A Ceres report published today analyzed how 600 of the largest US companies are faring as they try to meet key sustainability leadership expectations. The answer: not as well as the sustainability nonprofit organization had hoped.
“Turning Point: Corporate Progress on the Ceres Roadmap for Sustainability” found that many of the companies are not acting as boldly or as quickly as needed to transform into sustainable enterprises. Specifically, the report looked at the progress of major American companies following the Ceres Roadmap for Sustainability. This resource contains 20 expectations that each company should meet by 2020 to capture the competitive advantage sustainable business offers, the nonprofit says.
“Corporate sustainability leadership requires not only ambition in commitment, but also clear integration of environmental and social considerations within governance structures, strategic planning, and business decision-making at every level of the corporation,” says Kristen Lang, a director of the Ceres Company Network and co-author of the new report.
Lang recently shared key insights from the analysis with Environmental Leader.
Commitments Fall Short
“Our findings show more companies now understand sustainability as a business risk and opportunity, and are stepping forward in greater numbers with sustainability commitments,” Lang says. The Ceres team found that nearly two thirds of the 600-plus companies assessed have committed to reducing GHG emissions, more than half have formal water resource management policies, and nearly half have worker rights protection policies.
At the same time, the report found that companies aren’t acting as boldly or as quickly as they should be to become truly sustainable enterprises. As an example, 69% of the companies assessed call on their suppliers to address environmental and social impacts, but only 34% proactively engage suppliers, providing them with the tools and resources needed to incentivize action, Lang points out.
Furthermore, she says, 64% of the companies made commitments to reduce GHG emissions but only 36% of them set time-bound, quantitative targets. Even more of a challenge: Only a quarter of those targets actually work toward reducing emissions in line with what is needed to keep global warming to below 2 degrees Celsius.
Accountability and Board Oversight
“Increased accountability for sustainability performance drives commitment, business integration, and action,” Lang says. The report shows that companies holding decision-makers accountable for sustainability are demonstrating more ambitious commitments. She cites that 98% of companies with GHG emissions reduction targets hold a senior executive accountable for sustainability performance, and 97% of companies with water management targets also have senior executive accountability.
In 2014, Ceres found that only 42% of the companies assessed held senior executives accountable. Now it’s 65%. However, the change isn’t extending as quickly to boards of directors. Only 31% of the boards for companies assessed have formal oversight responsibility for sustainability issues, and only 24% are incentivizing senior executives by linking executive compensation to sustainability performance metrics.
“Those companies that do have formal board oversight and link executive compensation to sustainability oversight are over two times more likely to have company-wide, time-bound targets to reduce GHG emissions — and also over twice as likely to formally protect the human rights of employees — than those who do not,” Lang says.
Next Steps for Corporate Leaders
What can corporate leaders do? “We need more companies to increase the ambition of their commitments, and then translate those commitments into action that will create meaningful impact and change,” Lang says. That means backing up commitments with concrete, measurable and science-based targets.
The report represents an opportunity for US companies that aren’t taking action to learn from those that are — like Citi, Bank of America, Nike, and others — and to use the Ceres Roadmap to guide priority setting, Lang says. “If we are able to move even a small percentage of companies along this path, the ripple effects across their global value chains will be enormous.”
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