Ethical Corporation is now Reuters Events - LEARN MORE
Employees in CSR happier than average; tarnished jewellery supply chains; the problem of principles v profits; corporates scramble to restore trust
IT MAY NOT be the best paid job in the world. It may not herald great promotion prospects. It may even feel like an uphill battle much of the time. But this doesn’t seem to deter those working in the field of corporate sustainability. According to the latest data, environment and sustainability professionals are a (relatively) happy bunch. Figures from the sustainability body IEMA, which represents 14,000 sector experts worldwide, suggest 70% of its members are “satisfied” or “highly satisfied” at work. Of new recruits from other sectors (around one third of IEMA members), satisfaction levels jump to 78%. The figures compare to a national average for UK workers of 64%.
So what is helping sustainability shake the Monday morning blues? Salary size certainly helps. Averaging £40,000, professionals’ wage packets are not super-stellar, but they remain above the norm (of £28,758 in 2017 for UK employees). The job itself brings its joys as well. Most notably, three in four (74%) of sustainability workers report their work as being “challenging” (in a good way, that is). “Rewarding” (54%) and “full of opportunity” (38%) are the other most common descriptors.
Sustainability professionals aren’t skipping all the way to the office, however. For a sector that prides itself in its progressive values, gender inequality remains a rather embarrassing shortfall. Despite shrinking by 2.6% over the last 12 months, the difference between men’s and women’s earnings stands at 14.1% (five percentage points above the UK national average). Concerns for the future also abound, especially among young professionals. One third of the sector’s under-30s question the difference they are making. On everyone’s wish-list is a desire for far stronger political leadership on sustainability issues (64%). A substantive minority (35%) want more cross-industry collaboration on sustainability’s “big issues”. The findings are based on responses from 1,053 IEMA members.
Supply chain: sustainability’s toughest nut to crack?
Supply concerns continue to dog the jewellery industry. (Credit: Karn Samanvorawong/Shutterstock)
NOTHING SAYS ‘I love you’ more than a diamond ring, right? Human Rights Watch wants us to think again. Every year, 90 million carats of rough diamonds and 1,600 tonnes of gold are mined for jewellery. Yet policies governing the procurement of these precious metals and gems fail to provide the ethical assurances that consumers increasingly demand. Of the leading brands in the jewellery sector, which boasts estimated annual revenues of $300bn, none is judged by Human Rights Watch to have excellent supply chain management practices in place.
In a report on the sector’s 13 largest brands, only Tiffany and Co is rated as having taken “significant steps” towards responsible sourcing. Bulgari, Cartier, Pandora and Signet get a “moderate” rating, with all others judged “weak” or worse. Rolex’s failure to provide any public information on its sourcing policy renders it last on the list, together with fellow non-disclosing firms, Kalyan and TBZ. The three are notable absentees from the Responsible Jewellery Council, which was set up more than a decade ago to supposedly resolve supply-side concerns.
It is not just jewellery that faces problems. New research from Stanford University’s School of Earth, Energy and Environmental Science suggests that efforts to make supply chains more sustainable are having a limited impact. Analysis of the supply chains of 449 listed companies in the food, textile and wood-products sectors finds that only 30% of sustainable sourcing practices cover all a product’s input materials. Only 15%, meanwhile, focus on health, energy, infrastructure, climate change, education, gender or poverty. Other concerning findings include the moderate proportion of companies that fail to reach beyond their first-tier suppliers (60.5%) and the low level of third-party auditing (37%). Most worryingly, 48% of the sample companies have no discernible sustainable supply chain practices in place at all. However, among large western corporations, 90% are taking some form of action.
How large corporations manage their supply chains also has major ramifications for poverty reduction, environmental conservation and a host of other development issues. Global supply chains touch an estimated 80% of all trade and represent more than one in five of all jobs worldwide. Even The Economist concedes multinational companies now have “no excuse” for not pushing for better practices when sourcing from poorer countries. Doing so, moreover, is in their interest, according to the environment group WWF Switzerland, which has published a briefing on why it makes business sense to tackle the most grievous social and environmental iniquities in the developing world. A more “resilient” supply chain features high on its list (together with potential new market opportunities worth $12trn). The same argument is put forward in a new survey by assurance provider DNV Global, which finds that serious attempts to drive sustainability in the supply chain deliver brand reputation (in 65% of cases) and increase market share (32%). Feel inspired? Tiffany & Co happens to be looking for a new director of responsible sourcing, if so.
Bolstering the business case
Some firms still struggle to align profits and principles. (Credit: lovelyday1/Shutterstock)
IMPROVED energy efficiency, transformed business models, more efficient supply chains, happier customers. There are plenty of market-based arguments for a sustainable approach to business, but proving the connection between principles and profit remains elusive.
A new report new report by the financial services company ING bolsters the business case, finding that 48% of US banks and investors say that sustainability concerns “actively influence their growth strategies”. And such concerns apparently deliver, with 87% of financial firms with the most advanced sustainability programmes reporting an increase in revenues over the past 12 months. Two-thirds, meanwhile, have seen their credit ratings improve over the past two years.
On the other hand, 66% of the 210 financial services companies interviewed have yet to integrate sustainability throughout their operations. Half also admit to struggling to identify sustainability-led business opportunities (52%) and to predict the impact that sustainability investments will have on future performance (50%).
Those looking to build the business case for sustainability should check out the latest performance data from B Lab, organiser of the B Corp certification standard. According to the group’s UK arm, firms are growing a staggering 28 times faster than the national average. UK-based B Corps experienced average growth rates of 14% in 2017, compared to just 0.5% for UK Inc. Fast moving consumer goods companies certified under the standard, which pushes for business directors and officers to “consider the interests of all stakeholders” (ie not just shareholders), clocked up the fastest growth rate, at 21%, compared with a sector average of 3%.
Launched in the UK in 2015, the B Corp standard now counts 150 certified British-based firms. Most of these (86%) feel that certification has helped their business. Among the chief benefits are the attraction of new audiences (reported in over one third of cases) and improved staff recruitment (cited in almost half of cases).
Trust: that ever-illusive elixir
Rebuilding plummeting consumer trust is CEOs' top priority. (Credit: alphaspirit/Shutterstock)
BUSINESS LEADERS will meet for a gala dinner in central Manhattan next week for the twelfth annual celebration of the World’s Most Ethical Companies, which this year runs to 135 companies. Among them are Mars, Microsoft, Starbucks and Volvo. The Ethisphere Institute says winners are selected according to an exacting set of criteria, known as the “ethics quotient”. Underlying the awards is the theory that ethics pay. According to Ethisphere’s research, the stock prices of its honorees have outperformed the US Large Cap Index by 10.72% over five years.
But do consumers and the public at large buy into the notion of corporate ethics? Not much. Or so the latest annual opinion survey by global PR firm Edelman suggests. Its 2018 Trust Barometer shows the largest fall in trust among the US general public in the survey’s history, with trust in business falling ten percentage points to 48% since last year. Only trust in government fell further (from 47% to 33%). Among US informed audiences, meanwhile, trust in business crashed from 74% to 54%.
Part of the problem is linked to the credibility of the media. With fake news on the increase and traditional media losing its footing to internet platforms, 42% of people say they do not know which companies or brands to trust. Little wonder that chief executives identify building trust as their top job (69%), above delivering high quality products (68%) or stock price increases (60%). This finding about CEOs will echo well with the general public, 64% of whom think that business leaders should “lead on change” without waiting for the government to tell them. Another positive relates to employees, more of whom say their employers can be trusted than not. Employees trust ranges from 57% in Japan to 90% in Indonesia. In the middle of the spectrum are Germany (71%), the UK (71%) and Brazil (72%), with US employees giving their bosses a creditable 79%.
At a sector level, technology (75%) remains the most trusted industry, followed by education (70%), professional services (68%) and transportation (67%). Least trusted is the financial services sector, at 54%. By geography, companies headquartered in Canada (68%), Switzerland (66%) and Sweden (65%) top the most-trusted list. The least trusted country brands are Mexico (32%), India (32%), Brazil (34%) and China (36%).
As Edelman concludes: “Trust is only going to be regained when the truth moves back to centre stage. Institutions must answer the public’s call for providing factually accurate, timely information and joining the public debate.”