Being added to external corporate social responsibility indices enhances a company’s reputation and can affect its share price, but not always in ways expected. This article examines how the stock prices of 121 companies changed after being added to or removed from the Calvert Social Index.

Socially responsible investing has been growing faster than the overall market over the last decade. According to Lipper, socially responsible mutual funds are growing while other diversified equity funds are shrinking. Companies in the Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) delivered double the total return of Global 500 companies between January 2005 and May 2011 (see CDP Canada 2011: Key Highlights).

Generally speaking, being added to an external index amounts to an institutional endorsement and boosts a company’s stock price. The effects from being added to the S&P 500, for example, have been examined in various studies (Jain, Dhillon, Beneish). All confirmed that joining the index brings gains. Leaving the index brings losses.

Does the same also apply to indices in the area of corporate responsibility? Does joining the Calvert Social Index, widely used by many socially responsible mutual funds, boost a company’s stock price and leaving the index decrease it? During the six year period, from 2000 to 2005, 56 companies were added to the Calvert Social Index while 65 companies were removed. Each of the 121 companies’ stock prices was tracked by researchers at Villanova School of Business from the day before the addition or removal announcement through to 2 days after the announcement. The results were not all as expected.

The overall finding: Being added to a corporate responsibility index does not increase a company’s share price, but when a company is removed, its stock price takes a hit.

On first look, this appears to be a no-win situation. Your share price either remains the same or drops. Does this mean company should simply avoid to be added to any corporate responsibility index? It turns out, as is often the case, the background reasons are more interesting than the overall finding.

An announcement of addition to the index does not mean a company has changed overnight. It means the company has been demonstrating good corporate citizenship behaviour for one or more years in areas including environment, governance and ethics, human rights, community relations, etc. By the time a company joins the index, many great achievements had been made over a significant period of time. Naturally, they had also been communicating these achievements to the public through press releases and other communications. Rightfully so. These communications had been steadily lifting the stock price so that by the time they join the index, no further significant increase occurs. The research data does show that in the year prior to being added to the index, these companies delivered higher market-adjusted returns and more positive changes in operating performance than their deleted peers. So their stock prices did increase, just not during the index announcement.

The situation is quite different when it comes to removal from the index. A removal means the company, which had previously been a good corporate citizen, has stopped much of their good behaviour. But companies do not issue press releases when they stop doing something good. The general public does not notice something has changed until an external index announces the company no longer meets the criteria for their inclusion. Such announcement brings new information to the public. The market reacts to the new information and the stock price drops. In dollar terms, the average deleted firm in the study lost four million dollars in market capitalization on the day of and the day following the deletion announcement.

What is the take away from this? Focus not on the indices but on internal performance. Many studies have found that a company’s social performance and financial performance are linked (e.g. Waddock, Orlitzky, Schmidt, and Rynes). Firms that take actions to improve their social performance tend to also improve their operating performance, which leads to good financial performance. Focus on social and operating performance. Share your achievements with your stakeholders and your shareholders will thank you. Being added to an index is simply icing on the cake.

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You may have heard about the “Reality Sucks” General Motors campaign that launched last month across various college campus newspapers in the US. The ad was promoting GM’s college discount, enabling students to buy Chevrolet, Buick, or GMC cars at a discount. The ad depicts a young woman in a car, smiling, or perhaps smirking, at an embarrassed-looking cyclist who pulled up alongside her, with the text underneath saying, “Stop pedalling … start driving.”

This ad caused an outrage amongst the cycling community as well as student groups across the web and social media platforms. The criticisms especially focused on the ad’s message conflicting with GM’s environmental commitments and corporate responsibility statement, which ironically states: “… we will actively participate in educating the public about environmental conservation”. It seems the brand manager who worked on the campaign had not been communicating with their Corporate Social Responsibility (CSR) department.

Furthermore, from a marketing point of view, it’s clear that the brand manager had not done his research to understand and properly connect to this offering’s target audience. University bicycle subculture is ubiquitous and is embedded into the college lifestyle.  With prices at the pump rising, and with majority of students trying to pay their way through school, bicycles offer an inexpensive and fun method of transportation. Even the League of American Bicyclists points out “… obviously it’s been a while since GM execs and their creative teams set foot on campus.”

GM, to their credit, spent a long time responding to all the outrage messages they received via Facebook and Twitter and have apologized, changed the campaign and dropped the ad.

Brand Managers as Reputation Gatekeepers

Consumers expect brands to reflect socially and environmentally responsible business behavior (while also maintain quality and competitive prices). Discrepancies between a brand’s marketing message and a company’s corporate responsibility statement can tarnish a company’s hard to come by brand trust and consequently customer loyalty.

The 2011 GlobeScan Radar Report – a survey of consumer attitudes to company’s CSR performance – confirms that there is a large gap between consumer expectations and perception of industry CSR performance. GlobeScan suggests that the gap reflects silos within companies separating operational CSR and marketing and communications functions. Organizations that are integrating CSR effectively into brand platforms are winning consumer awareness.

In its Corporate Social Responsibility Guide for Business, International Institute for Sustainable Development points out that “the effect of a tarnished reputation often extends far beyond that one firm: entire sectors and, indeed, nations can suffer”.  Firms frequently expend considerable time and money attempting to regain their reputation, with mixed results.

Brand managers are recognized as gate keepers for internal and external communications and messaging affecting their brands, but they are not spending enough time understanding how their brand fits into the broader corporate responsibility and sustainability commitments.

There is a powerful opportunity for brand managers to collaborate with operational sustainability colleagues to identify innovative ways of not only enhancing the product, but also differentiating, and telling a compelling brand story.

Social Media Shaping Brand’s Public Perception

According to a 2010 Nielson study, social network websites account for over 22% of all time spent on the Internet. These platforms are shaping the public perception of a brand. They can start vital communication campaigns that can either build or destroy a brand’s reputation.

As the GM example indicates, when a brand makes a claim that is contradictory to their corporate responsibility commitments, and also contradictory to their target market’s values, the trust is broken.  The League of American Bicyclists expresses that sentiment: “If you are a student looking to add tens of thousands of dollars of long term debt, care little about the environment, and want to lump two tons of steel around campus while paying through the nose for insurance, gas, and parking…General Motors has got a perfect deal for you. Bonus: it’ll make you fat and unhealthy! All you have to do is give up that dorky bicycle that’s easy to use, practically free, gets you some exercise and is actually fun to ride.”

Effective CSR/Brand Integration Winning Consumer Awareness

Compare the GM campaign with a Zipcar campaign also targeting college students.

The brand manager for this campaign understands that it is a hassle for students to own a car on campus. This campaign also addresses financial barriers, and clearly connects Zipcar’s corporate responsibility commitments with the value proposition of this offer by stating that choosing to not own a car and drive Zipcars reduces demand for on-campus parking, alleviates congestion, and is a sustainable alternative transportation solution that reduces your carbon footprint.

Is it working? Zipcar’s membership in its North American market has doubled from 200K members in 2008 to 400K in 2010. With an impressive 30% membership growth 2011 third quarter, it now exceeds half million members in North America. And, the potential of much greater penetration levels increases, as the popularity of car sharing rises in North America.

I welcome your thoughts and feedback on this topic. Please join the conversation by adding your ideas to the comments section, or connect and continue the conversation on Twitter.

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I love reading sustainability reports. The sheer variety of approaches to reporting, content, presentation, design, quality and creativity is as great as the number of companies which report. Sustainability reporting has become a true differentiator and not only because of a report’s existence (which is now, for the larger companies at least, at “license to operate” level) but also because of the way a company reports.

A while back, I posted tips on How to Read Sustainability Reports, and these remain valid today. A quick refresher:

• Start with an open mind—Don’t let prior impressions of the company color an open-minded impression of the report content.
• People write reports, not companies—Remember that people are always doing their best.
• Read the opening remarks by the Big Chief—The CEO sets the tone for what’s in the report.
• Choose how you read—Decide if you want to read bestseller-style or pickn’mix.
• Seek materiality—Check out if the company has reported on the most important issues.
• Be copy-paste and delete aware—How much info is fresh.
• Look for consistency (and inconsistency) in data—Does it all add up?
• Give feedback, ask questions, make comments, get engaged—Help them make it better.
• Give some leeway to first timers—The first is always the toughest.
• Always eat ice cream when reading reports—OK, I didn’t say this, but I meant it.

These days, I am reading and reviewing more reports than ever, and getting more feedback than ever from companies whose reports I review. Last month, I started writing an exclusive series of in-depth report reviews for the Sustainable Business Forum under the title: Reporting: How They Do It. In this series, I go beyond a short overview and go for the jugular, aiming to bring out the best and less-best practices of a range of corporate sustainability reports while opening up some avenues for further exploration. It’s easy to make a bad report good. It’s less easy to make a great report outstanding. So, in addition to the 10 tips above, I will add some new ones, based on experiences of writing the How They Do It series.

Don’t be fooled by diagrams, tables, images and charts: In my review of Showa Denko Group’s 2011 CSR Report, I was challenged to find enough data of substance that would justify the presence of a host of charts and diagrams which give the impression of a highly structured approach to CSR. In the same way as its claims to have “referenced” ISO26000 and other guidelines without referring to them in the body of the report, I found the diagrams and charts to be graphically interesting but left me wondering where the golden nuggets of true data is hidden.

Follow the tough issues: Companies that report on how they are approaching sticky challenges, rather than just doing nice things, gain in credibility. In my review of Merck’s 2010 Sustainability Report, I make the point that the company underwent a 17% downsizing following a merger with Schering Plough. This represents thousands of people that were laid off. While we can debate the responsibility of business in job creation, rather than job elimination, what is more important is the way a company manages downsizing. I would have expected to read quite a lot in the Merck report about this tough issue which I suspect took up significant amounts of management time in the reporting period and affected the entire organization and external communities. Absence of disclosure begs questions and reduces credibility.

Examine how companies are setting targets: Sometimes targets can seem extremely challenging but when you take a look at the fine print, you realize that they may be less impressive than you thought. This is one point I mentioned in my review of Procter and Gamble’s 2010 Sustainability Report. The company has a target to increase the proportion of Sustainable Innovation Products, having sold $40 billion of those during the past 3 years. Reading the fine print, I noticed that Sustainable Innovation Products fit the bill if they meet a 10% improvement in just one design parameter from a selection of energy, water, transportation, amount of material used, and renewable energy or materials. Overall, such Sustainable Innovation Products appear to be a very low percentage of P&G’s total sales, and a 10% improvement on one parameter per product seems to me to be rather a soft target. Sustainable Innovation sounds much more impressive than what the fine print reveals.

If a report wins an award, perhaps it deserves it: While there are many different approaches to evaluating quality of reports, sometimes those that win reporting awards do deserve it. Such was my experience when reading and reviewing the De Beers 2010 Sustainability Report that recently won the ACCA South Africa Reporting Awards. In fact, I decided to review that report precisely because it won the award (wouldn’t we all like to know the winning formula?). Without knowing which other reports were also-rans, I did find the De Beers report impressive on many counts and worthy of recognition.

Look at what a company is doing for its people: One of the things I found most impressive in my review of the Ferrero 2010 CSR Report was a strong heritage of family values which infuses the corporate culture in a way which respects and cares for people including a large group of retirees. Sustainability begins at home and rests on embedding a culture that supports employees becoming champions of sustainability actions and ambassadors of sustainability messages. If this doesn’t happen, sustainability simply doesn’t gel. Companies that devote energy to reporting extensively on sustainability-minded employee practices are ones which are apparently doing it right. (See How To Embed Sustainability Into Corporate Culture.)

Check for impact: It’s not enough to define material issues and not enough to describe what actions a company is taking to improve its own sustainability and that of the planet. A sustainability report should be about impacts, not just about actions. You are probably tired of hearing me say this. Almost all the reports I read and review are totally disproportionate in the amount of space used to recount activities versus space assigned to describing impacts. Almost all of them leave us guessing as to how a range of noble actions actually made a difference. This is not surprising. Assessing sustainability impact is not a task for the faint-hearted, and there is no single methodology that takes precedence. However, reporting is, in general, getting more professional and the better reporters are moving to a higher plane where stakeholder engagement, materiality analysis and impact evaluation are gaining ground.

I dare say the above list of 16 tips is still not exhaustive. Reading sustainability reports does have its pitfalls (mainly because writing them has its pitfalls). However, every single report has value and careful reading both on and between the lines, combined with a healthy level of optimism, skepticism, and criticism should help good reporters get better and better reporters get great.

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PricewaterhouseCoopers published a report in February 2011 called “Creating value from corporate responsibility: Does your reported data get the respect it deserves?” (PDF). Today there is more emphasis than ever on companies’ environmental and social performance—in addition to traditional financial results. Companies are disclosing unprecedented amounts of information, promoting their corporate responsibility goals and commitments. More enterprise value can be generated by those efforts with stronger operational discipline.

From the KPMG and SustainAbility report “Count me in: The readers’ take on sustainability reporting” (PDF), the future of sustainability reporting includes continuous stakeholder dialogue linked to the core business agenda.

Reporting standards like the Global Reporting Initiative and mechanisms such as third-party assurance have helped improve the content and quality of reports. AccountAbility’s AA1000 Stakeholder Engagement Standard (PDF) is a generally applicable framework for the design, implementation, assessment and communication of quality stakeholder engagement. The AA1000 principles provide great guidance on the underlying reporting processes and are firmly embedded in the proposed integrated reporting framework.

What is Integrated Reporting? Integrated Reporting combines the different strands of reporting—financial, management commentary, governance and remuneration, and sustainability reporting—into a coherent whole that explains an organization’s ability to create and sustain value. According to KPMG’s “Road to Integrated Reporting” (PDF), a key aspect of integrated reporting is that it addresses those resources (referred to as Capitals) which the business consumes and creates — financial, manufactured, human, intellectual, natural and social.

Integrated Reporting can reduce the reporting burden on organizations and help investors and other stakeholders gain clearer understanding of the information. Much of this information could be moved to an online environment, reducing clutter in the primary report, which will focus only on the matters that the organization considers most material to long-term success.

Key Benefits of Integrated Reporting: The informative Harvard Business School article on the book “One Report: Better Strategy through Integrated Reporting” (Amazon.ca) by Robert G. Eccles and Michael P. Krzus states four key benefits of integrated reporting:

1. Greater clarity about the relationship between financial and non-financial key performance indicators
2. Better management decisions
3. Deeper engagement with the broad stakeholder community
4. Lower reputational risk

One Report challenges management to be much more granular about how they are “doing well (for shareholders) by doing good (for stakeholders)”, says Krzus, who spoke in the Carbon Economy Summit in Toronto in 2010.

Experience from South Africa: According to the KPMG and SustainAbility report, South African organizations have shown a positive start in the adoption of integrated reporting. Integrated reporting became a requirement for Johannesburg Securities Exchange listed entities effective from years commencing on or after March 1, 2010. Several experiences are worth noting. Integrated reporting has helped businesses to be better understood and managed. Organizational change was a key requirement. The biggest challenge was the efficient gathering of non-financial information. A full implementation of integrated reporting could take three to five years.

Vancity shows Canadian leadership: Vancity, the largest English-speaking credit union in Canada, is a benchmark for many global companies aspiring to be sustainable leaders. Their 2006-2007 Accountability Report was short-listed for Best Sustainability Report award from the Ceres-ACCA North American Awards for Sustainability Reporting. Their 2008-2009 Accountability report won the Globe Sustainability award.

The next milestone for Vancity is its participation in the International Integrated Reporting Committee’s Integrated Reporting Pilot Programme. “We’re keen to push the agenda and bring the co-operative perspective to the table,” says Joanne Westwood, Manager of Accountability Reporting at Vancity, in an exclusive interview. “We also want to learn from the IIRC and the experiences of the participants to take our reporting practices to the next level.”

Now that we’ve talked about the benefits, what is involved for a company to adopt integrated reporting?

Phase One: Prepare the organization for engaging with stakeholders: A company should first understand what information is needed by their stakeholders, then perform an information gap analysis to arrive at an optimal level of transparency in consultation with the board. For an example, see BASF Report 2010.

Phase Two: Adopt integrated reporting: Once the company has started engaging with their stakeholders, Mike Krzus suggests seven steps for the adoption of IR:

1. Get CEO and board support
2. Appoint an executive to drive the process
3. Identify material financial and nonfinancial performance measures
4. Develop explicit causal models about the relationship between financial and nonfinancial performance
5. Determine the content of the first integrated report along with a plan for further improvement and development
6. Redesign the company’s website to be able to support integrated reporting
7. Engage and seek feedback from all stakeholders

Deloitte’s report “Integrated Reporting: A Better View?” (PDF) includes 11 practical steps similar to those suggested by Krzus. One of its key recommendations is to use a formal process to determine relevant KPIs that are aligned with the organizational profile and strategy. Leveraging existing activities and risk and strategy personnel would be a smart move.

Westwood shared with us Vancity’s experience, “integrated reporting is a journey, one that will expose areas of your business that are not managed in an integrated way as well as gaps or inconsistencies in your business strategy or operations. It will be a catalyst for dialogue and process. It will be a catalyst for performance improvement. Ultimately, it will add immense value to your organization and stakeholders.”

If you would like to be part of a discussion forum focused on solving the challenges related to integrated reporting, please write to stakeholdersolutions@gmail.com.

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The director of CDP North America Zoe Tcholak-Antitch leads the launch event with a panel that includes first time CDP reporter Tim Hortons. As a consumer facing business, brand reputation is always the “Big Elephant” in the room, says Tim Faveri, Tim Hortons Director of Sustainability and Responsibility. “Anything that has to do with brand reputation, we must look carefully into it.”

Both the panel discussion and the presentation by Losel Tethong, Canadian Sustainability Lead of Accenture, brought out many interesting points. I have summarized a few notable highlights here.

Businesses who lead in carbon performance delivered twice the financial return compared to their peers. Companies in the Carbon Disclosure Leadership Index (CDLI) and Carbon Performance Leadership Index (CPLI) delivered approximately double the total return of Global 500 companies between January 2005 and May 2011.

Taking action towards low carbon growth is important if business is to protect itself against risks such as resource scarcity and create more sustainable business models that generate long term shareholder value.

More Canadian companies than ever reported their greenhouse gas emissions. Canada’s leading corporations have clearly signalled their willingness to disclose. The highest number of Canadian companies responded to the Investor CDP Information Request in 2011. This represents a response rate of 54%, a significant increase from the 2010 response rate of 46%.

Canadian businesses pursue commercial opportunities through climate innovation. Companies are taking a strategic approach to climate change and are taking action to seize commercial value from its effects.

Canadian businesses generate new revenue from climate change. 54% of respondents indicated they were providing products or services to aid third parties in reducing their GHG emissions.

Canadian businesses build brand value from climate change. Respondents stated that communications about their climate-friendly practices and emission-reducing actions could increase brand value.

Canadian businesses reduce cost and mitigate the risk of rising energy prices. 91 out of the 108 respondents reported a cumulative 425 emission reduction activities that were either underway or completed, demonstrating that companies are planning and implementing energy reduction initiatives to reduce this growing operational expense. Energy efficiency initiatives in operations and building services were among the most popular activities, while transportation-related initiatives were commonly cited. (See case studies on Coca-Cola, Sears, Unilever, Fairmont.)

Climate change has gone beyond compliance, it’s become a business strategy. The majority of Canadian respondents are already integrating climate change into overall business strategy. 75% of the Canadian respondents reported having integrated climate change into their overall business strategies, confirming a commitment to long-term, sustainable growth amidst regulatory uncertainty and the physical effects of a changing climate.

And saving the most interesting for last …

Google Finance now shows CDP ratings. Environmental, Social and Governance (ESG) data has appeared on the Bloomberg Terminal for a number of years now, forming part of core financial analysis. But recently it has gone even more mainstream. The section “Key stats and ratios” in Google Finance (both Canada and U.S.) now shows a public company’s CDP rating along side traditional indicators like net profit margin, operating margin, etc. It goes to show … carbon is important and investors are watching.

The full CDP Canada 2011 report is available here (PDF).

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Sustainability version 1.0

Building a responsible corporate image was one of the first business cases for sustainability initiatives. Managing reputation of a company amongst customers and other stakeholders was the mandate of Sustainability 1.0.

Often labelled as green washing, many corporations portrayed themselves as environmentally responsible without much evidence and by masking environmental wrongdoings. The focus was to create a perception and legitimacy that the business is performing activities in line with societal and environmental values.

The “Sustainability Leadership Report—Measuring Perception vs. Reality” (PDF) released by Brandlogic and CRD Analytics shows how some corporations focus more on building green reputations than on their green performance.

Sustainability version 2.0

Sustainability 2.0 focuses on non-financial performance (sustainability) reporting. Organizations like GRI and CDP have established global standards for quantifying and reporting requirements. I would call the increasing corporate focus on reporting sustainability performance data as Sustainability 2.0.

The 2010 accountability statement (PDF) of Vancity, Canada’s largest credit union, is a great example of leadership in integrated reporting (financial and non-financial data) across the globe.

Sustainability version 3.0

So, what is Sustainability 3.0? It is a state in which employees in an organization realize the importance of sustainable business practices and make decisions while coordinating with relevant stakeholders.

The key challenge for Sustainability 3.0 is engagement. Realization of top level strategies comes when every employee is engaged in the journey. The engagement of stakeholders will allow strategy implementation to be more effective. Engagement is the key to Sustainability 3.0.

That’s the corporate sustainability initiatives in 3 versions, based on maturity. In addition to the above mentioned reports by McKinsey, Brandlogic, and CRD Analytics, another major report released recently is the “14th Annual Global CEO Survey” by PricewaterhouseCoopers. As I read these reports, I see three key challenges emerge for sustainability 3.0 that will be faced by corporations in the coming years.

Key Challenge 1: Creating change leaders for total engagement

The McKinsey study states that 94% of the respondents say their companies have integrated sustainability into strategic planning. The next stage—Sustainability 3.0—is to catalyze key employees to translate C-suite strategic commitment into organization-wide action. How do we create change leaders, or tribal leaders, who will enable such a transformation within their organizations? Building an enduring corporate culture of sustainability in the business organization where all employees are highly engaged in the formulation and implementation of sustainability initiatives is a key challenge for sustainability in businesses.

Challenge: How can we create change leaders or influencers at all levels of organization to promote sustainability?

Key Challenge 2: Communicating the value proposition

The PricewaterhouseCoopers study suggests that companies could save costs by minimizing business risks, improving operational efficiencies, and improving employee retention, morale and productivity. CEOs across the globe also believe that there are business opportunities arising by creating sustainable innovative products and services. Despite strong business cases, the C-suite still hesitates in accepting sustainability as a business value proposition. Probably the same kind of resistance existed when new concepts such as “Quality” was introduced, which eventually led to widespread adoption of “Total Quality Management (TQM)”.

Challenge: How can the value proposition of sustainability be communicated so that it becomes a cultural norm or policy within businesses?

Key Challenge 3: Co-creating policies for growth

Any provincial or federal election adds uncertainty towards sustainability initiatives in businesses. Public consultations to formulate policies to mitigate recession and climate change risks can be more effective by having a shared agenda across the public, private and NGO sectors.

Even though governments across the globe are coming up with regulatory policies, the private sector will have to work closely with the public sector, NGOs, and other stakeholders to arrive at common shared agendas. Half of the CEOs surveyed by PwC are optimistic that a shared agenda would be more effective than it has been in the past.

Challenge: How can businesses, governments, and other stakeholders co-create policies that promote socially responsible growth?

What’s your view on the future of sustainability: Sustainability 3.0? What other challenges do you foresee in businesses for the implementation of sustainability initiatives in the future? Share your comments below.

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82% of consumers have good green intentions, but only 16% are dedicated to fulfilling these intentions, according to an Ogilvy study. This puts 66% in what is called the ‘Middle Green’, a group that is neither active environment crusaders nor anti-greens. These are the massive middle, the everyday mainstream consumers.

The big question is ‘Why don’t mainstream consumers turn their green intentions into green actions and what can be done about it?’ This is what Ogilvy & Mather tried to find out. ’If we are to motivate a mass green movement, perhaps those of us most committed to the green movement need to stop trying to get the masses to see things our way and instead get better at seeing things their way.’

OgilveyEarth, the sustainability practice of the Manhattan based multinational marketing firm, conducted a research by surveying 1,800 Americans, trying to understand why there is a disconnect between consumer intentions and actions and how we can help bridge this gap.

The 129-page research report (PDF) contains many fascinating insights. While the research was conducted in America, I think the findings and recommendations are quite applicable to most Western societies.

I have summarized 12 key points that can help middle-of-the-road mainstream consumers turn their green intentions into green actions:

1. Make green normal: Mainstream consumers are reluctant to go green because they don’t want to be seen as ideological crusaders. Going green attracts unwanted attention from their families, friends, colleagues, and neighbours as if they have adopted a new identity and that they no longer belong to the main group. Marketers should make consumers feel like everybody’s doing it. Show them numerous cases where other people just like them are also going green. Make middle-of-the-road mainstream consumers feel going green is normal behaviour, not oddball behaviour.
2. Make it personal: Don’t focus on the benefits for the planet or future generations, but on the benefits for them personally, e.g. less toxin going into their body
3. Make green choice the default: Green is not an optional extra. Don’t ask consumers choose to go green. Green should be the default choice. For example, make no plastic shopping bag the default, allow consumers to pay extra for one. They don’t need to choose to be green because green is the default, they need to choose to be non-green.
4. Remove price premium: Where possible, remove the price premium for green products. The message should be green is normal, not just for the rich.
5. Bribe shamelessly: Offer treats along the way of their behavioural change, e.g. prizes, kudos, rewards, gold stars, public recognition.
6. Punish wisely: Small doses of guilt and shame can motivate behavioural changes, especially if they are also reminded of the green options available to them.
7. Don’t stop innovating: Make better stuff. Consumers are reluctant to sacrifice performance for sustainability.
8. Lose the crunch: Green marketing needs to be more mainstream hip than off-the-grid hippie. Market green as one of the secondary features instead of the leading feature: ‘Great performance, also friendly to the environment.’ Many consumers assume products with a primary focus on being green to have subpar performance, cost more, and are geared towards hippies.
9. Turn eco-friendly into ego-friendly: Green marketing often has a feminine image. Girly green needs a manly counterpart.
10. Make it tangible: Toyota Prius displays real time fuel economy information on the dashboard.
11. Make it easy to navigate: Design labels to be simple and clear. Consumers are often confused and suspicious to environmental claims.
12. Tap into hedonism over altruism: Project an experience and image that is fun and exciting to be in a sustainable world rather than projecting it as an act of ‘charitable’ contribution.

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It was 7 pm on August 24^th at the London Tap House in Toronto when a tornado alert was declared. Amidst the continuous rain and lightning at the CN tower, a group of Canadian sustainability thought leaders was paying their tributes to a world legend and the father of sustainability, Ray Anderson. The feature documentary of the evening So Right So Smart demonstrates the success of businesses that took positive steps toward a sustainable future. Canadian publications such as Corporate Knights and roundtables in Toronto Sustainability Speaker Series are also examples of leadership in corporate social responsibility (CSR).

A recent article from the New York based magazine Corporate Secretary shows how Canada is leading global interest in CSR. ‘When it comes to CSR, Canadian companies are the leaders in this field’, says Deputy Editor Aarti Maharaj.

CSR Ranking

The list of top 50 socially responsible corporations of 2010 by Jantzi Sustainalytics and Macleans magazine shows Canadian companies are well positioned when it comes to effective CSR practices. The study rated companies on their performance across environmental, social and governance (ESG) indicators and across areas such as community impact, supply chain and treatment of employees.

Government Can Do More

According to Aaron Dhir, an associate professor at Osgoode Hall Law School, ‘the Standing Committee on Foreign Affairs and International Trade (SCFAIT) report called for the Canadian government to, among other things, enhance incentives for fostering corporate compliance with international human rights norms and improve or create tools for monitoring corporate operations in the developing world.’

But Dhir notes that ‘the Canadian government tabled a response in October 2005 that neglected to adopt many of the SCFAIT report’s recommendations,’ though it did ‘lead to a set of National Roundtables on CSR in the extractive sector’. The Government can surely initiate more actions towards catalyzing CSR initiatives in businesses.

Still Ahead of the US

The failure in passing the American Clean Energy and Security Act is an example of US lagging behind Canada due to its poor support of sustainability legislation in Washington. Heather Lang, Jantzi Sustainalytics’ director of research for North America, adds that ‘Canadian companies generally lead their US peers when it comes to issues surrounding employee relations and the environment’.

Success Story – Talisman Energy

The Corporate Secretary article highlights a turnaround success story from Canadian oil and gas producer Talisman Energy in their venture in Sudan.

The shareholder activists in Sudan believed that oil production from the Greater Nile Petroleum Operating Company (GNPOC) project was providing financing that prolonged Sudan’s civil war. Although Talisman tried to address the issue by voluntarily initiating annual corporate responsibility reports and openly complying with the International Code of Ethics for Canadian Business, the company was sued with a genocide lawsuit.

In a statement, Talisman president and CEO Jim Buckee announced a deal to sell its interest in GNPOC, stating ‘Shareholders were tired of continually having to monitor and analyze events relating to Sudan’ as the major reason. Buckee also used the sale of the assets to establish Talisman’s commitment to CSR. (See Investors Increasingly Concerned With Climate Change Risks)

The genocide lawsuit against Talisman was dismissed in October 2009. While the company lost its business in Sudan, it has been able to close a number of successful mergers and acquisitions in order to gain business in other countries. Some of the deals were aided by the company’s solid CSR record.

From examples like Talisman, it is clear that CSR should be moved to the top of the boardroom agenda because it leads to effective employee engagement and with that comes an ethical corporate culture. ‘Talisman shows us that even under very difficult circumstances, effective management of CSR can be achievable and can facilitate international business objectives in a profitable way, if integrated into corporate strategy and governance,’ says Michael Torrance, a lawyer at Norton Rose. ‘Talisman has become a world leader in CSR as a direct result of its experiences in Sudan,’ Torrance concludes.

Other Canadian mining firms that have been actively taking sustainability initiatives include Argex Mining, Rencore Resources, and Shore Gold.

Learning

In this day and age of globalization, it is important for companies that are operating in other countries or those seeking to establish international subsidiaries to act responsibly and furnish reports to prove the credibility. (See CBSR 2011 summit ‘Canadian Business as a Global Citizen‘.)

‘If the highly-regulated mining industry can do it, I am pretty sure other companies will take heed and improve their CSR practices all over the US,’ says Maharaj. ‘Essentially, the purpose of this article is to educate our readers on how Canadian companies are leading in their ESG performance.’

We should be proud of the Canadian companies that have created interest and leadership for CSR across the globe. Would you like to share similar Canadian global success stories in CSR with us?

Aaron Dhir’s quote was update on September 2, 2011.

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How to use the framework diagram? The framework has 4 quadrants. To effectively embed sustainability into your corporate culture, you should have initiatives in all 4 quadrants. See below for an explanation for each quadrant along with example initiatives. If you are starting from zero, plan for small initiatives in all 4 quadrants. If you are already executing your initiatives, check to see if they cover all 4 quadrants and analyze for any gap.

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1. Fostering Commitment (Informal-Fulfillment)—Deliver existing sustainability commitments by motivating employees to get involved.

• Host internal workshops and competitions
• Include sustainability messages and success stories in communications
• Include sustainability messages in hiring and reward staff for sustainability contribution
• Share progress widely across the organization

2. Clarifying Expectations (Formal-Fulfillment)—Develop structures and procedures to implement current sustainability commitments.

• Set measurable sustainability goals at organization level, department levels, and personal levels
• Incorporate sustainability into organization’s vision and strategy
• Expand existing roles or create new roles for sustainability responsibilities
• Train staff on sustainable business practices
• Link compensation to sustainability performance

3. Building Momentum For Change (Informal-Innovation)—Develop new ideas and new practices for the road ahead.

• Form cross-functional champions team to seek innovative ideas from all levels
• Crowd-source from suppliers or customers for ideas and collaborations
• Share best practices across internal groups and at external industry events and publications

4. Instilling Capacity For Change (Formal-Innovation)—Formalize learning and process development

• Play an official role in industry conferences and policy development
• Benchmark progress with industry peers
• Incorporate sustainability deeply into business processes and systems, e.g. implement environmental management systems (EMS)
• Design new products and services that achieve industry leading levels of sustainability performance

How do your sustainability initiatives fit in to the framework? Share with us by leaving a comment below. More details of the framework are available at this website.

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Coca-Cola‘s 600,000 square foot facility in Brampton houses the plant, management team, and warehouse. It has three plastic bottling lines, including a Dasani line; one bag-in-box line producing syrup for national accounts; one pre-mix line for the restaurant business, and one canning line. There are 650 plant operators, sales and equipment service representatives, truck drivers, warehouse employees, management and staff.

Located within the eco-business zone around Toronto Pearson International Airport, Coca-Cola in Brampton joins the local community of businesses to collaborate on green projects. Under the stewardship of Partners in Project Green, businesses participate in programs to reduce energy and resource costs, uncover new business opportunities, and address everyday operational challenges in a green and cost-effective manner. Other companies in this program include Xerox, Unilever, FedEx, Hewlett-Packard, Walmart, Kraft, and LoyaltyOne.

Social and environmental risks are now one of seven business risk categories and are formally embedded into Coca-Cola’s enterprise risk management process. This in turn guides the business processes, including annual planning, three-year business planning, and internal audit planning. As a result, sustainability decisions are becoming an integral part of the business decision making, commercialization and capital management processes, the three-year business planning process, and customer and supplier relationships. Highlighted here are some of their goals, implementation, and progress.

Energy Conservation and Climate Change

The goal is to reduce the overall carbon footprint of the business operations by 15 percent by 2020, as compared to the 2007 baseline.

The Brampton operation converted to an energy efficient lighting system that uses 50% less energy and provides 50% more light. These new fixtures also operate on motion sensors for even greater savings.

In the distribution channels, the company has installed 2000 EMS-55 energy management devices in vending machines. These devices activate lights and adjust cooling based on use, leading to improved energy efficiency by up to 35 percent.

In addition, the company installed 1,400 climate-friendly coolers at the 2010 Olympic Games to reduce greenhouse gas emissions by approximately 5,600 metric tons, the equivalent of taking about 1,200 cars off the road for an entire year.

Finally, 37 heavy-duty hybrid delivery trucks and tractors were introduced to the Canadian fleet in 2008 and 2009. These vehicles improve fuel consumption and reduce emissions by about one third and create less noise and emissions when stopped in traffic.

Water Usage

The goal is to establish a water-sustainable operation to minimize water use and have a water-neutral impact on the local communities by safely returning the amount of water used in the beverages to the local communities and environment.

A 20% reduction in water use, accompanied by an efficiency ratio of 1.62 litres was achieved between 2005 and 2007. Plant teams focused on: 1) reducing the water use ratio; and 2) recycling the water used in operations (wastewater treatment).

To help reach its water usage goals the company developed and used a water conservation toolkit to identify actions that would conserve water. It implemented recycle and reclaim water loops through the plant’s membrane water treatment system. And it installed a new osmotic water recovery system designed to reclaim nearly 11 million litres of water for production. In addition water based container rinsers were replaced with ionized air rinsers and the lubrication system on all production lines was retrofitted to discontinue water use, saving approximately 28 million litres of water annually.

Sustainable Packaging and Recycling

The goals are to: (1) avoid the use of 100,000 metric tons of packaging materials between 2007 and 2010, (2) recycle or recover more than 90% of waste materials at production facilities by 2010, (3) increase recycled content in plastic (PET) bottles to an average of 10% by 2010.

For goal (1), Dasani PET bottle weight was reduced by 30%, saving 493 metric tons of PET. Plastic twist-off closures were designed 24% lighter, saving 235 metric tons of resin. Also, lighter fibreboard was developed for Minute Maid products saving 124 metric tons of fiberboard annually. The company also launched the PlantBottle, a 100% recyclable packaging made with up to 30% plant-based waste materials.

Goal (2) was achieved in 2009, ahead of schedule. The team also implemented a centralized recycling initiative that captures broken, damaged or expired product packaging from satellite facilities to be baled and sold to an industrial recycler.

Investments were made to achieve green innovations in recycling technologies, renewable packaging materials, vending and cooling equipment controls and design, and hybrid trucks.

Among the tools used was a proprietary packaging database to identify opportunities for future packaging material reductions and to benchmark performance against the global Coca-Cola system. See here for more on sustainable packaging.

The Coca-Cola operation in Brampton has shown that there are advantages to thinking “outside the box”. By respecting the finite nature of the earth’s water and resources the operation is implementing innovative business practices and contributing to the sustainability of communities while meeting the expectations of its stakeholders.

This case study is based in part on material provided by Partners in Project Green. Photos courtesy of Partners in Project Green.

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