A Closer Look at the Environmental Records of Top 10 CDP Leaders
A Closer Look at the Environmental Records of Top 10 CDP Leaders
One of the most interesting findings was a suggested correlation between financial performance and how well a company takes action on climate change and discloses it. The organization found that companies on the Carbon Disclosure Leadership Index and Carbon Performance Leadership Index produced double the returns to their shareholders than the average return of the Global 500 index as a whole.
The CDP highlighted the top 10 performing companies that made both lists. They include: Bank of America, Bayer, BMW, Cisco Systems, Honda Motor Company, Philips Electronics, SAP, Sony Corporation, Tesco and Westpac Banking Corporation.
We couldn't help but notice that some of these companies have seen their share of troubles recently. Just last week, for instance, Bank of America said it would lay off 30,000 workers. Cisco, meanwhile, has lowered sales forecasts and laid off nearly 13,000 employees this year, while Bayer has faced uncertainty lately over approval of a key drug.
Granted, these developments took place in just the last few weeks, while the potential correlation between financial and climate performance raised by CDP is based on earnings from January 2005 through May 2011. I suppose that although no one likes layoffs, it is a cost-cutting move designed to shore up the bottom line, which will ultimately continue to deliver returns to shareholders, though not in the way many would like.
On the environmental side, our archives are full of accounts of how some of these companies have been working toward more sustainable operations for years. We took a peek and here's what we found:
• Bank of America: The banking giant may have just released its first CSR report, but since 2007, the company has invested $11.6 billion in environmental business initiatives, the lion's share of which was earmarked for the financing of LEED projects, Brownfield redevelopment and renewable energy tax credits. Other activities include: a goal to reduce greenhouse gas emissions by 15 percent; creating a policy that would phase out lending to companies whose primary means of coal extraction is mountaintop removal; and adopting the Carbon Principles to manage risks associated with lending to coal projects.
• Bayer: The company has seen a string of bad headlines recently, such as the $750 million it paid to settle mutant rice lawsuits and questions over FDA approval of its drug Xarelto. But on the environmental side, Bayer reported that while its production grew 20 percent last year, its environmental impacts grew at a far lower pace, a sign that the company was finding some success in decoupling impacts from business growth. Other efforts include: replacing boxes for bottles of Bayer and Aleve with printed directions attached to the bottle; making chlorine production more efficient with its oxygen depolarized cathode technology; increasing waste recycling rates; and committing to spending $1.46 billion on climate change initiatives.
• BMW: As PricewaterhouseCoopers Parnter Alan McGill noted this week, BMW has begun tweaking its business model to accommodate the concept of sustainable transport, even launching a new line of vehicles dubbed the i-Series. The i3 and i8, spotlighted at the Frankfurt Auto Show this week, are electric vehicles also made with lightweight carbon fiber. The company was a supporter of higher mpg standards in the U.S. that other carmakers opposed, and BMW was also lauded for more efficiently leveraging its economic, environmental and social resources than other automakers.
• Cisco Systems: In the last several years, Cisco has emerged as a strong telecommuting advocate, and its Telepresence line of products are often cited by companies as a top solution for trimming business travel and carbon emissions. Cisco is also an active player in the smart grid space, although the company has joined the likes of Microsoft and Google with its move away from its home energy management business. Cisco also recently landed on the top 10 list of the Best Global Green Brands. More than once, Cisco has topped Greenpeace's Cool IT list, which names the companies most likely to apply their IT solutions to address climate change.
• Honda Motor Company: Long hailed for its energy-efficient cars -- although the company was overtaken as the most efficient auto company in the U.S. last year by Hyundai, according to the U.S. Environmental Protection Agency -- the company has also made a series of advancements in the areas of waste and supply chain. In July, the carmaker capped a decade's worth of work by announcing its 14 North American facilities have reached zero waste to landfill status. Earlier this year, Honda began using its revised Green Purchasing Guidelines globally to evaluate track the environmental footprints of the products its buys from suppliers. From 2006-2010, the Union of Concerned Scientists named Honda the Greenest Automaker.
• Philips Electronics: Philips operates in many sectors, including healthcare and lighting, where the company recently generated buzz with its ultra-efficient LED light bulb that won the company the coveted $10 million Bright Tomorrow Lighting Prize. Before that, the company unveiled other LED lights that are bright and more efficient than the standard incandescent. The Netherlands-based company also was one of several big-name brands to urge the European Union to adopt more stringent climate change goals and ban toxics in electronics, such as ban polyvinyl chloride (PVC) and all types of brominated flame retardants.
• SAP: Business software pioneer SAP went from zero to 60 since its first sustainability report. The company has not only been a leader in developing products to help businesses transition to a low-carbon economy, it adeptly uses those products to demonstrate what's possible, such as reporting carbon emissions on a quarterly basis, making it possible to correct its course should the company find itself in danger of missing its targets. For its reporting efforts, SAP has earned nods from the likes Ceres, while its bottom line has benefited: Since 2008, its sustainability investments have saved the company $252 million and counting. In 2010, SAP enjoyed a record year for revenue with 17 percent growth, while at the same time, emissions declined 6 percent.
• Sony Corporation: Entertainment may be the first word that comes to mind for many when they think about Sony, but the company has also been steadily plugging away at a goal it set last year to produce zero environmental footprint by 2050, including emissions and waste, and using virgin materials. It's a lofty goal, to be sure, but it follows other efforts by the company to reduce its impacts, such as using less packaging in its DVDs, recycling electronics waste, and making environmentally-friendly electronics that are energy efficient with fewer hazardous materials. Since 2000, Sony has reduced its emissions by 31 percent.
• Tesco: We've covered Tesco extensively over the years because they've given us a lot of fodder. Among their slew of environmental efforts, a few come immediately to mind: Tesco's carbon footprint work includes not only mapping its supply chain, it also added carbon labels to many of its products, such as toilet paper; two years, Tesco announced it sent zero waste to landfill; the retailer has also targeted packaging, committing last year to reduce the carbon impact of packaging by 10 percent and trim supply chain packaging waste by 5 percent by 2012.
• Westpac Banking Corporation: Perhaps because of its proximity (it's based in Australia), we don't have a lot on Westpac in our archives, but this bank is more squarely on our radar now. We do know the company encouraged sustainable agriculture practices by through landcare term deposits, where for every dollar spent, the bank lent a similar amount in support. As early as 2003, Westpac joined nine other global banks in adopting social responsibility guidelines from the World Bank known as the equator principles, a way for banks to manage sustainability risks in their lending.