Wednesday, 13 July 2011

Unilever’s Sustainability Plan: “almost insanely ambitious”

First there were the sustainability plans of retail giants Tesco and Marks & Spencer.

In the mid-2000s, Tesco began by setting goals for increasing locally-sourced products, making their stores and transportation of goods more efficient, and investing large sums into sustainability research.

Meanwhile in 2007, M&S introduced its lengthy and much more comprehensive Plan A, aiming to make both broad and specific improvements in areas including climate change, waste, and natural resources. The firm now has 180 targets to hit, with a solid record of achievement to date on many of them.

But in 2010, Unilever became the bigger kid on the block (in terms of turnover anyhow) of sustainable business when the corporation launched its ten-year Sustainable Living Plan.  The firm is four times as large as M&S.

Now, just over six months in, implementation of the plan has achieved initial success, yet will soon face achieving long-term goals that may prove to be impossible to realise without substantial help from partnering companies.

An analytical report on the plan, published in the July-August edition of Ethical Corporation magazine, examines Unilever’s notable progress while pointing out the challenges on the horizon and how partnership can help.

Unilever’s plan sets out specific quantifiable targets for the company to achieve over the next ten years.  The plan is composed of four pillars: improve health and well-being, reduce environmental impacts, enhance livelihoods, and support people.  

Its main goals include making Unilever’s entire agricultural sourcing 100 percent sustainable, halving the waste associated with the disposal of their products, and making drinking water available to 500 million people.

With such extreme tasks, the company’s aspirations are “almost insanely ambitious,” admits Unilever advisor John Elkington in the briefing published by Ethical Corporation.

Through the plan thus far, Unilever has provided 20 million people with safe drinking water, runs all of its Netherland factories on renewable energy and use only sustainability certified cocoa in its ice cream products, states the report.  The company also offers more sustainable product offerings and provides all of the company’s branches with tools to evaluate sustainability progress.

But in spite of these early achievements, the report reveals that Unilever is now facing challenges in terms of meeting its biodiversity improvement goal and evaluating the water use of its factories, products and consumers.  Additionally, consumer-based targets remain Unilever’s most difficult commitment because of marketing’s limited effect and one-on-one training’s expense.

As such, the report shows the report shows that the key to the success of Unilever’s plan lies not only in speeding up their progress, but more importantly teaming up with outside companies to accomplish their goals.

 “The ground breaking scale of Unilever’s commitments means it has big challenges ahead – challenges that will have to work with others outside the company to achieve,” says Mike Tuffrey, director at consultancy firm Corporate Citizenship and a long-term advisor to Unilever in the report.

So far, Unilever has reached out to conservationist charity WWF to work on its biodiversity targets and non-profit group Water Footprint Network for its water goal.

If Unilever manages to successfully collaborate with outside companies, the corporation’s bold plan stands a chance of accomplishing not just its individual targets but also its overarching objective of inspiring companies to tackle more ambitious sustainability goals, according to the report.

To read Ethical Corporation’s complete Unilever briefing, go to this link.

Friday, 1 July 2011

Fukushmia & Tepco's kamikaze ethics

A group of Japanese pensioners shot to fame last month when they volunteered to lead on the clean-up of the Fukushima Daiichi power plant. Their rationale was straight forward: should they develop cancer, it will take ten to twenty years until the condition becomes fatal. And by that stage, they’ll be dead anyway. The press labelled them the ‘Kamikaze Pensioners’. To belittle their stance is cynical and unfair. Amid the tragedy of the tsunami that hit the Japanese coast earlier this year, examples such as these demonstrate the remarkable Japanese trait of solidarity and self-sacrifice.

It’s just a shame that Tokyo Electric Power (Tepco) has not shown a similar calibre of ethical commitment. Jon Entine’s recent feature article in Ethical Corporation details a raft of incidents dating back over decades that raise serious questions about the company responsible for operating the Fukushima plant. Faked safety reports, internal cover-ups and blackballing of whistle-blowers seem par for the course at the world's largest privately-owned electricity utility.  
Entine highlights two critical failures in the Tepco case that are relevant to any sector. The first centres on the relationship between companies and their regulators. In Japan’s power sector, cosiness reins. That breeds complacency and, worse, collusion. Politicians and civil society need to be awake to such scenarios and hold regulators to account. 

The second lesson is more immediate to corporate management. How should senior company executives respond in the wake of an ethics crisis? Japanese leaders, more than most, are quick to accept responsibility for misdemeanours that happen on their watch. How different the reluctant response of BP’s TonyHayward after the Deepwater  Horizon spill to the mea culpa performed by Tokyo’s  president Akio Toyoda after the Japanese automaker’s recall crisis? Yet a company must be seen to take action as well, not just offer mere words. Following a major safety cover-up scandal at Tepco in the early 2000s, its chairman and president were made to resign - only to be then given advisory posts at the company. Other executives were demoted, but later took jobs at companies that do business with the utility.

Nobody could have predicted the tsunami. What happened at Fukushima was, and still remains, a tragedy. One’s left thinking, however, that if Tepco had taken stronger action in the wake of earlier ethical breaches, then it’s a tragedy that could have been mitigated.

Saturday, 25 June 2011

Ethical Competition: time to get real

Type ‘email’ into Google and what do you think comes up first in the search engine’s listings? Why, ‘Gmail’ of course. What’s wrong with promoting your own products? If you’re a search engine, quite a lot, as it turns out. Services like Kayak and Microsoft are complaining that Google’s is routing user inquiries unfairly to its own services. Now the Federal Trade Commission is investigating the anti-trust claims. If found guilty of abusing its dominant market position, Google could find itself facing its largest legal challenge yet.

In a way, it’s rich that Microsoft should be among those wagging the finger. (The US software pre-empted this latest spat with an anti-trust suit against Google in Europe back in April). For years, Microsoft used its near monopolistic position in the software market to browbeat and bully computer manufacturers into using its operating platform. It waded through endless lawsuits to carve out its place at the top. Now it’s behind the curve. The big fights are no longer over operating systems, but the interface between users and the internet. Microsoft’s own search engine, Bing, has been clinging to Google’s coattails ever since it launched. So could this be seen as a case of sour grapes? Of an underhand jab at a competitor? perhaps. But is that necessarily wrong? In our dog-eat-dog world, could it not just be described as ‘fair play’?

It is a question Mallen Baker considers in Ethical Corporation’s latest issue. Yet, interestingly, not in the context of Microsoft (and the rest) v’s Google. Instead, it’s another of today’s teutonic battles: Facebook v’s Google. A few months back, Mr Zukerberg’s  social media site was found to have hired a PR agency to push negative stories about Google privacy policies (internet freedom is a separate issue altogether, and one recently addressed by Rebecca MacKinnon in an Ethical Corporation podcast). On the face of it, what Facebook did smells wrong. But how wrong? Not legally wrong. No subpoena papers have arrived at the company’s shiny new Menlo Park headquarters. Wrong in the sense of its public image? Sure, but how many Facebook users have delisted as a result? Precious few, I suspect. Ethically wrong then? The questions get to the nub of Baker’s piece.   

“What Facebook did wasn’t nice. But then Google aiming to move into Facebook’s social networking area of dominance isn’t “nice”.

Ethics isn’t about ‘niceness’. If it were, it would have gone out of business a long time ago. It’s about principles and values. Those should certainly include a commitment to compete within the law. By that marker, Facebook and its PR agency are (as I understand it) within bounds. It should include provisions against spreading falsehood as well. Again, it’s not entirely clear if Facebook is guilty here or not. The whole affair still feels wrong, though. Which shows just how difficult it is to define ‘ethical competition’ in a competitive world. Companies should draw their own boundaries based on personal and professional conviction  – and then, within those parameters, go at it cats and dogs.

n.b. the opening statement of this post was correct at the time of writing. Rechecking now, ‘Hotmail’ comes out top. A change in algorithms in Menlo Park or are those Federal Trade Commissioners getting to work already? 

Sunday, 5 June 2011

Resource Nationalism: re-slicing the pie

Peruvians went to the polls today. Multinational extractive companies such as Newmont, AngloAmerican. Xstrata and Occidental Petroleum will be watching the results with apprehension. On the ballot list is Col Ollanta Humala, an ex-army officer who once led a military revolt (against President Fujimori, the father of the other candidate in today’s polls). Humala came to the fore in 2006, when he ran unsuccessfully against out-going president Alan Garcia.

Back then, fears that Humala was in the pocket of Hugo Chávez, the socialist president of oil-rich Venezuela played a critical role in his defeat. Just a week before Peruvians went to the polls five years ago, Mr Ch
vez took a 60% controlling stake in Venezuela’s huge Orinoco fields, hitting Exxon, Conoco, Chevron, Total and Statoil. Fellow ‘Chavistas’ in Bolivia and Ecuador were undertaking similar moves to wrest back control of their country’s national assets from foreign companies.

It’s not just Latin America where resource nationalism has been on the rise in recent years. As a special briefing in the latest issue of Ethical Corporation reveals, resource-rich countries in Africa and Asia are following suit. As global commodity prices soar, emerging economies (justifiably, it could be argued) want a bigger piece of the pie. It’s their pie after all. The implications for foreign investors companies are worrying. Around 80% of oil produced by Opec countries is in state hands. Foreign oil companies are now being pushed to develop oil sands, a costly and high-risk enterprise. Not because they want to, Ethical Corporation writer Eric Marx points out. But because the choices open to them are becoming increasingly limited.

So what’s the responsible company to do? In Venezuela, Exxon just walked away. That’s one option. But only if you have very deep pockets, and options elsewhere. These are multi-billion dollar investments in the main. Choosing to renegotiate tax arrangements is another option that’s buying companies time. Good environmental and social investment track-records are proving ever more vital too. Even Chinese companies, which have been pouring money into Africa’s mining sector over recent years, are facing local demands to ‘give something back’. Companies would be well advised to take the likes of Unilever and Standard Bank in undetaking full economic impact studies, which capture their indirect,as well as their direct, contributions to the economies where they invest. 

Marx looks specifically at India, where demands for greater resource nationalism have led to calls for mandatory social investments by foreign companies. In reference to the proposed measure, Indian prime minister Manmohan Singh told industry to see community investment as being in their own long-term interest. “Companies undertaking greenfield projects cannot see their factories and units as oases, cut off from the needs and interests of the community around them,” he warned.

Citing a range of experts from both industry and civil society, Marx builds a convincing case for companies to increase the social returns derived from their investments overseas.  Either that or face ever greater pressure from host governments.

In Peru, Humala has tried to distance himself from Mr Chavez and his brand of radical, nationalistic socialism. It might help him get elected (exit polls have him out ahead). It won’t, however, reduce popular pressure for foreign investors to share a larger slice of the pie. 

[6 June 2011: eds. Humala won the election by a narrow margin. Lima's stock exchange fell 8.7%, in apparent reaction to the socialist candidate's win] 

Friday, 27 May 2011

GMOs: are we in for a 'Spud Wars' summer?

The season for potato planting is upon us. Big deal. Spuds don’t usually justify a news item (or even a blog post). Nor would they now were it not for those provocative three letters, ‘GMO’ (Genetically Modified Organism). In northern Sweden, the controversial acronym has sent Greenpeace activists into a tizz. This week, they’ve been camped out at the gates of a warehouse stocking Amflora, a genetically modified variety of the humble tuber. The GM potato contains a gene that is resistant to antibiotics and should, the protestors say, be banned. The European Union, which legalised the creation of German chemicals group BASF last year, thinks otherwise.

A visit to GM Watch will reveal a catalogue of similar protests over recent weeks, months and years. Here's just a recent sample of headlines: ‘No Improvement in EU’s GMO risk assessment’, ‘Unlabelled clone meat allowed on shop shelves’, ‘Industrial poultry, GM feed and the RTRS’. The mainstream press may have wearied somewhat from their ‘Frankenstein Food’ stories of old. But passions among a large sub-set of consumers still run high.

Recent years have seen huge advances in GM technology. Who could have imagined filling your grocery basket with ‘pluots’ (a hybrid of plums and apricots), ‘lematos’ (lemons and tomatos) or ‘grapples’ (grapes and apples)? Or heading down to your local pet store and buying a GloFish (a modified florescent zebrafish)? Gimmicks aside, GM goods now proliferate in our food chain. American dairy farmers, for instance, are now saying the days of non-GM organic milk are numbered. (The warning follows the decision by the US Department of Agriculture earlier this year to legalise GM alfalfa, an essential feed for dairy cows).

Yet the fundamental arguments are much the same as when GMOs first burst onto the commercial scene. In the one corner, you have a vocal consumer lobby - perturbed about the technology’s potential health and environmental impacts. In the other, you have the biotech industry – rich, powerful and intent on arguing that GM is the future for a resource-stretched planet. The result has been a heated and often vitriolic clash. None more so than Monsanto’s head-on collision with European regulators and the general public back in the late 1990s.

As part of Ethical Corporation’s collection of landmark events for the corporate responsibility movement, Ben Schiller examines this mother of all battles. Some of the lessons are particular to the time and the industry. Playing with science – particularly when it’s linked to something as fundamental as the food we eat – is, and always be, an emotive subject.

Other lessons, however, are more generic. Most revolve around communications. Sat in St. Louis, Missouri, six hours behind London, Monsanto’s PR team were always one step behind the news agenda. The US company's advertising wasn't always the wisest either. (An early set of ads were rules as misleading by the UK watchdog). Schiller examines the PR battle in depth. The ultimate lesson? Regretable as it sounds, good news will never trump bad. Companies just have to hope journalists will eventually grow bored and move on. For GMOs, that strategy seems to have worked of late. But the coming potato harvest could see the horror headlines return. Does a ‘Spud Wars’ summer lie ahead?   

Sunday, 22 May 2011

CR professionals as 'master storytellers'

Sustainability professionals are used to being called names. ‘The company’s conscience’, on a good day. ‘Corporate cost centre’, on a bad one. Yet how many have had the term ‘master storyteller’ thrown at them? Few, I’d wager. More’s the pity. So research by the Doughty Centre for Corporate Responsibility suggests, at least.

Narratives comprise an intrinsic part of every company’s identity. No one narrative is the same. A company’s history, its sector, its values, its culture and, above all, its people craft what such a narrative is and how it is told. Composed within this narrative is a separate yet significant sub-narrative: namely, a company’s sustainability ‘story’. Unpicking that story marks a critical part of persuading employees to buy into the whole sustainability agenda. Which is where the story-telling skills of in-house sustainability experts come in. By working with employees to understand why and how their organisations support sustainability objectives, those employees become inspired to start taking action. So the theory goes. But how to go about putting it into action?  

In a guest essay in the latest issue of Ethical Corporation, Doughty scholars David Grayson and Melody McLaren propose three straightforward steps. First, talk to key stakeholders inside and outside your company to assess your current sustainability ‘story’. Second, engage and support individual employees to act as sustainability change agents in order to improve that story. And third, tell your revised sustainability story through use of the company’s formal communication channels as well as through informal social networks.

All sounds like a curious fiction? Then ask the consumer communications gurus at Saatchi & Saatchi. Few understand the influence of a good story better than they. Which is exactly why Wal-Mart turned to them. Working with Saatchi& Saatchi S (the PR firm’s new corporate responsibility outfit), the global retailer hit on its ‘Power of One’ concept. The idea? To help its two million employees develop personal sustainability plans. That gave birth to a second, even more ambitious initiative: its Connect the Dots (Do One Thing) campaign. The campaign aims to engage one billion people as ‘change agents’. Their small, consistent actions will – Wal-Mart tells them – combine to deliver large-scale sustainability solutions. Now these are powerful narratives – even if neither example, as yet, has an ending.

Adam Werbach, global CEO, Saatchi & Saatchi S
“Some companies are already realising profits by putting sustainability at the core of their business. Not with top-down directives from executives, but from dozens, even hundreds of small steps taken by people at every level of their companies.”

Friday, 13 May 2011

The M&S Effect: bin bags, business sense and Barry

Who wouldn’t agree to give old clothes to charity rather than see them end up in landfill? Few of us, right. Yet, the rubbish tip is where most of it goes: 80% in the case of Marks and Spencer. So for the last three years the UK high street retailer has been engaged in an intriguing experiment. It’s been effectively paying people to recycle. Anyone who heads down to an Oxfam store with a bag of unwanted clothes gets a £5 shopping voucher. The idea has been a roaring success with us, the consuming public. Oxfam has collected over seven million garments – that's an item from almost one in every eight UK residents. 

There are two conditions to the scheme. First, at least one of the recycled items must be an M&S product. Second, the £5 can only be used against purchases in M&S of £35 or over. Both make eminent sense. M&S wants to cut down its environmental footprint. By including its own clothes in the deal, the retailer can justifiably say it’s doing its bit (3,500 tonnes of it). As for the £35 requirement, the business rationale is self-evident. Oxfam is in the business of reducing poverty. More clothing donations means more funds to do just that. M&S is in the business of making profits. Persuading people to come into its stores and spend is therefore fundamental. A voucher helps towards that. Consumers feel happy (they’ve collectively pocketed vouchers worth over £7.5 million so far), as does M&S (whose tills are busier).

This kind of alliance is just one of a growing number of savvy corporate-charity tie-ups. Kingfisher provides another example. The home improvements retailer has joined up with an environmental non-profit to promote its ‘eco-products’ range. Again, the benefit is mutual: sales are higher, and the planet’s resources safer. Hard landscaping company Marshalls, meanwhile, joined with a local charity in India to provide educational alternatives for child quarry workers (the programme was singled out for praise at Ethical Corporation’s recent annual Awards). The examples are a world away from the days of cheque-book philanthropy and tree-planting CEOs. Ethical Corporation’s new Briefing on NGO Partnerships describes the latest best practice in strategic, outcome-orientated alliances. (It also highlights the pitfalls to partnership and how to avoid them).

The M&S/Oxfam case is interesting for another reason too. The UK retailer is working to meet a raft of sustainability targets, announced back in 2007 under its Plan A (“There’s no Plan B") programme. Much of the ‘heavy lifting’ – cutting waste, making factories more resource-efficient, minimising transport-related emissions, etcetera –can be done by the company itself. But for M&S to achieve its most ambitious sustainability goals, it must get others on board: suppliers, business partners, government and – yes, us - the consumer. 

Influencing public behavioural patterns is no easy task. A small ‘eco warrior’ contingent will do the right thing regardless. Equally, a renegade minority won’t, however many vouchers you give them. But most of us sit somewhere in between – needing a gentle nudge or the knowledge that ‘everyone else is doing it’ (what Mike Barry, head of sustainable business at M&S, calls “consumer tribalism”). 

The Oxfam recycling project is genius because it makes choosing the sustainable option both easy and attractive. Like buying fertiliser-free food (who prefers chemicals on their plate when given the choice?), or purchasing ethically sourced coffee (ditto, who’d rather their coffee promoted worker abuses?). Companies can’t force us to ‘do the right thing’. But they can present us with options that take the hassle out of doing what – in our more principled moments – we know to be right. So, about that clear-out . . . 


Note: Working hard in the trenches for years, Mike Barry has done more than anyone to integrate sustainability policies and processes into M&S's day-today operations. Here’s a link to an interview Ethical Corporation did with him nearly a decade ago. Those efforts crystallized three years ago in the company’s ambitious ‘Plan A’. His task since has been to start turning M&S sustainability goals into practice. That work has come to the attention of The Guardian, which has shortlisted him as its Corporate Sustainability Innovator of the Year. The winner will be decided by public vote. Click here to see the other nominees and have your say.  

Wednesday, 4 May 2011

Companies & development: not-so-strange bedfellows

Businesses are not development agencies. That much is clear. But, like it or not, they are in the business of development. How so? Through the jobs they create, the supplies they procure, the taxes they pay, and products they sell. All these activities have economic and social implications beyond the factory gates.

That much isn’t new. What is new is that companies are getting better at gauging the size and nature of their overall socio-economic footprints. Progressive corporations have been good in try to capture their immediate impacts. A prime example is AngloAmerica's SEAT assessment tool, which focuses at a local community level. But 'cradle-to-grave' impacts, from sourcing to product disposal - that represents a whole different order of magnitude. Yet companies such as Unilever are giving it a go. The Anglo-Dutch consumer goods giant has calculated that it provides almost 1% of all South Africa’s tax revenues. As for the national labour pool, for every South African on the company’s employee payroll, there are 22 others in its ‘value chain’. So too Standard Chartered. The economic activity – both directly and indirectly – generated by the $65.5bn UK-based bank was found to equal 2.6% of Ghana’s total gross domestic product. 
Such calculations are by no means easy. Relevant data (especially in developing countries) is not always available, nor are accounting frameworks always in place. Yet early some early measurement models are emerging. Efforts by the likes of Prof. Ethan Kapstein at INSEAD (to whom both Unilever and Standard Chartered turned) and the World Council for Sustainable Development (which published the ‘Measuring Impact Framework’, together with the International Finance Corporation) are helping navigate the way forward.

Interesting though these early studies might be in their own right, the numbers are just a small part of the picture. How will managers use this information? That’s the key question, says Peter Davis, Ethical Corporation’s politics editor and author of a recent report on socio-economic impact. His answer is refreshingly simple: use it to make better decisions. The example he gives is Heineken. The beer maker mapped some of its African operations and saw an opportunity to swap imported malted barley and maize (which is shipped in a great cost) for sorghum, a local equivalent (which was cheaper and resulted in jobs for domestic farmers). ‘The end goal is not just to optimise social economic impacts, but business operations themselves’, he clarified during Ethical Corporation's two-day Responsible Business Summit, which concludes today.

Companies may feel uncomfortable with the label of ‘development actors’. Don’t be. Not only is it a fact (and therefore unavoidable), but a better understanding of your relationship to society at large will stand you in better stead for the future. Standard Chartered, for example, is now increasing its investment in SME services in Ghana as a direct result of the impact “gap” (read: opportunity) highlighted by its value chain assessment. 

In the desire to be ‘business-like’, however, don’t ignore what the development community can teach. Not about programmes so much (leave that rightly to the NGO experts), but about assessment. Davis points to the ‘results chain’ approach used by large donors. Such an approach accepts the complexity of the development process and frequent disjunctions between cause and effect. In so doing, impact measurement standards employed by the likes of the Donor Committee on Enterprise Development move away from producing isolated data and focus instead on the “consequential effects” of development interventions. That helps development actors tell the broader story of their role in, and impact on, society. It works for NGOs. It would for companies too.

Pitching the Press: passing the 'so what?' test

‘Surfer who rode e-commerce wave shares £70m.’ So runs one of the top business stories in The Times today. Others include EasyJet’s booking charges, a takeover bid for car dealer Lookers and the latest manufacturing figures. The stories have three things in common. They are ‘news’ in the obvious sense of being ‘new’, and they play to the interests of the general reader. And thirdly, they have nothing (save perhaps the consumer interests of EasyJet passengers) to do with corporate responsibility.

The latter is no surprise. CR professionals might think their companies’ efforts to implement, integrate and generally imbibe responsible business practices are fascinating. Unfortunately, most business editors do not. Bad news – corporate crises, product flops, management malfeasance, fat cats, depressing economic data (see above) – wins out every time. That’s just the way it is. Hence Sony’s online data breach makes it into the press, and not its mobile libraries in South Africa.

So, should CR execs and their PR teams just forget trying to sell in stories? Not quite yet, says Peter Stiff, a business reporter at The Times and panelist at Ethical Corporation’s current annual Responsible Business Summit. But do change your pitch, he advises. Cut the fluff and buzzwords. Provide some hard numbers. And, above all, spell out “at the get-go” what the business case is. Why are you doing this? What tangible difference does it make to your bottom line? These are the questions that reporters on busy business desks want to know. And make your answers sharp. As Stiffs puts it: “Frankly, I don’t have time to dig.”

Some topics are more likely to win the ear of an editor than others. As a general rule what works for the in-house magazine (pictures of smiling volunteers, CEOs planting trees etc) doesn’t work for newspapers. New technology or the discovery of “interesting, surprising” data, on the other hand – now, these might just cause an editor to lay aside his scepticism a moment and take a look. At least, so says Daniel Franklin, executive editor at The Economist and another Summit panelist. Other subjects on Franklin's potential ‘tick’ list include innovative partnerships with NGOs and “honest engagement” with the real life trade-offs faced by companies trying to become responsible.

Make it relevant, simple and interesting and your news story stands a chance. In that sense, the principles of pitching a CR initiative to a news desk aren't that far removed from selling it to the board. Remember: journalists are fickle, busy and intrinsically suspicious of ‘greenwash’. But they have another trait too: they’re terrified of being boring. As Franklin admits: “If you can make a good news story less boring, we’re much more likely to write about it.”

Sunday, 1 May 2011

Reporting: forcing the conversation

Most corporate responsibility professionals approach the task of reporting in much the same way as spending Christmas with the in-laws: they grit their teeth at the prospect, try to keep from screaming during the event, and pray they don’t have to repeat it once it's all over. Social and environmental reporting is time-consuming, labour-intensive and expensive. So what’s the value?

Well, more than you might think, argues social responsibility investment guru Rory Sullivan in the latest issue of Ethical Corporation. For starters, the popular notion that no one cares about such information is misplaced. That might have been the case in the past, says Sullivan. Not any more. Taking account of non-financial issues “has now become mainstream investment practice”.

That doesn’t mean sustainability reports are flying off the shelves. Most still don’t get read. Why? Because, despite the talk from investors of the importance of social, environmental and governance issues, such reports are seen as “irrelevant” to investment decisions. For Sullivan, the situation is not a lost cause. It all comes down to better communication. Companies need to tell investors what they need to hear. At present, corporate assumptions on what that might be lie way off the mark. Investors don’t help. They are bad about spelling out just what non-financial data interest them and why. The result: an impasse.

Sullivan uses his fascinating essay (based on the conclusions of his new book, ‘Valuing Corporate Responsibility) to explain what responsible investment looks like; what this means in terms of investors’ use of non-financial data; and, how reporting can be made more investor-friendly. Answers to the first two provide a host of incisive insights. Unfortunately, these don’t mount to a step-by-step roadmap for reporters. Precisely what data should go into a report remains a “work in progress”. Nor are investors’ interests uniform. The onus, Sullivan maintains, lies with companies. Link information to corporate strategy and performance, and investors will sit up and listen. Don’t and it’ll be like Christmas with the in-laws once again: lots of conversation and very little said.   

(Note: Ethical Corporation readers can obtain a discount on Rory Sullivan’s new book. Click here and use the code EC3VCR at the checkout.)