or understood. As civil regulation institutions and authorities were established,
they eventually created a sense of “governance without government” in which overlapping
“multilateral, non-territorial modes of regulation, with the participation of private and
nongovernmental actors” could potentially have overlapping and conflicting spheres of authority
(Vogel 2008).
Pertaining to green initiatives, a firm may just as easily implement sustainable policies
within the U.S., but may disregard them in off-shore holdings and operations. Also the
contention of private and public regulation between CSRs, NGOs, and public regulations blur the
boundaries between mandatory and voluntary regulations.
Research Strategy
The main component of this research analyzed and compared the scope and depth of
GHGEs in NGOs and CSRs. Scope related to which fields were disclosed in the reporting
process through a reference framework of Scope 1, Scope 2 and Scope 3 GHGE definitions.
Reporting depth corresponds to how corporations responded and used the data they reported,
whether they made goals and reductions, or simply reported the levels. The methodology behind
the reference framework was based off of international standards for reporting and regulating.
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Reference Framework and International Standards
The reference framework established the minimum reporting requirements (if any) for the
corporations included in the study, pertaining to Scope 1, Scope 2, and Scope 3 GHGE
definitions. GHGE reporting is used as the standard because of its explicit definitions for direct
and indirect GHGE reporting methodology. Using the International Organization for
Standardization (ISO) 14000 series on “Environmental Management,” United Kingdom Publicly
Available Specification (UK PAS) 2050: “Specification for the Assessment of the Life Cycle
Greenhouse Gas Emissions of Goods and Services,” World Resources Institute (WRI): The
Greenhouse Gas Protocol Initiative’s (GHGPI) “A Corporate Accounting and Reporting
Standard, Global Reporting Initiative’s G3 reporting guidelines, and the International Panel on
Climate Change’s (IPCC) “1996 Revised IPCC Guidelines for National Greenhouse Gas
Inventories,” the definitions of Scope 1, Scope 2, and Scope 3 were established. Under Scope 1,
all direct emissions (from combustion and chemical reactions) from corporations will be
recorded from company sustainably reports. Scope 2 will include indirect emissions with
regards to energy use, for example the GHGEs associated with the purchase of electricity from a
coal power plant. Scope 3 takes into account other indirect sources of GHGEs that are not
controlled by the company such as GHGEs resulting from contracted services or GHGEs from
the production of materials that were purchased by the corporation.
Regarding the depth of reporting, quantitative and qualitative data was collected from
corporate sustainability reports. The reference framework compared and contrasted if
corporations made any initiatives or goals to reduce GHGEs from specific sectors. The initiative
response to GHGE reporting was categorized between either Sustainably Direct Initiatives
(SDIs) or Sustainably Indirect Initiatives (SIIs). Though there were different means of reduction
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across all the companies more weight was given to corporations that laid out direct initiatives
with specific reductions.
Though the measure of GHGE accounts for overlap with other sustainability categories,
such as energy-use measured by Scope 2 GHGEs, these categories were only used where
reporting data was available. For companies that did not specify reporting by scope, reductions
over time and/or SDIs or SIIs in response to the data reported were taken into account as a
second tiered rating system for the reference framework. The affect of any non-regional local
initiatives, such as corporate philanthropy and carbon-offsets were also accounted in the second
tiered rating scale. Water use, recycling, and waste disposal were excluded from the
sustainability reporting categories (despite any residual GHGE impact) due to a lack of definitive
scientific consensus. Water footprinting methods are still in contention with origin, fugitive
losses, and end disposal. Recycling and reuse back into the product cycle is already counted
under Scope 1 and 3 emissions, and waste is already well-documented and enforced. Gathering
quantitative and qualitative data on these sectors would have created too many variances to
account for.
Limitations and Boundaries
Even though sustainability is defined into the three categories of economical,
environmental, and ethical, analysis is only drawn from the economical and environmental data
sets. While it can be argued that an ethical analysis can be made from the data collected, it is
still lacking largely in employment data such as use of off-shore labor, worker benefits, and
ethnic diversity, to name a few. Furthermore the purpose of this study was not to compare and
explore social constructions, but physical infrastructure and capital.
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This project analyzed companies that operated within the United States and had global
relations, but focused on companies that held operations predominantly in California. This
narrowing of the selection pool minimized variance in local environmental factors. When
comparing scope and depth of sustainability, different regional, state, and country political
environments could equate to an irreconcilable amount of unknown variables. The direct and
indirect impacts of a corporation on its regional environment can hold implications based on
regional issues regarding sustainable programs that are implemented. Though micro-variances
can exist within regions they were excluded from this analysis by using GHGE reporting as the
standard measurable variable.
The selection of corporations and member-initiated NGOs focused on corporations that
held operations in California. Due to the varying amount of environmental laws and regional
NGOs choosing one state to draw data points from minimized jurisdictional overlap and
reporting methodologies. California was chosen over all other regions and states because it
holds the highest GHGE reporting standard. In order to account for all existing government
regulations under this boundary, a survey of the United States Environmental Protection Agency
(U.S. EPA) and California Environmental Protection Agency (CA EPA) was taken. Compared
with international standards, California passed a similar GHGE reporting mandate in 2006 for
corporations to cap GHGE levels based on 1990 emissions, by the year 2020 (CA Air Resources
Board 2009). Under the “Mandatory Reporting of Greenhouse Gases” by the U.S. EPA this
mandate would only go to include “facilities that emit 25,000 metric tons or more per year of
GHG emissions” (U.S. EPA 2009). Though these government mandates are steps in the right
direction, they only served as a defining variable in corporation selection since the companies
under these laws must comply with GHGE reporting by 2020.
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Selection of Corporations
Studies were conducted on corporations representing a limited amount of core industries
including manufacturing and retail, energy, biotechnology, telecommunications, and health and
pharmaceuticals,. The ten corporations selected included biotechnology firms Genentech;
manufacturing and retail corporations, Wal-Mart, Hewlett Packard, Sony Group, and LG
Electronics; telecommunications corporations, Kyocera and Qualcomm; energy corporation,
Sempra; and health and pharmaceutical companies, Pfizer and Johnson & Johnson
Pharmaceutical. .The corporations chosen were based on a list of commonalities in order to
reduce variance in data. These corporations operate in the global realm, adding subjection to
international regulations; have major bases of operation within the United States and California,
to make sure all corporations are under similar governmental pressures to report; and have a
dedicated sustainability branch, to ensure that the data pool has made a dedicated effort to
sustainability data reporting.
Selection of Member-Initiated Sustainability Organizations
As already stated with the lack of government regulation for GHGEs despite what is
reported by corporations, this study looked towards sustainability organizations for businesses.
Amongst the organizations selected were the San Diego Regional Sustainability Partnership
(SDRSP), CleanTECH San Diego (CTSD) and Carbon Disclosure Project (CDP). These three
organizations were ultimately selected because they represented a large member base, as well as
being organized under a multi-stakeholder system where members direct the organization. All of
these organizations also profess a commitment to be a driver of sustainability while maintaining
economic profit and competition. In order to maintain a control group for the governance-
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driving for sustainability, corporations with various memberships, as well as corporations not
within these organizations were used.
Carbon
Disclosure
Project
Genentech
Hewlett Packard
Johnson & Johnson
Pharmaceutical
Kyocera
LG Electronics
Pfizer
Qualcomm
Sempra Energy
Sony Group
Wal-mart
Member
Member
Member
Member
Member
Member
Member
San Diego
Regional
Sustainability CleanTECH
Partnership
San Diego
Member
Member
Member
Member
Member
Member
Member
Table 1: Corporations and Sustainable Organization Membership
Data Segregation and Collection
Corporations were first grouped by their prevailing methodology in sustainability
reporting. Of the ten corporations, Genentech, Qualcomm, Sempra, and Wal-mart were found to
use the Global Reporting Initiative’s standards for GHGEs in the publication of their
sustainability reports. The remaining six also used the Global Reporting Initiatives standards,
but also included standards from the International Organization for Standardization. Hewlett
Packard, Johnson & Johnson Pharmaceutical, Kyocera, LGE, Pfizer, and Sony Group all were
reported to use the ISO 14001 standard on environmental management with Hewlett Packard
also being subscribed to the ISO 14040 standard for product life cycle analysis. Both of these
organizations (ISO and GRI) provide a GHGE framework with which to report their GHGEs
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data. Though all companies subscribe to these standards, they still only pertain to reporting
guidelines only and do not obligate or mandate GHGE reduction initiatives.
Corporation Scope and Depth
LG Electronics
LG Electronics was one of the two corporations chosen that were not a part of any
member involved sustainability organization. Though LG Electronics does utilize GRI reporting
guidelines and ISO 14001, these GHGE subscriptions are reporting based and do not mandate or
regulate improvements, reductions, and reports that are made. As a control, LG Electronics was
not found to subscribe to any member organizations that collaborated on furthering sustainability
and initiating goals. Within their “2008 LG Electronics Sustainability Report” they outlined
their sustainability motto as “Keeping the World Green Through Voluntary GHG Emissions
Reduction.” Their 2008 domestic corporate GHGE was listed at 716,658 tons of CO2 and was
further delineated between 17.9% being Scope 1 at 128,281.8 tons, 70.1% being Scope 2 at
502,377.3 tons, 1.5% being Scope 3 at 10,749.9 tons, and 10.5% being Optional sources at
75,249.1 tons of CO2. In their manufacturing sector their GHGE target reduction is 150,000
tons between 2008 and 2010, and with products their target reduction is 30 million tons by 2020
compared with 2007 figures.
Genentech
Genentech was the second corporation surveyed to not be a part of a member driven
sustainability organization. Unlike LG Electronics, the “Genentech 2008 Corporate
Sustainability Report” based their reporting guidelines only on the GRI reporting rules and did
not use the ISO standards. Despite this, they still reported a comprehensive listing of their
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GHGEs, defining their emissions between energy related GHGEs and transportation related
GHGEs. Their energy related reporting was separated by direct (Scope 1) and indirect (Scope
2). Direct emissions constituted natural gas usage at 64,078 metrics tons of CO2 and diesel fuel
usage at 801 metric tons of CO2. Indirect emissions covered GHGE from purchased electricity
with 98,360 metric tons of CO2. Transportation related GHGEs segregated emissions by
business travel on the road at 10,135 metric tons of CO2, business travel by air at 26,325 metric
tons of CO2, and employee commuting at their South San Francisco branch at 28,581 metrics
tons of CO2. Reporting of their onsite vehicle fleet was excluded in their CSR since emission
sources totaling less than 5% of the total threshold under their reporting guidelines are
considered as negligible to the entire company’s sustainability reporting. Depth of sustainability
consisted of setting goals to “improve energy efficiency by 10 percent by the year 2010,
compared to 2004.” Progress on this goal consisted of boiler improvements in 2008 which saved
2565 tons of CO2 as well as lighting upgrades which reduced energy related emissions by 330
tons of CO2.
Kyocera
Kyocera was the only corporation selected that was a member of all three organizations
in addition to being subscribed to both the GRI reporting guidelines, and ISO 14001
environmental management system standard. The “Kyocera CSR Report: Economic, Social, and
Environmental Reports – 2009” lists the overall environmental impact of through a process map
including material procurement and production, distribution, and consumer use. Though it did
not explicitly list GHGE by scope its process diagram described their GHGEs by the sections of
their product life cycle analysis. For their material procurement and production, they emitted
445,794 tons of CO2, 44 tons of nitrogen oxides, and 2.3 tons of sulfur oxides. Their distribution
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centers emitted 5,177 tons of CO2 which was decreased from the previous year by 527 tons. The
end use impact of their solar cell modules and cellular phones was reported as a net of -115,972
tons of CO2 due to the solar energy it provided which offsetted regular electrical use. The depth
of their report constituted a commitment to engage suppliers on sustainability consciousness and
practice as well as qualitative goals under their “Environmental Safety Vision” for the prevention
of global warming, recycling of resources, environmental conservation, safety & disaster
prevention, and perfect 5S (raising employee awareness).
Johnson & Johnson Pharmaceutical
Johnson & Johnson Pharmaceutical was one of two corporations selected that had
membership to the Carbon Disclosure Project and San Diego Regional Sustainability
Partnership, in addition to having GRI and ISO 14001 compliance. From their “2008
Sustainability Report,” emissions were specified as direct at 357,000 metric tons, indirect at
971,000 metric and indirect offsets at 364,000 metric tons. Sustainable direct initiatives looked
towards investing in “Lower-Carbon Energy Efficiency.” From $124 million in capital, eight
projects were funded: 17% to energy efficiency, 15% to chiller upgrades, 8% to cogeneration,
8% to solar P.V./thermal, 5% to HVAC, 4% to boiler upgrades, 3% to biomass, and 1% to wind.
Sustainably indirect initiatives focused on getting suppliers to join CDP’s Supply Chain
Leadership Council and the formulation of “Healthy Planet 2010” goals.
Qualcomm
Qualcomm was the second corporation selected that held membership to the CDP and
SDRSP, but only had GRI compliance on their reporting procedure. From their “2008
Qualcomm Social Responsibility Report,” emissions were denoted by “Total Direct” and “Total
Indirect” emissions. In 2007 total direct emissions accounted for 43,921 CO2 metric tons, while
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total indirect emissions accounted for 46,694 CO2 metric tons. Represented as CO2 metric tons
of emissions per gross square foot, Qualcomm’s California facilities equaled .0205 despite
expansion of facilities by 91% from 2001 to 2007. Starting from the 1990’s to now, “more than
130 projects that improve energy efficiency and reduce greenhouse gas emissions” from
operations have been completed. Incorporation of highly efficient lighting at HVAC systems
saved 135 metric tons with an additional 3,981 tons saved through other energy savings
throughout the year. Cogeneration also reduces purchased energy consumption with 2
cogeneration units saving 6,172 tons of CO2 annually.
Hewlett Packard
Hewlett Packard also had membership with two of the three organizations, the SDRSP
and CleanTECH San Diego (CTSD). Their “Global Citizenship Report 2008” utilized the GRI
standards as well as ISO 14001 on environmental management systems and ISO 14040 on
product lifecycle analysis for GHGE. Emissions were listed under HP Operations at 1,442,000
metric tons, HP employee business travel at 425,000 metric tons, product manufacturing at
3,500,000 metric tons, product transport at 1,800,000 metric tons, and an estimated 300,000 for
product end use by customers. Current savings from 2007 were a 4% reduction in GHGEs or
13% when normalized with revenue value. The only numerical listing associated with this
reduction was a savings of 550 metric tons from the energy contribution of 6,200 solar panels.
Similar to Kyocera, Hewlett Packard has also put emphasis on attaining emissions from their
supplier base. All other sustainability initiatives listed only offered broad goals with no
numerical amount for reductions, timeline, or specified details regarding implementation.
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Sempra Energy
Sempra Energy was the only corporation selected that had membership to both CDP and
CTSD. Their “2008 Corporate Responsibility Report” based their reporting framework from the
GRI reporting guidelines for GHGEs. GHGE reporting for 2008 estimated 17 million metric
tons of CO2 from electricity generation and purchases. Since Sempra Energy creates and
distributes energy as its product it essentially has no Scope 2 emission sources. Of its Scope 1
and Scope 3 are power generation at 47% of their total, end-use purchasing of power by
consumers at 36%, fugitive emissions at 12%, power line losses at 3%, process emissions at 1%,
fleet vehicle emissions at 0.31%, and facility electricity use at 0.20%. Sustainably direct
initiatives set by Sempra Energy aim to reduce emissions by 15% from fleet vehicles by the year
2010 and to reduce kilowatt hours per square foot 15% by 2015 (with a 2003 baseline).
Compared to energy reductions in 2008, consumption was reduced by 11 percent. Sempra also
works with affiliate companies and clients in order to reduce electricity usage equaling to GHGE
reductions.
Pfizer
Pfizer was one of the three corporations selected that listed the Carbon Disclosure Project
as its only member initiative GHGE reduction organization. Their “2009 Corporate
Responsibility Report” relied on the GRI GHGE reporting guidelines as well as ISO 14001 for
environmental management systems at 70% of their manufacturing sites and 100% of their major
R&D sites. Greenhouse gas emissions in 2008 were separated by Scope 1 and Scope 2 at a total
around 2 million tons of CO2. For Scope 1 emissions, 12% were from fleet operations and 35%
were from onsite combustion. For Scope 2 emissions, 50% of the GHGEs were indirectly
produced through the purchase of electricity. The only sustainably direct initiative mentioned
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with a numerical goal consisted of a “public goal to obtain 35 percent of electricity from clean
sources in 2010.” Considering the 50% contribution of GHGEs from electricity purchases, 35%
proves a significant challenge especially with Pfizer’s acknowledgement of the “closure of some
plants with cogeneration capability.” Other SDIs listed without numerical reduction values were
the impact reduction of their 32,000 vehicle fleet by identifying and selecting appropriate engine
sizes with intent and purpose in mind.
Sony Group
Sony was the second corporation selected as a member of the Carbon Disclosure Project,
utilizing the GRI GHGE standard as well as the ISO 14001 standard for environmental
management systems. From the “CSR Report 2009 Executive Summary,” total GHGEs for Sony
on the global scale was 1.8 million tons of CO2, with roughly 230,000 tons of CO2 accounted
for operations in the Americas. Further scoping data was not provided as to the nature of the
emission sources other than the energy being used at sites. As for numerical SDIs made by
Sony, their sustainability agreement with the World Wide Fund for Nature (WWF) outlines that
the Sony Group will reduce absolute GHGEs to 7% of the year 2000 levels, by the year 2010.
Also 42 million kWh of renewable energy was purchased for United States sites, averaging a
global saving of GHGEs at 92,000 tons. Non-numerical SDI included reducing CO2 emissions
from product use through lowering energy consumption on major products. Currently all 20082009 models met or exceeded standards set by the International Energy Star program. End of
lifecycle waste for products is also listed, but does not include any associated GHGE figures on
impact of disposal or recycling. Sustainably Indirect Initiatives focused on raising consumer
awareness and supporting “the view that the average global temperature rise must remain below
2 degrees Celsius above pre-industrial times.” In addition are SIIs focused on protecting
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biodiversity with “site greening activities and initiatives aimed at helping to restore areas outside
its sites to their natural state.”
Wal-Mart
Wal-mart is the last corporation viewed holding membership with the Carbon Disclosure
Project. Their “Wal-Mart 2009 Global Sustainability Report” is compiled with the use of the
GRI reporting standard for GHGEs. CO2 emissions in 2007 were accounted at roughly 20
million metric tons of carbon dioxide equivalent. This estimated total is not delineated by any
scope or definition other than a corresponding listing of CO2 emissions per $1 million sales at
around 50 metric tons of CO2 per million dollars of sales. Of their sustainably direct initiatives
Wal-Mart has announced that 15% of the energy load of deregulated markets in Texas would be
supplied by purchased wind energy. Wal-Mart’s overarching sustainability goals are to “be
supplied 100 percent by renewable energy, create zero waste, and sell products that sustain our
resources and the environment.” Of these three sustainability goals, only the renewable energy
goal is directly associated with lowering their GHG footprint. Despite this goal being a major
reducer of energy related GHGEs, the sustainability report makes no mention for steps to be
taken to accomplish this other than the incremental purchase of renewable energy that was stated
with deregulated markets in Texas.
Analysis
The data showed that not all corporations reported at the full scope of the standards they
subscribe to. The only two that fell short of standard reporting guidelines were from the Sony
Group and Wal-Mart supported by GRI/ISO14001 and GRI alone respectively. While all other
companies listed purely as Scope 1, Scope 2, Scope 3, or by Direct/Indirect, two corporations
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further detailed emissions by their process flow diagrams. Hewlett Packard and Kyocera
presented their GHGEs data in such a way as to best facilitate pinpoint reductions and GHGE
auditing. Though corporations have the option to report to their own discretion, it is for the
purpose of this study to reveal the need for standardization.
Sustainability depth was across the board with Sustainably Direct Initiatives and
Sustainably Indirect Initiatives being quantitative or qualitative in nature. Wal-Mart’s three step
sustainability goals obviously presented itself as a listing of qualitative goals such as “reducing
GHGEs” or “use 100% renewable energy” with no time frame or mention of feasibility. This is
juxtaposed to SDIs of a quantitative nature such as Genentech’s long term goal for 10% energy
reduction by 2010, followed by a current update on this goal from 2008. The presence of SDIs
and SIIs with numerical and qualitative sustainability initiatives helped reconcile the reported
data, whether in showing marked improvement in numbers or purely just the effort in sustainable
thought. The differing reporting styles of data emphasized the need for a common standard
amongst all industries.
Genentech
LG Electronics
Johnson &
Johnson Pharm.
Qualcomm
Hewlett Packard
Sempra Energy
Pfizer
Sony Group
Wal-Mart
Reporting
Standards
Third Party
Verifier
Full
Scope
Depth (Goals)
GRI
GRI + ISO
14001
GRI + ISO
14001
GRI
GRI + ISO
14001, 14040
GRI
GRI + ISO
14001
GRI + ISO
14001
GRI
Bureau Veritas
Yes
Numerical
Yes
Numerical
Yes
Yes
Numerical
Numerical
None
None
CDP, SDRSP
CDP, SDRSP
SDRSP,
CTSD
CDP, CTSD
Yes
Yes
Qualitative
Qualitative
None
CDP
Yes
Numerical
Bureau Veritas
None
CDP
CDP
No
No
Numerical
Qualitative
GRI B+
None
None
Organizations
None(control
group)
None(control
group)
Hong | 21
Kyocera
GRI + ISO
14001
Pricewaterhouse CDP, SDRSP,
Coopers
CTSD
Yes
Qualitative
Table 2: Corporate Listing of Reporting Standards, Organizations, Scope, and Depth of Reporting
The presence of the control group, when relating the reporting scope and depth
performance to corporate affiliations with sustainability membership, proves that more data is
needed to better ascertain the informal governance structure behind sustainable initiatives. The
results presented may have been biased from the start due to the selection bias of corporations in
requiring the presence of a reporting standard being used. Corporations that were excluded from
this study, that were a part of the CDP, SDRSP, or CTSD were excluded on the basis of not
having a sustainability department or CSR report outlining their reporting, if any. This
hypothesis was ignored in formulating the reference framework and methodology of this study
due to the negative returns of investment
The results of this research uncovered many possible loopholes that corporations have
taken advantage amidst the lack of standard verification and governance. Based on the criteria
GHGE reporting scope and reduction initiatives, the GHGE reporting scope fell short of meeting
basic defining of GHGEs as Scope 1, 2, or 3. In addition, the reduction initiatives present were
largely a list of unempirical goals and dreams when actual reduction numbers were not present.
As a whole, all corporations displayed disclosure on GHGEs by at least indirect and direct
sources. Despite the membership of member driven sustainability organizations, the increased
amount of subscriptions did not necessarily equate to higher reporting values and more
extensive SDIs and SIIs listed (as was the case with Kyocera). Alternatively all the corporations
Hong | 22
with dual memberships or no memberships at all performed the best in scope reporting and SDI
and SII disclosure.
When comparing solutions and commitments in response to the data, other environmental
NGO memberships arose amongst some of the companies. Only with Sony did it make a
particular impact since its SDIs and SIIs were partnered with environmental NGO World Wide
Fund for Nature’s (WWF) “Climate Savers Program.” Of all the corporations surveyed, the only
additional NGO membership that affected GHGEs was the WWF affiliation with the Sony
Group and Johnson & Johnson Pharmaceutical (albeit more of a philanthropic nature for the
latter). Other organizations that were present amongst the corporations were third party
verification programs. Despite verification of CSR reports there was discrepancy amongst
corporations that used the same verifier such as the Bureau Veritas group which verified
Genentech and Sony Group’s CSRs. Even with a common verification entity, their scope
reporting and responsibility to SDIs and SIIs did not correlate.
Conclusion
Amidst the growing importance of sustainability in the workplace, home, and
government, unification and authority are needed to ensure responsibility and integrity. Today,
this sense of governance and authority is not found in the established government but instead in
environmental NGOs, third party standards/regulators/verifiers, and sustainable business
partnership organizations. Though the data presented does not draw clearly defined conclusions
on the exact nature of informal sustainability governance structure, it does better define the
informal governance structure for sustainability that was created by the lack of government
Hong | 23
presence. These informal structures though based on scientific accounting principles for
reporting GHGEs are only voluntarily enforced for scope and depth.
The formation of the reference framework for scope and depth of sustainable programs
and policies served as the best indicator since it could be compared as a methodology amongst
differing industries. Research from this study also contributes to demystifying public and private
regulation standards. Since there is currently no governmental agency to regulate sustainability,
as it is reported now (corporations outside of the scope of the “Mandatory Reporting of
Greenhouse Gases”), it is the intention for this research to expose the need for a sovereign
authority (governmental or non-governmental) in setting a more universal standard of regulation
and verification. The creation of a sovereign government entity to regulate should be instituted
due to the ability of the government to impose fines or tax incentives in attaining unified
compliance. Additionally, due to the global implications of environmental sustainability it
should be in the interest of the U.S. government to set the example on the international stage as
one of the world’s largest contributors of GHGEs.
Though informal organizations do exist as was researched above, the data explicitly
proves that standardizations, SDIs, and SIIs are not a key driver in reporting on sustainability.
Since the membership organizations are either paid subscriptions of member-initiated
standardization is not incentivized or penalized other than the parading value of membership. It
is not enough for companies to advertise going green, but to show actual results and set the
example towards sustainability.
What remains unanswered is further study on the nature of informal sustainability
governance structures on the global scale. Ultimately if a national entity is created for the United
States, there will be the question on the process for enforcing compliance for corporations that
Hong | 24
operate in multiple countries. While this study primarily looked at greenhouse gas emissions as
the standard factor to measure corporate sustainability, further study is needed outlining the
social aspects and implications such as employment and wage policies, and water usage and
footprinted impact on the international level.
Hong | 25
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Source
Findings
State/National Reporting 
Standards
International Reporting
Standards (ISO 14000s,
PAS 2050)


Corporate Sustainability 
Report Analysis

EPA/National standard
deadlines
Relevance

Sets the boundary for companies
that are surveyed
Sources and methods

framework for sustainable
reporting established
Uniform standards found for
reporting water, electricity
usage, GHGe, Waste,
Recycling
Created a standard to compare
different CSR data under different
NGOs
CSRs under different NGOs 
were analyzed for
comparison

Looked at whether certain
criterion were reported
(water usage, electricity
usage, GHGe, Waste,
Recycling)
Data used in comparison of
companies under different NGOs
Presents Sustainably Direct
Initiatives to distinguish
responsibility of what's reported
Scholarly work on NGOs 
Classification of different
NGO types in relation to
business practice

Builds understanding of any
possible governance conflicts, is
there basis for authority conflicts?
Supplementary Data

based off of corporate bylaws
Portrayal of Sustainably
Indirect Initiatives (SIIs)

How companies address
responsibility that they cannot
directly reduce.

How well do these companies live
out these goals for sustainability
NGO Goals

What goals companies are
bound to
GIS Data

Dispersion of corporate HQ's 
under specific NGO
groupings
Adds regional level of data for
scope of NGO goals
Scholarly work on CSRs 
What scopes CSRs are

bound to
Breakdown of any corporate
behavior trends
Contributes to standardization of
CSRs as a benchmark for
comparing NGOs
