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‘You want us to produce one of those corporate socialist reports?!’



Seb Beloe, partner and head of sustainability research at WHEB Asset Management, looks back at the history of sustainability reporting to see how it has evolved.

You want us to produce one of those corporate socialist reports?!” This incredulous response, from the CEO of a large US conglomerate, may not be the typical reaction that we get from companies (a raised eyebrow is much more common in London) but it does belie a deep-seated misunderstanding about the role and value of sustainability reporting.

In case you’ve not been watching, sustainability reporting has become a sizeable industry., a consultancy that monitors the global output of reports every year, estimates that in 2011 there were approximately 6,600 reports (including corporate responsibility, sustainability, environmental and other similar reports) – up from less than 1,000 10 years ago and just 40 in 1992.

But is all this effort really worth it? As investors, should we even bother to read these reports?

This was the question posed by one of my WHEB colleagues, as part of a review of how we might refine our examination of environmental, social and governance (ESG) issues as a core part of our stock analysis. He had recently returned from a seminar on integrated reporting where the reliability of sustainability reports as a source of information on companies was put under the spotlight (see his subsequent blog here).

Our starting point is that many environmental and social issues are directly relevant to company strategy and operations. Whether it is growing resource scarcity affecting the price and volatility of commodities, population and demographic change driving skills shortages, or rapid evolution in technology that is arguably enabling a more active and influential citizenry, the world is changing and companies need to respond.

Fundamentally, we review sustainability reports (as well as other corporate literature) as a way of getting a better reading on how an individual company understands this agenda, and how it is adjusting.

Unfortunately, sustainability reports are often seen as an opportunity to spout trite public relations guff. They can also be very lengthy. We do nonetheless think that they are worth reviewing, but it is important to sort the ‘wheat from the chaff’.

A decade ago, the consultancy and research group SustainAbility (where I was head of research and advocacy from 2003-2007) published a typology of corporate reports which is still a useful framework today.

At one end of the spectrum are the ‘corporate truants’. Originally of course, companies were remarkable for producing a corporate sustainable or environmental report. Today it is the non-reporters who are more noteworthy.

Next to the non-reporters are the ‘corporate cosmetics’ – ‘pretty pictures and PR piffle’ as one colleague pithily put it.

The corporate ‘nerds’ present a more challenging conundrum for us as investors. Volumes of data obscure the ‘wood for the trees’ and as the original SustainAbility report put it, “Corporate nerds operate at the MS-DOS level, needing someone else to provide the equivalent of Windows user-friendliness”.

The final two reporting categories, the ‘virtuosos’ and the ‘supersonics’, are thankfully much more common today than they were in 2002. These companies focus explicitly on the strategic implications of the sustainability trends outlined above.

As investors, we believe that companies that understand how their business is impacted by these trends (and vice versa) are better at navigating 21st century markets and will therefore outperform their peers in the long run.

These reports also provide clear evidence of how their business is configured to manage these issues appropriately. For example they will describe the structures and incentives that are in place to focus management on critical ESG issues. They will also provide data on performance, with indicators that are clearly aligned with the company’s underlying business strategy, and with the commercial significance underlined.

In many ways, the most sophisticated companies have dispensed with sustainability reporting altogether.

A core failing of environmental or sustainability reports has always been that their audience is almost never clearly defined. In reality they are a ‘catch-all’ designed for everybody, and nobody.

That is not to say that nobody is interested in what they contain, but there are much better ways to disseminate this to customers through marketing and advertising, to regulatory authorities through regulatory submissions, to suppliers through procurement codes or to investors through annual financial reports.

The efforts of the International Integrated Reporting Council (IIRC) are, at least from an investment perspective, particularly critical. The framework that this initiative is developing is expected to define the key parameters of what corporate reporting, sustainability or otherwise, will look like and in the process hopefully put paid once and for all to notions of ‘corporate socialist reporting’.

Seb Beloe is a partner and head of sustainability research at WHEB Asset Management. This article originally appeared on WHEB’s blog.

Further reading:

Lies, damned lies and sustainability reports

Has CSR reached its sell-by date? Part 1

Has CSR reached its sell-by date? Part 2

The Guide to Sustainable Investment 2013

Articles, features and comment from WHEB Group, an independent investment management firm specialising in opportunities created by the global transition to more sustainable, resource efficient economies. Posts are either original or previously featured on WHEB’s blog or in its magazine, WHEB Quarterly.


How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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5 Easy Things You Can Do to Make Your Home More Sustainable




sustainable homes
Shutterstock Licensed Photot - By Diyana Dimitrova

Increasing your home’s energy efficiency is one of the smartest moves you can make as a homeowner. It will lower your bills, increase the resale value of your property, and help minimize our planet’s fast-approaching climate crisis. While major home retrofits can seem daunting, there are plenty of quick and cost-effective ways to start reducing your carbon footprint today. Here are five easy projects to make your home more sustainable.

1. Weather stripping

If you’re looking to make your home more energy efficient, an energy audit is a highly recommended first step. This will reveal where your home is lacking in regards to sustainability suggests the best plan of attack.

Some form of weather stripping is nearly always advised because it is so easy and inexpensive yet can yield such transformative results. The audit will provide information about air leaks which you can couple with your own knowledge of your home’s ventilation needs to develop a strategic plan.

Make sure you choose the appropriate type of weather stripping for each location in your home. Areas that receive a lot of wear and tear, like popular doorways, are best served by slightly more expensive vinyl or metal options. Immobile cracks or infrequently opened windows can be treated with inexpensive foams or caulking. Depending on the age and quality of your home, the resulting energy savings can be as much as 20 percent.

2. Programmable thermostats

Programmable thermostats

Shutterstock Licensed Photo – By Olivier Le Moal

Programmable thermostats have tremendous potential to save money and minimize unnecessary energy usage. About 45 percent of a home’s energy is earmarked for heating and cooling needs with a large fraction of that wasted on unoccupied spaces. Programmable thermostats can automatically lower the heat overnight or shut off the air conditioning when you go to work.

Every degree Fahrenheit you lower the thermostat equates to 1 percent less energy use, which amounts to considerable savings over the course of a year. When used correctly, programmable thermostats reduce heating and cooling bills by 10 to 30 percent. Of course, the same result can be achieved by manually adjusting your thermostats to coincide with your activities, just make sure you remember to do it!

3. Low-flow water hardware

With the current focus on carbon emissions and climate change, we typically equate environmental stability to lower energy use, but fresh water shortage is an equal threat. Installing low-flow hardware for toilets and showers, particularly in drought prone areas, is an inexpensive and easy way to cut water consumption by 50 percent and save as much as $145 per year.

Older toilets use up to 6 gallons of water per flush, the equivalent of an astounding 20.1 gallons per person each day. This makes them the biggest consumer of indoor water. New low-flow toilets are standardized at 1.6 gallons per flush and can save more than 20,000 gallons a year in a 4-member household.

Similarly, low-flow shower heads can decrease water consumption by 40 percent or more while also lowering water heating bills and reducing CO2 emissions. Unlike early versions, new low-flow models are equipped with excellent pressure technology so your shower will be no less satisfying.

4. Energy efficient light bulbs

An average household dedicates about 5 percent of its energy use to lighting, but this value is dropping thanks to new lighting technology. Incandescent bulbs are quickly becoming a thing of the past. These inefficient light sources give off 90 percent of their energy as heat which is not only impractical from a lighting standpoint, but also raises energy bills even further during hot weather.

New LED and compact fluorescent options are far more efficient and longer lasting. Though the upfront costs are higher, the long term environmental and financial benefits are well worth it. Energy efficient light bulbs use as much as 80 percent less energy than traditional incandescent and last 3 to 25 times longer producing savings of about $6 per year per bulb.

5. Installing solar panels

Adding solar panels may not be the easiest, or least expensive, sustainability upgrade for your home, but it will certainly have the greatest impact on both your energy bills and your environmental footprint. Installing solar panels can run about $15,000 – $20,000 upfront, though a number of government incentives are bringing these numbers down. Alternatively, panels can also be leased for a much lower initial investment.

Once operational, a solar system saves about $600 per year over the course of its 25 to 30-year lifespan, and this figure will grow as energy prices rise. Solar installations require little to no maintenance and increase the value of your home.

From an environmental standpoint, the average five-kilowatt residential system can reduce household CO2 emissions by 15,000 pounds every year. Using your solar system to power an electric vehicle is the ultimate sustainable solution serving to reduce total CO2 emissions by as much as 70%!

These days, being environmentally responsible is the hallmark of a good global citizen and it need not require major sacrifices in regards to your lifestyle or your wallet. In fact, increasing your home’s sustainability is apt to make your residence more livable and save you money in the long run. The five projects listed here are just a few of the easy ways to reduce both your environmental footprint and your energy bills. So, give one or more of them a try; with a small budget and a little know-how, there is no reason you can’t start today.

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