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Corporate Sustainability Practices: Waste & Recycling

Published July 17, 2014

Website: GreenBiz.com

When it comes to waste, everyone knows the 3-R mantra: Reduce, Reuse, and Recycle. But it’s tough to follow the 3 Rs when products, packaging and materials aren’t designed with end-of-life in mind.

GreenBiz Group and Waste Management recently conducted a joint research effort to identify current trends in waste reduction and recycling. The research was undertaken to identify insights into how waste and recycling decisions are made by sustainability executives, the metrics they are employing in their drive toward waste reduction, and the actions they plan to undertake in the future.

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This book is a roadmap for business careers in sustainability

Published July 17, 2014
This book is a roadmap for business careers in sustainability

Katie Kross and I have known and collaborated with each other for 10 years. I was excited when she published her guide to sustainability careers, "Profession and Purpose," in 2009. I was doubly excited to hear about its second edition. "Profession and Purpose: A Resource Guide for MBA Careers in Sustainability" just became available for purchase on Monday.

Katie is managing director of the Center for Energy, Development, and the Global Environment (EDGE) at Duke University’s Fuqua School of Business. She has supported hundreds of MBA students and alumni in their searches for purpose-driven jobs.

We sat down to discuss how much has changed in the last five years since her first edition came out.

What is your definition of a Purpose job?

I use the term “Purpose” to include a broad range of careers through which you can have a positive social and/or environmental impact on the world. My coaching tends to focus on careers at the intersection of business and social/environmental purpose, but there are lots of ways to make a purposeful impact through a career in almost any discipline.

What is the demand for Purpose careers from MBAs?

One indicator of demand has been the growth in Net Impact, a global organization for students and young professionals who want to use their skills to transform business and the world. Membership grew 30% in 2012-2013, and there are now over 53,000 members and 320 chapters globally.

Many MBA students today are from the Millennial generation. Recent reports have shown that Millennials are looking for ways to imbue their careers with meaning — including making a social and/or environmental impact.

Are MBA schools doing enough to meet the demand for Purpose Careers?

I think MBAs are well prepared in terms of a skillset. However, disciplines such as sustainability, CSR or social entrepreneurship typically don’t hire through on-campus recruiting channels at business schools. So MBA students passionate about a Purpose career often have to navigate a job search that’s different from more traditional MBA disciplines. Some business schools do a great job of helping students interested in Purpose careers, while others may not have the capacity or expertise to help in this area.

The first edition of "Profession and Purpose" was published five years ago. What has changed in the marketplace since then?

The biggest change is that sustainability has become much more mainstream in business. The first edition of my book came out soon after Walmart announced its sustainability initiative, which at the time was really bold and new. Now, partly because Walmart and other companies have been driving sustainability up through their supply chains, and partly because consumers and the general public are more aware of sustainability issues, sustainability has become more readily understood, taught in business schools and more mainstream in practice.

Another recent change has been the rise in impact investing, which has become more of a focus for the students and alumni with whom I engage.

Where are the jobs?

There continues to be good growth in corporate sustainability and CSR jobs at large companies, but the number of jobs is still small in aggregate. The biggest opportunities are in a traditional business role (marketing, operations, finance, strategy) at a Purpose-driven organization. That might be an organic food company, B Corporation, environmental or social NGO, impact investing fund, clean tech company, or any other organization where social or environmental issues are part and parcel of the organizational mission. These are roles where the job seeker might not necessarily have social or sustainability management as the central focus of their job, but it can be very rewarding to work in an organization where everyone is on board with a shared sense of purpose.

Another place we see job growth is in the energy sector — including both traditional energy employers and those in cleantech, renewable energy and energy efficiency applications, which often appeal to purpose-driven candidates.

I went to last year’s VERGE conference. One of the really interesting spaces going forward is in the intersection of energy, technology and infrastructure/buildings. There’s so much innovation happening to make buildings more efficient, intelligent and productive with resources.

What skills are employers looking for in these jobs?

There is a lot of diversity in the skills, but in interviewing employers for my book and a research article I wrote last year, a few themes stood out.

1. Ability to lead change: Demonstrate that you can envision change, take initiative, be persuasive and influence others.

2. Systems thinking: The challenges of sustainability tend to be big, complex, multilateral issues requiring leaders who understand the systems dynamics of the big picture.

3. Diverse employment history: It’s not necessarily expected that you should follow a linear career path. In fact, a lot of employers value diverse work experience. Many employers I interviewed value a mix of private-sector business skills and an understanding of the Purpose-related issues.

Why should someone buy this book?

The landscape of Purpose jobs is incredibly diverse, so it can be really hard to find job search resources and job openings in one place. "Profession and Purpose" is intended to be a “one-stop shop” for job search resources, career advice, tips, examples and employer insights necessary to navigate a Purpose-driven job search. There are career options in fields like sustainability, social entrepreneurship, and impact investing, but there are also many other disciplines through which a student or graduate can have a positive change on the world.

Top image by Anneka via Shutterstock. 

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Why innovation isn't always the answer in clean tech

Published July 17, 2014
Why innovation isn't always the answer in clean tech

Like most people, I love the idea of innovation. Innovation is new, it's exciting, it's cutting-edge and it's vital — even if no one can agree on precisely what it is.

In green business and environmental circles, innovation is self-evidently of huge importance. Our current economic models are at the root of the environmental crises we face, so we need to develop innovative new technologies and business models to resolve those crises. Without technical innovation to bring down the cost of clean energy and transport, we will never decarbonize the economy; without innovative new ways of doing business, we will never tackle the resource crunches that loom over so many industries. That is what makes the sheer quantity and quality of clean tech innovation on display at the recent BusinessGreen Leaders Awards so inspiring and heartening. We need clean tech innovation, and long may it continue.

However, there is a little-acknowledged caveat to our obsession with innovation that was highlighted last week by Dutch landscape ecologist Victor Beumer. Sometimes, he told the Global Estuaries Forum in Deauville, France, you need to stop regarding a solution as innovative and acknowledge that it has become normalized, boring, passé even. In fact, this should be the point you are aiming for. That is when you have made it.

Beumer was speaking of how we can use eco-engineering techniques to tackle flood risks when he said: "People say this is innovative, but it's been being done for over 10 years and if you call it innovative, people want the government to pay for it and businesses won't take the risk." But he could have been talking about almost any clean tech innovation.

The surprising stigma of innovation

The key point that too many in the clean tech sector overlook in their rush to celebrate innovation (and I am as guilty of this as anyone) is that not everyone likes innovation. Large swathes of the public don't like innovation. Pension funds and institutional investors really hate innovation. Many multinationals, regardless of what they say to the contrary, are wary of innovation. What they want is safe, reliable, bankable technologies, projects and business models that will deliver near-guaranteed returns.

Credit: Joe C via FlickrThe goal of the clean tech revolution is not innovation for innovation's sake, it is innovation to reach and then pass the point where greener alternatives become safer and more effective propositions than the polluting incumbents they are designed to replace. We need a clean tech industry that can innovate, but we also need one that can roll out its innovations at global scale in the matter of a few years. There are other skills that matter besides innovation (and yes, I appreciate the contradiction of writing this just days after our BusinessGreen Leaders Awards celebrated the best in green business innovation).

The most encouraging aspect of the decision by retail giants such as Walmart, Sainsbury's and Tesco to invest so heavily in deploying solar panels and LED lights at their stores is that these firms are not traditionally that innovative when it comes to this aspect of their operations. They are not deploying these technologies to prove that they are cutting-edge. They've done the return on investment calculations, tested the technology and deemed it to be the best and most cost-effective, not necessarily most innovative, option. Similarly, it has to be asked if wind and solar energy should still be seen as innovative in those parts of the world where the technology has been around for more than 20 years and can compete with fossil fuels on cost without subsidy.

Innovation's goal: To become commonplace

Of course, innovation remains crucial. It is the lifeblood of the clean tech sector and will remain so for years to come. Green industries secure huge benefits from their being regarded as unimpeachably modern and technologically bleeding edge.

But there will come a point, and for some parts of the green economy it already has come, when clean tech firms will have to realize innovation can get you only so far. Sometimes you have to focus on deployment, and at that point being regarded as innovative can become a curse as well as a blessing. It is almost always good to be seen as innovative, but if clean tech firms are to ever achieve their goals they also have to be regarded as boringly mainstream.

Top image of Rube Goldberg machine by Jeff Kubina via Flickr. This article first appeared at BusinessGreen.



Why sustainability requires leadership training

Published July 17, 2014
Why sustainability requires leadership training

Sustainability is now firmly on the radar screen of business. Along with their ongoing focus on economic issues, two-thirds of executives and managers now consider social and environmental issues as significant or very significant concerns. Yet only 10 percent of leaders say they are fully addressing these issues. Those who have been able to embed sustainability into core functions of their companies are reaping significant benefits.

Sustainability is one of those big openings that hold enormous promise. It requires teams to know not only what it means and why it’s important, but also how it can be actualized in a business. And as always, it takes excellent leadership skills to turn good ideas into tangible results.

For every highly-influential leader who may have the clout to put sustainability on the table, it takes a whole team of skillful champions working together to make sustainability a reality.

Throughout my career, and in my role at the U.S. Chamber of Commerce Foundation, I’ve witnessed what’s possible when business leaders set a powerful agenda and then pull together the teams that get it done. Those game-changing initiatives take commitment, talent, hard work and time.

One problem we face as leaders today is that we developed our leadership talents, and gained business success, in environments that were much more predictable than those our businesses face now. The business challenges surrounding resource constraints, erratic markets, extreme weather, economic volatility and social change have become the new normal described by Andrew Winston in The Big Pivot. These conditions, along with innovations in technology that have interconnected our world, have infused the business landscape with a never-before-seen radical level of transparency. All this has left business leaders with much less control than they would ideally want.

Making sustainability happen — at scale — and with the speed required to reap returns on investment under these conditions, requires business leadership to rethink and remix their skill sets to develop the versatility and agility they need.

Sustainability leadership training

The value to leaders of developing collaborative relationships that are cross-functional and inter-industry cannot be emphasized enough in regard to sustainability. The USCCF and other forward-thinking business-focused organizations have a critically important role to play in moving sustainability forward by providing venues where business leaders can learn what they need to be highly effective in a complex, rapidly changing world. The recent Sustainable Brands Conference is one example of how this can be done. GreenBiz VERGE events are another. 

We also see a huge opportunity for a new kind of leadership training: one that gets at the hands-on, nuts-and-bolts of actually running a profitable, socially responsible company, and ensures that business leaders at all levels and key job functions — including operations and production, R&D, marketing and sales, human resources and finance — are equipped with both the “why” and the “how” of sustainability.

We believe that to be successful, leadership must engage enough people so that sustainability practices permeate the organization. That's the reason our LeaderShip for Sustainability three-day training program aims at causing such breakthroughs as garnering C-suite support for integrating sustainability throughout the entire organization and in every function, or implementing sustainability employee-resource groups and green teams throughout the organization to engage employees at every level and make sustainability goals their own.

We’ve been watching the rise of gamification in business that helps employees discover, learn and practice hard-core business skills (while including the human side) in a low-risk environment, as DeloitteGartner, and others have noted. While it’s still an emerging arena, gamification has huge potential to help people learn and gain insights about making sustainability real in their business. And doing it in days, rather than years.

That's why we apply a learning model that integrates sustainability concepts and best practices with hands-on experience through gamification that simulates an actual business. We believe this approach models for companies what they can do internally to accelerate learning and to have their leaders gain relevant experience with minimal risk.

We believe that each of us has a role to play in responsibly managing our planet’s resources and making a positive contribution to society, while generating business opportunities and results that benefit many people both locally and across the globe. Many of you have your own experiences to share. Now that you know what we've been up to, we’d love to hear what you are doing to champion sustainability.

Top image by docstockmedia via Shutterstock.



How to track corporate action on climate change

Published July 17, 2014
How to track corporate action on climate change

When the Unitarian Universalist Association announced its new fossil fuel divestment policy, the resolution stated that the UUA would divest its holdings in the Carbon Tracker 200 within five years.

What is the CT200? Originally assembled by the Carbon Tracker Initiative  — the organization whose 2011 report Unburnable Carbon focused the attention of investors and others on the concept of stranded fossil fuel assets — the CT200 list the world's 200 largest fossil fuel companies. The list is currently maintained by Fossil Free Indexes, an environmental, social and corporate governance index and research company.

To be precise, the CT200 lists the 100 largest oil and gas companies and the 100 largest coal companies. Noted and links to media coverage included in the rankings describe investment and reputational risks incurred by the companies due to environmentally unsustainable business practices. The list also reports on the reserves on the books of each company, measured in gigatons of CO2.

As the fossil fuel divestment movement grows increasingly mainstream — even BlackRock recently partnered with the Natural Resources Defense Council to launch an “equity global index series that will exclude companies linked to exploration, ownership or extraction of carbon-based fossil fuel reserves” — the smart long-term investment money would seem to be on divestment.

But as UUA's carefully crafted divestment policy points out, divestment alone probably is not enough to steer the world to a low-carbon economy. That is why the Association was explicit in its determination to maintain the level of shareowner engagement that it has developed over its years as an institutional investor.

Besides, as the UUA's Simon Billenness pointed out to SocialFunds.com in a recent conversation, the fossil fuel divestment movement is “also influencing the way shareholder activists engage with companies that are not in the fossil fuel industry, like electrical utilities.”

Investors rely on the climate change disclosures of companies to assess whether how those companies are responding to climate change, both in strategies to reduce greenhouse gas emissions and prepare for the business realities of a low-carbon economy. In 2010, the Securities and Exchange Commission published interpretive guidance for corporate reporting on climate change. “Certain existing disclosure rules ... may require a company to disclose the impact that business or legal developments related to climate change may have on its business,” the Commission stated at the time.

To provide investors with improved access to corporate climate change disclosures, Ceres has collaborated with Jackie Cook of CookESG Research to provide a searchable database of such disclosures by companies listed on the Russell 3000 index. Only half of Russell 3000 filers had something to say about climate change in their 201410-K filings, the database reveals.

“Robust climate-related data from companies is a critical need, but it’s still lacking,” said Mindy Lubber, president of Ceres.

“This portal helps investors make sense of textual climate disclosures, conduct company-to-company comparisons and identify best practice,” Cook added. “The full value of the SEC’s 2010 interpretive guidance can only be realized if we actually monitor companies’ climate disclosures and act on the information — or absence of information.”

The tool will be extended in the future, Ceres states, “to include U.S. and non-U.S. companies and coverage on a broader range of sustainability issues, including hydraulic fracturing and water availability, which also pose material risks and opportunities to a range of companies.”

This article originally appeared at Social Funds. Top image of examining a report by EDHAR via Shutterstock. 



6 ways collaboration can boost sustainability

By Laura Gitman
Published July 16, 2014
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Tags: Business Models, Business Operations, More... Business Models, Business Operations, Commitments & Goals, Leaders, Meetings, The Business Case, The Green Office
6 ways collaboration can boost sustainability

A room filled with 10 companies, each at various stages of maturity in their sustainability programs. They’re in the same industry but are different sizes, from different markets, with different brand images and perspectives. My role is to facilitate discussion and gain consensus on a collaborative approach — despite all the differences.

I’ve been in rooms like this many times and have come to recognize there is always one constant: Collaboration is hard. Period. You have to balance competing needs and, compared to an individual corporate initiative, collaboration almost always takes more time, commitment and patience.

But it’s also worth it. Corporate collaboration can drive exponentially greater impacts. It can foster innovative solutions, level the playing field, move an industry, raise expectations for partners, influence policy and catalyze change in myriad ways.

At BSR, we recently launched five new collaborative initiatives for our member companies, and as I have worked with colleagues to get these started, I have been asking myself: How can we make these successful and just a little bit easier?

I came up with six ways. In the spirit of collaboration, I'm sharing my list:

1. Don’t follow a template

Over the past decade, corporate sustainability collaborations have appeared to follow the same formula: Create industry solutions to a particular issue by forming an initiative with a multistakeholder governance structure. While these collaborations are important and powerful, they are not the only viable approach.

I facilitated the Electronic Industry Citizenship Coalition for more than four years, growing the initiative from 15 to more than 50 electronics companies and helping institutionalize the EICC as its own entity. Unlike groups like the extractives industry’s Voluntary Principles — which includes companies, governments and NGOs — the EICC includes industry only. But that’s because the collaboration needed was across the complete supply chain, and EICC members represent the entire industry, from retailers and electronics brands to contract manufacturers and raw materials suppliers.

There is a need for a wide variety of collaborations: some within an industry, some multi-industry, some multistakeholder. Some are focused on standards and implementation, others on learning and sharing. But there is no one right way.

2. Embrace good governance

Regardless of what form they take, good governance is a critical part of improving performance or setting standards through formal collaborations. Take the time to define decision-making processes and roles, ensure sufficient administrative time and support staff and use effective meeting facilitation techniques. In some cases, this might mean hiring staff to ensure the long-term viability of the effort.

3. Take advantage of external pressure

Collaboration can be challenging and sometimes it helps to get an external push. The calamity at Rana Plaza that killed more than 1,000 apparel workers in Bangladesh was both predictable and avoidable. But the silver lining is that it spawned two new collaborative initiatives focused on systemic challenges to health and safety within Bangladesh’s garment industry. Ideally, it wouldn’t take a horrific event to trigger necessary collaboration, but it’s helpful to use these events or bring in external stakeholder input to drive buy-in from internal skeptics or additional peer companies.

4. Focus on the long term and recommit to your purpose

Collaborations take a lot of compromise, and sometimes they require two steps backward just to take one step forward. As with any long-standing relationship, it’s important to focus on the long term and remember why the group came together in the first place. I like to ask company representatives to restate why they joined a group several years later, so that they remember the value they were seeking in that collaboration. That commitment provides a foundation for healthy debate and the motivation to push through the difficulties.

5. Know when to move on

Often, we associate ending an effort with failure, when it’s actually a sign of success. Every group should review progress annually and assess whether it makes sense to continue. For three years, I led the Licensing Working Group, which comprised media and entertainment companies focused on helping licensees improve their social and environmental performance. The group developed a partnership with the international licensing association, conducted a global survey of licensees, ran several in-person and virtual workshops and published a guide translated into several languages.

Then we asked ourselves, “Now what?” We recognized that we had accomplished our goals, and the next step was for individual companies to integrate the lessons. So we sunset the group. I’ve seen groups in similar situations struggle to find a purpose to stay together. Instead, we should celebrate these endings, as there is plenty more work to do in other areas.

6. Be open to informal collaboration

Many informal networks play an important role in collaboration as well. For more than 20 years, BSR has been a membership organization focused on corporate sustainability, and when I took over leadership of our global membership a year and a half ago, I made a point to recommit to our membership model. With more than 250 member companies representing a wide range of industries and geographies, our membership provides a platform for informal collaboration through networking, events and learning opportunities, as well as the option to participate in and shape BSR’s more formal collaborative initiatives.

I often encourage companies to take advantage of their membership for these reasons: Formal initiatives are important, but they also take a lot of work, and sometimes all a company needs is a place to go for thought partnership and ideas. There are many opportunities for informal collaboration, through groups such as BSR, industry-specific associations and even social networks.

Collaboration is vital to achieving systemic change on critical sustainability challenges. It will be hard, but with some of these ideas, I hope it will be just a bit easier to reach the potential of collaboration and drive real impact.

Top image by BlueSkyImage via Shutterstock.

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Google and EDF join to expose gas leaks under U.S. streets

By Fred Krupp
Published July 17, 2014
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Tags: Big Data, Chemicals, More... Big Data, Chemicals, Cities, VERGE
Google and EDF join to expose gas leaks under U.S. streets

Not so long ago, people who worried about pollution in their local environment had few options. Getting answers required hands-on testing by trained experts with specialized equipment, or finding and sifting through scarce, hard-to-come-by data.

Today, all of that is changing. A convergence of tech trends — inexpensive sensors, cloud computing and data analysis, and social media — is transforming environmental protection by giving people and organizations such as Environmental Defense Fund the ability to collect and analyze huge troves of data, then publish results for all to see.

Three cars, 15 million data points

We launched one of these powerful projects Wednesday.

Thanks to a partnership with Google Earth Outreach, EDF has mapped thousands of natural gas leaks beneath three American cities — Boston, Indianapolis and New York City’s borough of Staten Island. Using three of the company’s famous Street View cars equipped with special sensors, we gathered millions of data points over thousands of miles of neighborhood streets.

The maps are available here, with many more to come.

For the most part, these natural gas leaks don’t pose an immediate danger; utilities are required to monitor and repair the major ones and usually do a good job of it. But leaking gas, which is mostly methane, has a powerful effect on the global climate, packing up to 120 times the warming effect of carbon dioxide.

In fact, scientists say that methane and other short-term climate forcers account for about a third of the warming we’re experiencing today, with methane responsible for most of that. It’s urgent that we plug these leaks to reduce near-term climate impacts.Detail on a Staten Island methane map

Our pilot project with Google gives citizens and local utilities data on pollution that used to be invisible. We show not just the location of thousands of leaks beneath the streets of three large American cities, but also assess how big the leaks are, giving utilities and regulators crucial information to accelerate and prioritize efforts to stop them.

Having access to this level of intelligence is something I could only dream of when I joined EDF 30 years ago.

The project — one of 16 studies coordinated by EDF to measure methane emissions across the entire natural gas system — underscores the challenge of controlling leaks from the local distribution sector, and the progress that can be made when cities work to tackle it aggressively.

Our sensors recorded just five leaks in Indianapolis, which has replaced many of its pipes in recent years. Never before has the public had access to so much transparent and usable data, and never before have we had an opportunity like this to address such an urgent, widely overlooked environmental problem head-on.

The future of environmental data

We are confident that our research will make it faster, easier and cheaper to gather and analyze data on methane leaks and other kinds of pollution. But breakthroughs like this don’t happen overnight.

Our research team spent two years working with scientists at Colorado State University to develop and test these new analytical tools. And we worked closely with a number of leading utilities to cross-check and validate their findings against real-world conditions.

Several utilities, including NationalGrid, worked directly with us to validate our findings.

We’re mapping more cities right now, while expanding our monitoring to other pollutants. We know Google Earth Outreach is interested in exploring others as well.

Google Street View covers 3,000 cities in 54 countries, so the possibilities truly are limitless.

People act, leaders react

Even more exciting is the larger trend.

Our maps are part of a powerful new era of environmental monitoring and protection. From Beijing and Fukushima to the rainforests of Brazil, technology is giving people new ways to see — and act on — pollution that is happening around them.

As former New York mayor Mike Bloomberg likes to say, you can’t manage what you don’t measure — and now people everywhere have the capability to take accurate measurements and publish them online, which applies pressure on authorities to step up their management.

If you want to nominate your city for methane mapping, go here.

This article originally appeared at EDF Voices. Top image of methane leaks in Boston via EDF and Google

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    Private equity has room for growth on sustainability

    By John Hodges
    Published July 16, 2014
    Email | Print | Single Page View
    Tags: Business Operations, Corporate Reporting, More... Business Operations, Corporate Reporting, Finance, Finance & Job Creation, Reporting & Transparency, Socially Responsible Investing
    Private equity has room for growth on sustainability

    A few weeks ago, I moderated a panel on environmental, social, and governance (ESG) integration in private equity at the Responsible Investor Europe Conference in London. This panel, and other discussions, highlighted the lack of consensus among investors on where the private equity industry is when it comes to sustainability.

    I would advocate that the industry is “definitely somewhere.” This may sound a bit flippant, but a decade earlier, the answer to the question on how far the industry has come on sustainability could have been “definitely nowhere.” Unfortunately, much of the progress private equity has made is hard for the public to see because of the industry's confidential nature.

    It is true that some companies have made initial public steps. Blackstone, Carlyle, and KKR, among other major private equity firms, have established ESG teams in recent years. Some firms’ websites include basic ESG sections and a few publish regular sustainability reports. When firms discuss ESG publicly, they often focus on their due diligence processes and assistance to portfolio companies on specific ESG topics, such as energy efficiency. In addition, private equity colleagues will tell you that a lot more is happening behind the scenes.

    External guidance to the industry, such as the UN Principles for Responsible Investment-led ESG Disclosure Framework for Private Equity (PDF), has focused on best practices in ESG disclosure to limited partners (investors). The largest of these limited partners are corporate and public pension funds — many of which strongly support responsible investing. While important, limited partners are too often the sole focus for ESG disclosure, which is almost always shared with them confidentially.

    Private equity firms typically own a controlling interest in their portfolio companies and therefore have tremendous influence on how these companies operate. Furthermore, many portfolio companies are well-known brands, such as Burger King, Dell, GoDaddy, Hertz, J. Crew and Toys R Us, and come from industries with significant ESG impacts, such as consumer products, energy, information technology and manufacturing. More than 17,000 U.S. companies are backed by private equity, employing about 5 percent of the total U.S. workforce. Yet, ESG disclosure by private equity portfolio companies is usually poor as well.

    These portfolio companies have diverse stakeholders — employees, customers, suppliers and communities — who are affected by their ESG performance. However, given the limited public disclosure by both the portfolio companies and their private equity owners, these stakeholders are unable to make an informed assessment of how well these companies are managing their sustainability impacts. This can lead to stakeholders assuming the worst.

    Speakers and attendees at the Responsible Investor Conference underlined that until private equity firms fully disclose ESG impacts across the value chain, they will continue to run the risk of negative public perception. To achieve a higher level of disclosure, I recommend that the private equity industry take three steps:

    1. Require that all portfolio companies have a minimum approach to ESG management and that they report publicly on their ESG efforts.

    2. Aggregate the real-world information that portfolio companies already disclose publicly, and use this to publish ESG reports that are useful to all stakeholders, not just limited partners.

    3. Use increased ESG disclosure to spur a more data-driven discussion about the industry’s beneficial ESG impacts, such as job creation, community development and environmental preservation.

    Private equity firms and their portfolio companies can have positive ESG impacts, but it is impossible for the full spectrum of their stakeholders to see them without consistent, publicly available information on where the industry is when it comes to sustainability. As in many cases, transparency is the important first step to effective stakeholder engagement.

    This article originally appeared on BSR Insights. Top image by wk1003mike via Shutterstock.

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