Corporate Sustainability a Progress Report
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KPMG INTERNATIONAL Corporate Sustainability A progress report kpmg.com In cooperation with Contents Foreword 3 Our thanks are due to all survey respondents and KPMG viewpoint 5 interviewees for their time and insights. About this report 12 Interviewees (listed alphabetically by company): Executive summary 13 • Hugh Share, Senior Global Director, Beer & Better World, Anheuser-Busch InBev Introduction 14 • Jeanne Ng, Director, group environmental affairs, CLP Holdings The role of government 23 • Victoria Mills, Managing Director, corporate partnerships Case Study: How FedEx, UPS and other program, Environmental Defense Fund logistics firms are driving new transport • Mitch Jackson, Vice President, environmental affairs and innovation 24 sustainability, FedEx Measuring and reporting 27 • Wayne Balta, Vice President, corporate environmental affairs and product safety, IBM Case Study: CLP—From integrated processes to integrated reporting 32 • Len Sauers, Vice President for global sustainability, Procter & Gamble Challenges ahead 34 • Sören Buttkereit, Head, corporate sustainability external office, Conclusion 37 Siemens • Bob Stoffel, Senior Vice President, engineering, strategy, supply chain distribution and sustainability, UPS (retired January 2011) © 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. Corporate Sustainability | 3 Foreword The evidence that sustainability is Among those that have implemented the becoming a core consideration for principles of sustainability, enthusiasm is successful businesses around the world high. grows stronger every day. Nearly half of the people who took part It is a powerful undercurrent running in our survey thought that sustainable through the pages of the business media, practices would definitely improve an almost compulsory topic of discussion profitability for their companies. One at meetings of business leaders, and respondent whose company has a long- among the most thoroughly researched running program reported that for every business issues of the past decade. dollar they are spending, they are getting US$1.50-2.00 back, while another told But translating this into action is not us, with complete confidence, that “… all proving to be easy. As this survey shows, issues of sustainability will be solved by despite all the progress that has been innovation.” made, more than a third of businesses So what are the problems preventing a still do not have a sustainability strategy in wider take-up of sustainable practices? place. Of those that do, only one in three is reporting publicly on their progress. © 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. 4 | Corporate Sustainability On the evidence of our survey, they come These initiatives need to succeed because down to three things: it is clear from our investigations that • The need for financing solutions that sustainability can be a source of innovation will allow the longer term benefits of and growth, if governments help business sustainability to compete with other to make it so. The large amount of private programs with a higher short-term sector funds necessary to achieve climate payback change goals will be released only when investors are confident that governments • The need for common measures, are committed to making these new and underlying systems that produce systems work. credible information, to analyze the impact of sustainability programs We want to thank everyone who has taken part in this research project, especially our • The need for a clear and rigorous colleagues at the EIU and the respondents international framework of regulation who gave their time to let us hear their within which companies can plan with views. We hope the report will be of value confidence. to anyone with an interest in achieving a The fieldwork for this study was carried genuinely sustainable future for business. out before the United Nations Framework Ted Senko, Global CEO Climate Change Convention on Climate Change talks in & Sustainability and Yvo de Boer, Global Cancún, Mexico at which major efforts Special Advisor were made to win progress on the international agreements necessary for further adoption of sustainable practices. © 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. Corporate Sustainability | 5 KPMG viewpoint Clearly, sustainability is rapidly becoming UPS or CLP Holdings (all of which are a strategic priority for businesses. Around profiled in the accompanying report) to see the world and throughout this survey, we that these market leaders are setting the see encouraging examples of pioneering pace and standard by which their peers will companies that have recognized the soon be held accountable. imperative of sustainability and created What propels these organizations – and strategies and solutions to effectively a host of others like them – past their respond to the issue. competitors is the recognition that For a growing number, the concept of sustainability goals must be tied to sustainability goes far beyond corporate operational strategy and measured in the social responsibility (CSR). It has become same way as other investments. And by the strategic lens through which they view treating sustainability as an investment their businesses. For these organizations, rather than a cost, they have adjusted their sustainability offers an undeniable business models to drive long-term change opportunity to gain competitive advantage, and make them more competitive in the drive innovation and generate real bottom- market. line results. And despite a complex array of challenges, these companies are already taking great strides towards shaping the global approach to sustainability. One need only look at leading global brands such as Procter & Gamble, Anheuser-Busch InBev, © 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. 6 | Corporate Sustainability Other companies, however, still see For example, governments may consider in changes that position the company to uncertainties and complexities which stop designing regulations that provide mitigate their risk and create competitive them from taking the initial steps required to incentives for businesses to transform. advantage. implement sustainability programs. For one, Indeed, in almost every jurisdiction, What gets measured gets managed the lack of a clear and consistent regulatory there is a real opportunity to create framework makes it difficult for companies to a stage upon which companies can Outside of regulation, many companies are formulate business decisions that can have achieve their sustainability goals in a finding that their largest challenges stem a long-term effect on sustainability. At the commercially viable manner. Managed from a lack of credible information, metrics same time, companies are struggling with appropriately, governments may find that and standards related to sustainability. This understanding how to build an appropriate they can effectively deliver on their own hampers progress in several ways. The business case for sustainability programs as environmental targets and create a self- first is – without meaningful benchmarks they grapple with sparse, inconsistent and sufficient market for sustainability. – many companies are unable to properly often unreliable data. gauge their progress in relation to their In the meantime, many companies are competitors and market leaders. This An evolving regulatory environment assessing both the risks and opportunities goes to the heart of good business Notwithstanding any assumed progress on that are posed by regulation. At the front decision making, and presents an issue the international stage, it is clear that more end, this generally includes a mix of for all stakeholders including investors, needs to be done to encourage businesses regulatory compliance reviews, enterprise shareholders and customers, all of whom to embrace sustainability. risk assessments and tax exposure are placing increased scrutiny on business evaluations, and can often result and product sustainability. © 2011 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. All rights reserved. Corporate Sustainability | 7 For sustainability programs to be properly There are a number of encouraging integrated into operational strategy, initiatives under way that seek to create meaningful and reliable metrics must industry benchmarks and reporting be developed along with the underlying standards such as the Global Reporting processes and systems to produce such Initiative activities and the International information. To determine long-term Integrated Reporting Committee’s work in ROI and delineate bottom-line benefits, this area. On a related front, new