1. Sustainability Reporting - the ultimate greenwash?

This is the first of a 5 part series on state of sustainability in the corporate world today....


Is sustainability reporting the ultimate greenwash?
If 95% of "green" product claims in the US are false, what about "green" company claims?
These claims are put forth in CSR/Sustainability reports. If the claims these companies make for products are basically all bs, than what about the claims they make about themselves, are they credible?

Wait a minute you say, there are safeguards: standards, assurance, NGO watchdogs...surely people don't just make stuff up and get away with it?  The challenge is not what is said, it is what is left unsaid.
Though some reports are known for their honestly, such as BASF a couple years ago, that highlighted worker fatalities, most reports glaze over ugly bottom side of their business model or  their strategy.
Part of it is the inherent tension between short term profitability and sustainability. Sustainability is a long term play, being a good corporate citizen builds goodwill, brand loyalty.  Short term profits yield bigger bonuses and higher salaries to management.

Standards such as GRI provide only a clue as to the breadth of a report, not the depth.  Also, if the GRI rating happens to be verified, it lacks the rigor of a financial audit.  It is like the difference criminal burden of proof - beyond a reasonable doubt, and civil -a preponderance of evidence. 3rd parties assure that there is not reason to believe it is untrue, not that it is true.  And besides, even in the case of financial audits, there is a lack of true policing. Enron, Bear Stearns both came up roses before their collapse, but that is a discussion for part 2 - Integrated reporting...does it really matter?

Reporting Standards are flat, uniform, real issues are thorny.  Every company has theirs, but do they talk about them or do they obfuscate?  From my observation, there is a simple rule,  if an issue is a big one and there is lots of negative press, they will take it head on. if it is big, but not as negatively treated, the more opaque the treatment and the greater the emphasis on other things.

I will take a major beverage company with a gorgeous sustainability report as an example.  The whole theme now is around positive living.  A lot of good stuff about water conservation (water use a big issue in the past for them), energy saving/climate change, but not too much on the elephant in the room - "diabetes".  In fact, it speaks to "beverage benefits" and even quotes the American Diabetes Association (the only mention of diabetes in the report) but only in terms of an artificial sweetener.

 So what's the big deal? Well, a few facts may help - 8.3% of the US has diabetes with 79million considered "pre-diabetes".  11% of population under 20 is diagnosed with diabetes.  Worldwide the numbers grow even more staggering.

A 2006 peer reviewed study showed that women drinking 1 or 2 soft drinks a day( less than the average consumption) doubled their risk of diabetes. Furthermore, there was a "remarkable difference" in results from industry-funded and non-industry-funded studies on soft drink consumption and health outcomes, with the industry-funded studies much more likely to find the results favorable to industry, according to one of the leading experts at Yale University.


Industry favorable studies are just half of a two -pronged approach of denial and change the subject.
So what do we change it too? Sustainability! 
Created by the well intentioned do-gooders based on science and compassion to help save civilization, sustainability/CSR organizations are now being becoming something quite different.  Perhaps that maybe why the some companies in recent days make their CMO their new CSO.  So in come the glizty websites and detailed disclosures, meeting the standards to get the good grades, but not addressing the thorniest issues. 


In the end though, can we blame a company for protecting shareholder value when that is in fact their duty?

Sustainability - Big or small?

Sustainability is a broad topic. According to wikipedia "Sustainability has become a wide-ranging term that can be applied to almost every facet of life on Earth" http://en.wikipedia.org/wiki/Sustainability.

As Paul Hawkin noted in referring to CSR, ""The term 'socially responsible investing' is so broad it is meaningless," . So where does that leave "sustainability", broader in scope because it extends well beyond investment into accountability and the regulatory purview?

"Sustainability" as a lens at which to look at issues facing people. Real issues, impacting real people at a community level, be it a neighborhood, municipality or larger scale. But only when discuss issues in those terms do people really engage beyond the echo chamber of so called "experts" the pontificate on sustainability in blogs and even for a living, imagine that.

Having grappled with reporting on sustainability for a multi-national company, in the most general of terms, there is more of a sense of feeding the beast than solving problems.

Both are important, as reporting is the first step toward accountability, but the last mile is in holding companies and communities co-responsible for how they interact and addressing issues. So that is the focus of this site, highlighting communities that exist virtually, but act physically to solve issues.

From Environment to Sustainability

Since I started on a quest to better understand our environmental footprint, I was exposed to Sustainability as a holistic concept, thanks to James Farrar, I am blogging once again.

Ok. So that interrelationship between all aspects of our lives (social, economic, environmental) should have been obvious. But it wasn't. And for 99.9% of the world that awareness is just dawning. Is this a call to action to work together on unprecedented global scale or is it second fiddle to localized needs of the day. And if it is the latter, what can we do to make enough of an impact to turn things into a direction that will be effective. In the 150th year anniversary of "Origin of Species", how viable are we? That is what sustainability is really about. Is there a Sustainable Footprint for our species on a macro level that translates to an organizational and individual level?

Big Step Forward

Since the beginning of human history, we have observed impacts we humans have had on our surroundings. Whether through over hunting, slash and burn agriculture, diversion of rives for agriculture or changing of habitat through settlement, man has been changing the planet for millenniums.

The fact that we have and will change the planet is not in dispute anymore, except for a few that may subscribe to a modern notion of manifest destiny, it is generally accepted that we are facing a challenging on a planetary scale. And the cause is Mankind.

Part of this awareness was brought about by the changes themselves. Weather that we were accustomed too as kids has changed or become less predictable. Escapism vacation spots, be they winter getaways or tropical getaways, are different somehow, with shorter seasons, more man-made snow, less undersea life and coral, perhaps more severe storms.
But, also, mass communication and media tools have broadened our awareness. "An Inconvenient Truth" is a prime example.

With this upsurge in mass media, and in an attempt to quantify an often complex set of climatological and atmospheric variables, the "carbon footprint" has emerged as the gold standard for measuring environmental impact.

Great benefit has ensued from identifying with a single standard measure and a semi-simplified concept or "bogeyman" that we can rally around. We are all talking a common language, carbon trading and offsets have come to light. The dimension of the problem is coming into focus.

The question is, have we taken something complex, and oversimplified for the sake of building awareness and in fact, should be focused on greater complexities of the planets eco-system? Or have we in fact, by focusing on carbon footprint, found the best proxy for measuring our collective and individual impact on the planet.

Can a data center have less of an impact?

Surpisingly the answer is yes...: Dan Golding from Tier 1 Research writes:


Infoworld's Nancy Gohring has an amusing article on how Microsoft is using biodiesel-powered construction equipment to build its massive new datacenters (http://www.infoworld.com/article/07/07/25/Biodiesel-fuels-build-of-Microsoft-data-center_1.html). Here's the short version: While this sounds very green, there is a very operational and tactical reason to go to biodiesel: heavy equipment operating in the huge 500,000+ sq ft along with datacenter shells will put out enough carbon monoxide to kill everyone inside unless massive exhaust fans are installed – or unless the equipment uses a fuel that puts out less carbon monoxide, like biodiesel made from canola oil. Apparently, this work-around is performing just fine, except that the smell is redolent of deep-fried engine block.
Needless to say, the backup generators will use good, old-fashioned 'petro-oil' – i.e., oil from dinosaurs, not from corn. Is this the carbon-neutral datacenter that Microsoft says it is? Walking across the street isn't carbon neutral, no matter how many trees you plant, and neither is a datacenter – any datacenter.

So even the "evil empire" can do good, espacially when it is in their interest. As demand for online applications and hosted web 2.0 sites proliferate, data centers are becoming a significant consumer of electricity.

Does our online activity add to footprint? Sure it does, and well beyond on electric bill.

Some ideas on components of eco-impact analysis

Here are some considerations for how you might measure holistically the impact of a product:

Resource required producing extractive equipment for source resource (amortized across life of equipment)
Resource required producing transport equipment for source resource (amortized across life of equipment, if material)
Resource required producing process equipment to convert source resource into component or sellable goods (amortized across life of equipment)
Energy required extracting resource
Energy required transporting resource
Energy required to process resource
Energy required transporting component
Energy required transforming into a finished good

Note that carbon would span across all these elements above, but there is water and other resources consumed as well.


What about social justice? How does that play in? Is that too complicated to look at quantitatively?

Further discussion...

Where most of the focus today is an the use and disposal of a given item, the creation of that item can be far more impactful.

There are social considerations that come into play as well. The impact on the human condition from the extraction, production of a resource as well as the eventual destruction or deconstruction. Species extintion, and consequential damage to ecosystems, these considerations must be accounted for.

Really, this is an extension of environmental economics, which factor in externalities or societal impacts and attempts to value non-tangibles such as an ecosystem. Rather than an attempt at monetary value, with a pure rating system, it becomes a series of trade-offs.