CSRHub Blog Research on ESG metrics and comments on sustainability best practice

Why Mandatory Reporting is the Key to Better Benchmarking

[fa icon="calendar'] Jul 9, 2015 10:48:02 AM / by CSRHub Blogging

Guest Author: Adriana Salazar

A well-known quote from 19th century American writer Mark Twain says “Comparison is the death of joy”, but if you’re a company wanting to create a sustainability strategy that makes business sense, what if I tell you there’s a lot to be happy about in comparing yourself with others?

And what if I tell you mandatory reporting is instrumental in helping you make these comparisons?

By others, of course, I mean your industry peers. Peer benchmarking is the process designed to assist companies in comparing themselves with each other (on specific metrics or processes for instance) in order to grow and make better strategic decisions. If we focus on sustainability benchmarking, the process naturally closes in on sustainability-relevant metrics.

So why benchmark? Companies that grasp the importance of a solid sustainability strategy (and view it as an asset rather than a hindrance) know investors increasingly value this forward-thinking approach. In addition, knowing where you stand against your competitors and identifying strengths and weaknesses for improved strategic decision-making can help your corporation drive innovation and increase bottom line benefits. But for all its benefits (if you follow the blog, you’ll know we’ve discussed this before), the benchmarking process also has its challenges. To name one, sustainability benchmarking is only as good as the data it’s based on.

If you’re a company wanting to benchmark your sustainability data against your peers, you’ll likely want to use third party tools and services offering a good range of data and allowing you to run quick and reliable comparisons on a variety of indicators. But if you think about it, the only reason your company will even have access to this type of data in the first place, is because your industry peers and competitors have made their sustainability data publicly available.

In short, data (always) matters. Good quality and publicly available metrics are at the core of sustainability benchmarking. And this is where the question of mandatory reporting comes in. The next time you hear someone complain about compulsory sustainability reporting, there’s at least one solid argument you can give them: Although voluntary reporting is fairly extended, it’s the mandatory disclosure of key (and sometimes sensitive!) data that’s going to take sustainability benchmarking to the next level. For a corporation to obtain a truly reality-based snapshot of where it stands against its peers, both industry leaders and laggards need to have previously measured and released the ‘metrics that matter’, including those they would rather not report about.

While it’s true that regulatory instruments remain largely voluntary at the global level, mandatory sustainability reporting standards and legislation are increasingly present at the national level. According to GRI’s 2013 ‘Carrots & Sticks’ publication, which analyzed the increasing number of national and international reporting policies from around the world, in 2006, 58 percent of policies were mandatory, while 7 years later, over two thirds (72 percent) of the 180 policies in the 45 reviewed countries were compulsory.

In 2013 (see image below), GRI already highlighted that sustainability reporting requirements and recommendations were on the rise in the EU. More recently, due to the December 2014 EU Directive on the Disclosure of non-financial and Diversity Information by Certain Large Undertakings and Groups, by the end of 2017 an estimated 6,000 public interest companies with over 500 employees, across 28 Member States, will be required to disclose relevant and material environmental and social information in their annual reports.

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In addition, increased mandatory reporting (contributing to improve and expand the quality and availability of data for sustainability benchmarking), also means the days of greenwashing are over. Highlighting a few obscure and supposedly ‘green’ KPIs in your next sustainability report is probably not going to convince anyone. Fortunately, globally and in the past few years, sustainability reporting has taken the opposite direction (towards increased disclosure, transparency, visibility, dialogue…), and that’s something we should all be very grateful for.

There are a number of user-friendly solutions to help you benchmark. At Enablon Publisher, we partnered with CSRHub to create a benchmarking tool allowing any corporation to quickly and efficiently measure environmental, social, governance and community performance against industry peers. From a user perspective, all you have to do is enter the name of your company, select your competitors, and start benchmarking!

If the idea intrigues you, visit us at: http://publisher.enablon.com/templates/benchmark/

 

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[fa icon="comment"] 1 Comment posted in benchmarking, CSR, sustainability benchmarking, sustainability reporting, Uncategorized, Mandatory Reporting, CSRHub, greenwashing, metrics

It's Biodegradable, I Swear!

[fa icon="calendar'] Apr 27, 2012 4:48:13 AM / by CSRHub Blogging

This post is part of an ongoing collaboration with Gia Machlin, president and CEO of EcoPlum, an online green shopping rewards site. Watch for her contributions to the CSRHub blog on eco-friendly products and green living ideas. For more on EcoPlum, or to follow the EcoPlum blog, visit www.ecoplum.com.


By Gia Machlin

The following was originally posted on the EcoPlum blog in two parts.

So after years of making fun of dog owners in the city, I became one myself: a city dweller with a canine friend. Meet Pepper. Of course now I think having a dog in the city is the best thing since sliced bread, but I still feel somewhat ridiculous picking up after Pepper does her business on the sidewalk. Luckily we have those tidy little poop bags to help us out and keep the mess to a minimum. I realize that using an old newspaper is probably more eco friendly, and I may just switch to that, but as I was getting used to this dog walking concept, using the bags just seemed much less disgusting.

So I walked into the pet store and asked for biodegradable poop bags, and the clerk pointed me to some bags hanging in a display case. On the packaging, there was a picture of the earth with some recycling arrows around it and the words “earth friendly.” If I didn’t happen to be in the sustainability field, I might have taken this information at face value and bought the bags. But I didn’t recognize the symbol as representing a reputable eco-label and I looked further. Nowhere on the packaging did the product claim to be biodegradable, compostable, or made of renewable materials. In fact, the bags were, as far as I could tell, no different than any other plastic poop bag. But I’m sure the manufacturer fooled a few customers into believing their product was “greener” than the next. How is this possible?

It’s possible, because there is very little regulation around what companies can claim as “green,” “eco friendly,” or “earth friendly.” Not that there isn’t any regulation – in 1992 the Federal Trade Commission came out with the Guides for the Use of Environmental Marketing Claimsalso known as the “Green Guide“. This regulation has been updated several times, and in October 2010 the FTC proposed major updates to this section of the Federal Register (the proposed updates have yet to be finalized). So this is all good, and the FTC has started to enforce these rules, but the rules are new, and in some cases unclear, and the door is still open for all the “greenwashers” and their claims for now.

So, as a consumer, knowing that the door is still open for marketers to make all kinds of green claims, how do you know what’s green? Well the first thing to know is that nothing is truly “green.” Everything we buy has some kind of environmental footprint. A product’s footprint is calculated using many factors: the material used to make it, the energy used tomanufacture it, the gasoline used to transport it, the electricity needed to operate it, and the waste created when ultimately disposing of it. But a product can be “greener” than another. (The most environmentally friendly option is not to buy anything new at all and reuse what’s already out there!) So how do we know what’s “greener?” Currently, we at EcoPlum believe the best option is to buy products that have are made of recycled materials, have been certified green by independent organizations or that have earned a reputable eco-label.

Now, how do you know which Eco-Label is reputable? That’s the topic of Part II of this post. But, for now, here is a list of eco-labels we have found be run by independent non-profit or government third parties that appear to have no vested interest in the products or companies they certify.

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Last time I wrote about how easy it is for marketers to “greenwash” by claiming their products are “eco friendly,” “green,” and “natural” with very little regulation and enforcement around these claims. I introduced the importance of the ecolabel: a “seal of approval” that is given by a government agency, a non-profit or an independent third party when a product or company meets certain predetermined environmental standards. With over 400 ecolabels floating around out there, how do you know which ones to rely on for your purchasing decisions? Which ones seem to be the most reputable and unbiased? Of course, as with most things in life, it is hard to know if any of these organizations are truly “independent” and have no vested interest in making the claims they make, but the best we can do is rely on their transparency, track record, and reputation. So, with this caveat, please read more about those ecolabels that, at least based on my research and experience, seem to be the most worthy of consumers’ trust.

One can categorize ecolabels in a number of ways: who issues them, whether they apply to the entire company or just specific products, and whether they are general or industry specific. Let’s start with the type of issuing organization.

Are they issued by the government, a non profit or another third party organization?


Two of the most well known ecolabels are the USDA Organic and Energy Star logos. No doubt you have bought some food labeled USDA Organic or an appliance with the Energy Star seal of approval. These are government issued labels that require adherence to very specific standards, carry hefty fines for misuse, and require certification and testing of operations and products by an accredited certification agent. Other government issued labels include: the Green Vehicle Guide, Design for Environment, and WaterSense programs from the EPA, the USDA BioPreferred program, and the Canadian EcoLogo program.

Non-profits and non-governmental organizations (NGOs) also play an important role in ecolabeling. Some of the better known NGO labels are GreenSeal, Green America, Fair Trade USA, Campaign for Safe Cosmetics, EPEAT, and the US Green Building Council’s LEED certification program. All of these programs have rigorous standards that products and companies must meet prior to earning the use of the seal or label. In some of these cases, the companies “self report” their compliance with these standards to the NGO, and there is little to no verification by the NGO. While this may make some people nervous, there is not a lot of room for abuse, as the NGOs monitor the companies closely for customer complaints and their reviewers are quite experienced in spotting the shadier applicants. Some of these organizations run random audits and site visits to maintain integrity.

Of course, this wouldn’t be America if we didn’t have our share of for profit companies in the ecolabeling space! The leader right now is probably UL Environment (ULE), with their 2010 acquisition of TerraChoice, a sustainability consulting firm and manager of Canada’s EcoLogo program. Another well known one is Cradle to Cradle, from MDBC, another sustainability consulting firm, although in 2011 the actual certification responsibility was transferred to a new, non-profit entity called the Cradle to Cradle Innovation institute, so technically they are part for-profit and part non-profit. These companies all require audits and verification of standards, and also provide the advice and consulting services to bring their clients into “compliance” with their standards.

Next, you should know if the label applies to a specific product or to the entire company.

Company wide or product specific – there are pros and cons to each of these types of certifications. Examples of company wide certifications are Green America, B-Corporation, Fair Trade Certified, and in some cases Green Seal and ULE. When the entire company is certified, it often means that the issuing organization has looked beyond product attributes such as material, energy use, etc. Green America, for example, looks at the labor practices, fair trade practices, community involvement, transparency and communication, employee treatment, and charitable giving practices of the company. As a matter of fact, when EcoPlum first applied for Green America certification in 2009, we were turned down due to not having all these policies in place. (This, of course, made our obtaining Green America Gold certification in 2011 all the more coveted!) So, when you shop from a Green America Gold Certified company, for example, you know that the entire corporate culture is dedicated to sustainability and social responsibility. On the other hand, when labeling occurs at the product level, as with the Energy Star program, you know that the exact product that you are purchasing meets very specific environmental criteria, but the manufacturer may have sweat shops in China or be a big contributor to the coal lobby, just for example. 

Finally, you should know if the label is specific to a certain industry or product type or if it is a general “green” certification.


Some of the ecolabels that cover a general range of products are Green Seal, Cradle to Cradle, Green America and EcoLogo. However, the majority of ecolabels are industry specific. So, if you are looking for safe cosmetics, then the EWG’s Skin Deep database is the place to go, but if you are buying a new car, check out the EPA’s Green Vehicle Guide. If you want a biodegradable cleaner, go to the USDA Biopreferred database, but if you want an eco friendly carpet, look it up in FloorScore. Yes, this is a TON of information, and if your head is not spinning yet, download our FREE GUIDE TO ECOLOBELS here!

[Note: the EcoPlum Online Boutique carries only eco friendly products that have been certified green, have a third party eco-label, or are made of recycled/upcycled materials.]


Gia Machlin is the president and CEO of EcoPlum, an online green shopping rewards site with eco-friendly products and green living ideas that make it fun, easy, and rewarding to go green. EcoPlum aims to inspire a community of people to be conscious of ctheir daily habits, purchases, and impact on the world's limited resources. Prior to founding EcoPlum, Gia was president and principal of MMC 20/20 Systems, Inc. and co-founded Plan Data Management, Inc. She has also worked with MachlinConsulting Group, Deloitte & Touche, AT&T, and Unisys. She received her MBA with honors from Columbia Business School and her BS in Industrial Engineering/Operations Research with honors from the Columbia University School of Engineering and Applied Sciences. She makes her home in New York with her husband and two children. 

CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

CSRHub rates 12 indicators of employee, environment, community and governance performance and flags many special issues. We offer subscribers immediate access to millions of detailed data points from our 140-plus data sources. Our data comes from six socially responsible investing firms, well-known indexes, publications, “best of” or “worst of” lists, NGOs, crowd sources and government agencies. By aggregating and normalizing the information from these sources, CSRHub has created a broad, consistent rating system and a searchable database that links each rating point back to its source.


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