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Pricing non-financial externalities
What if companies had to start paying for their impact on ecosystem services? The answer is an invoice for $7.3tn, roughly equivalent to 13% of global economic output.
The findings are based on an evaluation of the “environmental externality” costs of the world’s primary production sectors (agriculture, forestry, fisheries, mining, oil and gas exploration, utilities) and primary processing sectors (cement, steel, pulp and paper, petrochemicals).
The greatest costs derive from greenhouse gas emissions (38%), followed by water use (25%) and land use (24%). The bill for air pollution (7%), land and water pollution (5%), and waste (1%) is substantially lower.
The report highlights the external cost of specific sectors by region. Coal-fired power in east Asia ranks first, with an estimated footprint of $453bn a year. The same industry in North America is close behind, at $317bn. Several sectors are shown to be economically untenable in certain regions of the world, especially those with water shortages and other resource scarcities.
The annual impact on nature of south-east Asia’s $5.9bn cattle ranching and farming sector, for instance, are calculated at $29.1bn. The biggest disparity is in rice farming in northern Africa. Were water to be priced fully, each dollar earned by the region’s rice farmers would cost the planet $68.
Corn farming and sugar cane production in the same region have negative impact ratios of 47.2 and 38.7, respectively. The study, entitled The Natural Capital at Risk, was commissioned by the Teeb Coalition for Business and carried out by environmental accountancy firm Trucost.
Social progress: a GDP alternative
The United States remains the land of opportunity, according to a new ranking of national social and environmental performance. The social progress index, designed as an alternative to gross domestic product, analyses countries by a set of socio-environmental measures as well as economic indicators.
Opportunity is one of three main areas. The other two cover basic human needs and foundations of wellbeing, which are topped by Japan and Switzerland respectively. The social progress index is based on the aggregated scores. These see Sweden come out in overall first place, followed by the United Kingdom as runner-up.
The top 10 include six European nations, along with Canada (fourth), the US (sixth), Australia (seventh) and Japan (eighth).
The bottom end of the scale is dominated by African nations, with Uganda, Nigeria, Mozambique and Ethiopia vying for the bottom places. The index is based on an assessment of 50 countries in total, and was developed in collaboration with the Massachusetts Institute of Technology and others.
Going slow: Oekom’s annual verdict
Only one in six companies is doing enough when it comes to sustainability, despite over two-thirds purporting to have sustainability strategies in place.
That’s the damning conclusion of Oekom Research’s annual report. The Germany-based rating agency ranks the oil and gas sector as the poorest performer overall, with a score of 18.9 out of a possible 100. Other laggards include the retail trade (21.7), the property sector (20.6), banks (23) and insurance companies (24.1).
On a more positive note, Oekom gives the paper and forestry sector a score of 47.7, making it the best performing sector overall. Seven of the top-20 industry leaders are based in the UK, with the remainder mostly in Europe and none from the US. Some individual companies are picked out.
Big pharma firm GSK scores 82 out of 100 for its work on access to medicine. Anglo-Dutch consumer goods company Unilever wins a score of 72 for its water management measures – with McDonald’s coming bottom in the same category, with 19. More than 75 asset managers and asset owners routinely draw on Oekom’s research, representing more than €520bn in assets under management.
Waistline watch
The growth of middle-class consumerism and the expansion of fast food outlets are credited with contributing to weight gain in some of South America’s emerging markets.
The average man in Mexico weighed 6.8kg more in 2010 than in 1985 (the date that the first US fast-food outlet arrived in the country). Mexican women have put on more than 8.6kg over the same period.
The average weight of men and women in Chile, meanwhile, has increased by 6.4kg and 8.2kg respectively since 1989, when the US fast-food phenomenon first landed on its shores. The average global weight gain over the past three decades is about 5kg for men and 4.5kg for women. The research was conducted by news provider Bloomberg as part of its Waistline Index.
Low-carbon preparedness
France is the world’s most prepared country in the world for a low-carbon future, thanks in large part to its high dependence on nuclear energy. The low carbon competitiveness index puts Japan and South Korea in second and fourth place, respectively.
China is the biggest gainer since last year, jumping four places to seventh spot in the annual index, thanks largely to its investment in wind and other clean energy solutions.
Heading in a downward direction is the US, which slipped from eighth place to 11th. Over the past 12 months, the world’s largest economy has seen lower public equity investment in clean energy, shrinking high-tech exports and a surge in reliance on emission intensive airfreight. The report as put together by the Climate Institute, an Australian independent research organisation.
Retailers beef up sustainability teams
Nearly two-thirds of US retail companies have one or more full-time staff members dedicated to sustainability, while 60% have a part-time member of staff dedicated to a particular sustainability issue or issues.
As for seniority, 40% of corporate social responsibility teams at US retailers have gained a director-level role since 2009 and 29% have seen a vice-president position established.
Nearly three-quarters of those surveyed say that sustainability is becoming more important within their organisations, despite the economic downturn. That said, almost the same percentage say their budgets are likely to stay the same size in the year ahead.
The vast majority – 90% of retailers – have programmes relating to waste reduction, energy efficiency and community engagement, among other sustainability issues. The findings emerge from the 2013 Retail Sustainability Report, based on a survey of member of the Retail Industry Leaders Association members.
Organisation snapshots
US firms below par on assurance
US companies are increasingly likely to report on their sustainability performance, although remain less likely to obtain third party assurance than their global peers.
A new study by the Global Reporting Initiative’s Focal Point USA finds that more than half (53%) of all of the companies in the S&P 500 Index and Fortune 500 now publish sustainability reports.
However, the 2012 Sustainability Reporting – Does it Matter? report finds that only 26 out of the 269 US companies that report according to the benchmark GRI framework obtain independent assurance. The global average rate is almost four times higher, at 38%.
Child-focused
More than two-thirds of UK businesses think that responsibilities to children will become more important to UK companies over the next five years.
That will require a shift in current corporate policies, given that 89% of UK companies currently do not count children’s rights among their corporate responsibility priorities.
The research, published by the UN-backed children’s agency Unicef and public opinion firm Ipsos Mori, finds that 39% of UK companies do not address issues around responsibilities to children to “any great extent”. The report comes one year after the launch of the children’s rights and business principles, a set of company-focused guidelines.
Company insight
Shell’s spend
Shell spent $14bn in lower income countries during 2012, its most recent sustainability report reveals.
The oil major’s R&D bill for alternative energy, carbon capture and sequestration and other low-carbon technologies amounts to $2.2bn over the past five years. Biofuels form an important part of the company’s portfolio too, with sales of 7.7bn litres in 2012.
Shell, which counts 87,000 employees in more than 70 countries, generated $27bn in sales last year. It currently controls 2% and 3% of the world’s oil and gas production, respectively.
Sustainable sourcing at Unilever
Unilever is now sourcing 36% of its agricultural supply from sustainable sources, 6% above an interim voluntary target that it set for itself in 2010. The consumer goods giant, which recently reported full-year sales of €51bn, now sources all its palm oil from producers with GreenPalm certificates.
Other breakthroughs include the purchase of Rainforest Alliance-certified vanilla beans. The move involved the training of more than 1,100 farmers by Unilever’s vanilla supplier, Symrise. The findings derive from an update by the Anglo-Dutch conglomerate against its Sustainable Living Plan objectives.
Smiles at Cemex
Global cement and building materials company Cemex now counts more than two million direct beneficiaries of its self-construction programmes. The Mexico-based company facilitated the completion of nearly 3,000 affordable housing projects during 2012.
In terms of carbon emissions, Cemex’s energy efficiency measures have contributed to avoiding 7.8m tonnes of CO2 into the atmosphere, equivalent to the emissions made by 1.5m cars.
Corporate Responsibility Research CR Cheat Sheet CR Stats CSR Cheat Sheet Oliver Balch