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The 100 Most Sustainable Corporations
Alex Steffen, 31 Jan 05

The Global 100 is a new annual ranking of the world's most sustainable corporations, unveiled last week at Davos.

Their definition of corporate sustainability is pretty loose ("A Corporation that produces an overall positive impact on society and the environment"). Certainly, even their top-three companies have their critics:

TOYOTA

The automotive transportation sector has significant environmental impacts, especially with respect to climate change. Toyota Motors has developed and successfully commercialized the marquee environmental technology of the decade for the industry, the hybrid drive vehicle. Its Prius model was the fastest selling car in America in 2004 and the company is doubling production in 2005 due to strong demand. Toyota is also licencing some of the technology to Ford Motor for its hybrid vehicles, thereby vastly expanding the positive impact this technology has made on the automotive sector. Additionally, Toyota has made a strong commitment to environmental management at its facilities and has engaged its suppliers in an effort to improve the eco-efficiency of its operations throughout the value chain.

(more...)

ALCOA

All companies in the metals and mining sector face significant sustainability-related challenges [to put it mildly! -ed]. However, Alcoa has distinguished itself as a leader through its sophisticated approach to identifying and managing the material sustainability risks that it faces as a company. From greenhouse gas emissions reduction programs to engaging stakeholders over controversial hydropower projects, Alcoa has the requisite sustainability strategies in place to meld its profitability objectives with society's larger goals of environmental protection, wealth creation and social stability. In fact, Alcoa has found ways to make money in the process: the company expects its efforts to create environmental and energy cost savings of $100 million by 2006.

Importantly, Alcoa's approach to sustainability is firmly rooted in the idea that sustainability programs can indeed add financial value. This approach is perhaps best evidenced by the company's efforts to promote the use of aluminum in transportation applications, where aluminum - by nature of its excellent strength-to-weight ratio - is making inroads as a material of choice that allows automakers to build low-weight, fuel efficient vehicles that produce fewer tailpipe emissions. This kind of forward-thinking strategy of supplying the market with the products that will help solve pressing global environmental problems is indicative of a company that sees the future, has plotted a course, and is aligning its business accordingly.

BP

In the O&G industry, BP is on the leading edge on overall sustainability excellence. ... BP has demonstrated leadership in resource and energy efficiency, climate change risk abatement, waste reduction and recycling, and overall environmental impact minimization. Some relevant initiatives include participation in emissions trading, development of a world-leading solar power business, a shift towards natural gas from oil, a goal of zero impact in upstream operations, and the provision of clean/low emissions vehicle fuels at retail outlets. Additionally, BP has implemented a global social policy backed up by programs and initiatives comprising ethics, transparency, employee responsiveness, stakeholder relations and H&S. ...

Having a vision of transforming these investments and initiatives into strategic profit opportunities, BP has invested in developing business lines focusing on three areas: renewable energy technology (fuel cells, wind energy, and photovoltaic); low-environmental impact products; and cross-industry R&D partnerships for new product development and commercialization. By investing in strategies that go beyond sustainability risk minimization, BP has gained know-how and competitive advantage in new business areas created by a near-future business environment characterized by a carbon-constrained market place, continuously tightening environmental regulations for the O&G industry, and increased corporate governance scrutiny.

But to harp on the shortcomings of the companies involved in rankings like this is to miss the larger point. I believe that just as governmental lip-service to ideas like the hydrogen economy and sustainable development moves the center of the debate towards those ideas, recognizing good corporate behavior moves us closer to widespread acceptance of transcommercial principles. The point isn't that these companies are anywhere close to the transformations we need to see. These sorts of efforts, I think, change the debate about corporate behavior.

However, do they change corporate behavior itself? Joel Makower raises a set of stinging criticisms about the lack of transparency here. There's no insight offered here into the process by which these companies were chosen, or the specific metrics by which they might be judged. This raises credibility issues, sure, but more importantly, it's bad process design: it gives potential aspirants to the list no feedback with which to adjust their course. It's great to make sustainability a goal to which the corporate world aspires, but let's say I want my company on the Global 100 list next year: what do I do? What initiatives could I take to my board, with the knowledge that our efforts will be recognized by the Global 100? There's little to no guidance offered here, which can only be termed a lost opportunity.

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Comments

The Economist has published a very interesting and cynical review of the CSR movement in its January 22nd edition.

It's subscription-only website but I'd recommend picking up a copy from the newstand - it's a volatile read.

"The trouble is, CSR that pays dividends, so to speak, is unlikely to impress the people whose complaints first put CSR on the board's agenda. So there is a dilemma. Profit-maximising CSR does not silence the critics, which was the initial aim; CSR that is not profit-maximising might silence the critics but is, in fact, unethical."


Posted by: Jen on 1 Feb 05

the alcoa piece is particularly rich in equestrian fecal matter. I'm trying to focus on the debate center shift Alex points out and give the benefit of the doubt, but extolling a company thats still involved in profiting from finite, primary resource extraction as "sustainable" is like giving the fox thats guarding the henhouse an employee of the year award from his private security firm.

Theyre sustainable because theyre mining more bauxite and selling more aluminum to automakers? Where does one begin dissecting this laughable logic? Entrenching antiquated transportation modes, chewing up wild land, facilitating climate change via the massive co2 emissions from aluminum smelting and internal combustion, growing economic throughput (make-consume-dispose) rather than closing the materials loop....

The list of world-stagnating (and life threatening!) principles fundamental to how Alcoa and other mineral and hydrocarbon businesses make money is very long.

To me these awards reek of the lowest form of greenwashing. This blinds rather than educates, and erodes the integrity of truly worldchanging and sustainable businesses.


Posted by: shiva on 1 Feb 05

Alcoa _could_ be worthy of such an award, I suppose -- they've certainly made good efforts -- but as Makower points out, there's no way to know from this process. I'm glad to know that "Alcoa has the requisite sustainability strategies in place," but I'd sure like to know 1) what the awarders think those are, and 2) what results and impacts Alcoa is producing in the world, and 3) how those results and impacts compare with their competitors' and/or alternatives.

Natural Logic recently conducted an analysis, using our Business Metabolics KPI system, of the "leading CSR reporters" as noted in SustainAbility's "Global Reporters" report, comparing actual performance with quality of reporting. Quick summary: good reporting and good perfomance are not necessarily correlated.


Posted by: Gil Friend on 1 Feb 05

For those curious about the many questions the Global 100 raises, please see: http://www.global100.org/faq.asp


Posted by: Toby Heaps on 4 Feb 05



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