New report: Companies struggle to reduce environmental impact

New report: Companies struggle to reduce environmental impact

From the State of Green Business 2015 report
From the State of Green Business 2015 report

The world's biggest companies are working to address their environmental impacts — but it isn't making much of a difference, according to State of Green Business 2015, a report released Tuesday by GreenBiz Group and Trucost.

The eighth annual edition of the report, which measures the global progress of large, publicly-traded companies  confronting myriad environmental challenges, echoes past research that showed corporate progress leveling off or declining.

"This year's report offers a sobering reality," said Joel Makower, GreenBiz Group executive editor and the report's principal author. "For all the impressive work that companies are doing to embed sustainability into their operations, it's not really changing much."

The metrics from the report were drawn from an assessment of 4,800 of the world's largest companies by Trucost, a leading research firm focusing on natural capital and sustainability metrics. Those 4,800 companies represent 93 percent of global markets by market capitalization.

"Recent improvements in resource efficiency, although welcome, are not enough to break the link between economic growth and environmental decay," said Richard Mattison, CEO of Trucost Plc. "As a result, the business risks of unsustainable natural capital consumption are increasing."

One possible reason for the decline of progress by companies is that most have already addressed the so-called low-hanging fruit — or the things they control inside their operations, such as facilities and fleets, which can offer attractive financial paybacks. However, as the State of Green Business report shows, the biggest natural capital impacts for most sectors are found in supply chains.

Supply chain impacts can be harder to address, since vendors are often thousands of miles and several intermediaries removed from companies' direct control or influence. That's creating new, deeper levels of awareness, but most companies have yet to fully understand supply-chain sustainability impacts, let alone how to address them.

It's not all bad news, though. The report reveals "a hive of activity among companies taking these practical steps along the way to developing more sustainable business models," according to Mattison. In particular, more companies are using the concept of natural capital in order to integrate sustainability into their businesses. The number of companies involved in natural capital initiatives has grown by 85 percent to reach 300 over the past year.

The report also includes 10 sustainable business trends to watch in 2015. They include the rise of "stranded assets" as a potential liability for companies and the global economy; the increase in open and distributed sustainability solutions; increased supply-chain transparency; the growth of science-based corporate sustainability goals; and growing markets for "green bonds" and other mainstream financial instruments and business models that funnel investments to sustainable energy, "green infrastructure" and the like.

The State of Green Business report will be the centerpiece of the upcoming GreenBiz Forum (February 17-19), taking place in Phoenix, Ariz., where speakers will address many of these trends and metrics.

The free report can be downloaded from GreenBiz.com or by following this link.

ABOUT TRUCOST PLC

Trucost has been helping companies, investors, governments, academics and thought leaders to understand the economic consequences of natural capital dependency for over 14 years. Its world-leading data and insight enables our clients to identify natural capital dependency across companies, products, supply chains and investments; manage risk from volatile commodity prices and increasing environmental costs; and ultimately build more sustainable business models and brands.