Leadership
Ceres:
US Companies Must Up the Ante on Sustainability Efforts

There are encouraging pockets of sustainability leadership in the US business community, but far too many companies are only taking small, incremental steps to address pressing sustainability issues that could impact their bottom lines and the future of our planet and economy, according to a new report by Ceres and Sustainalytics. Chief among these sustainability issues are climate change and human rights.

Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability assesses the sustainability performance of 613 of the largest publicly traded companies in the US, and covers nearly 80 percent of the total market capitalization of all public companies in the country. The report tracks corporate performance against 20 key metrics, including governance, disclosure, greenhouse gas emissions reductions and labor standards. It identifies sustainability trends across eight key sectors, highlighting industry best practices and which companies are leading among their peers. It also provides aggregate data and online scorecards for companies on each performance area.

Key findings include:

• While many companies are taking action to reduce greenhouse gas (GHG) emissions, few have set time-bound targets. More than two-thirds of the companies evaluated (438) have activities in place aimed at reducing GHG emissions, but only 35 percent (212) have established time-sensitive targets for reducing GHG emissions. In terms of renewable energy, 37 percent of companies have implemented a program, while only six percent have quantitative targets to increase renewable energy sourcing.
• More companies are setting clear sustainability standards for suppliers. Fifty-eight percent of companies (353) have supplier codes of conduct that address human rights in supply chains, compared to 43 percent in 2012. However, only a third (205 companies) have some activities in place to engage suppliers on sustainability performance issues, up from 27 percent in 2012.
• A growing number of companies are incorporating sustainability performance into executive compensation packages. Twenty-four percent of companies (147) link executive compensation to sustainability performance — up from 15 percent in 2012.

According to Ceres, the metrics used in this report were first outlined in the Ceres Roadmap for Sustainability, which has been used by dozens of companies since 2010 to incorporate sustainability into their business planning and corporate accountability infrastructure.

“This is about more than how companies stack up against their peers — it’s about how innovation is driving performance from the corporate boardroom throughout the entire supply chain,” said Michael Jantzi, CEO and Founder of Sustainalytics.

The report also provides important information to shareholders about how the companies in their portfolios are performing in key areas, such as disclosing material issues and engaging with stakeholders.

“This report is critical for investors because it reveals how well prepared or, in many cases, how poorly prepared individual companies are to thrive in an economy being profoundly shaped by sustainability risks and opportunities,” said Anne Stausboll, Chief Executive Officer of the California Public Employees’ Retirement System (CalPERS) — the largest public pension fund in the country.

In February, Ceres released a report that claimed the US Securities and Exchange Commission (SEC) has not adequately addressed the climate disclosure deficiencies of publicly traded corporations, despite four-year-old formal guidance requiring companies to disclose material climate change risks.

Last year, Ceres and its Investor Network on Climate Risk (INCR) released a report that said energy efficiency could be a multi-hundred-billion dollar investment opportunity in the United States, but better policies are required to unlock broad-based financing from institutional investors.