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

By Carol Pierson Holding

The Sustainability Accounting Standards Board (SASB) just announced a new credential

So Hard to Change Course

for accountants charged with analyzing sustainability issues that impact the bottom line.  “More and more companies are disclosing sustainability information. In 2011, only about 20 percent of S&P 500 companies produced a sustainability report, while in 2014 that number jumped to 75 percent.”

Should this make us jump for joy? I’d hoped for more.  By now, we were supposed to have one overall reporting scheme that integrated financial results with quantified sustainability measures.

I remember how participants cheered at the 2007 Socially Responsible Investment (SRI) Conference when piles of the Wall Street Journal’s special section “A Smarter Approach to SRI” were distributed. The section acknowledged SRI investors, data analysts and portfolio managers as a valid segment of investing, chronicling SRI’s shift from a sin-avoidance screen (no tobacco, liquor or firearms) to a philosophy that doing good in the world produces great financial results.

We thought we could see the end of a need for SRI. After all, if a strategy is producing better returns, wouldn’t everyone jump on the bandwagon? Wouldn’t accounting standards incorporate sustainability factors into their reporting requirements? Wouldn’t financial analysts demand access to standardized sustainability measurement?

Yet here we are, eight years later, and we’re no closer to sustainability integration. The SEC requires financial reporting on climate change and conflict minerals to account for their risk, but that was put in place in 2010 and has only been minimally enforced. The U.S. has not required sustainability reporting seen in other countries, and the U.S. accounting board (FASB) leaves sustainability reporting to independent organizations, removing FASB’s responsibility to put sustainability factors side by side with financial reports.

Sustainability data, also called CSR, is available – in fact, CSRHub, sponsor of this blog, posts some of its data online for free. But none have been used to establish standards that can be enforced.

Despite these roadblocks, some investors have figured out how to incorporate sustainability performance into their investment strategies, and they’ve had remarkable success. This month’s The Atlantic reports on Al Gore’s phenomenal performance with sustainable investing: his firm earned 12.1 percent annually over ten years, an astounding 5 percentage points over the average managed account.

Gore’s results are substantiated by studies from Oxford University and the Wharton School. So why are supposedly rational investors not enrolling in droves?

Bank of England’s Chief Economist Andrew Haldane has considered this behavior irrational as well. The Atlantic piece explains:

“…this is known as the ‘$20 bill paradox’: An economist sees some money lying on the sidewalk and says, ‘That can’t be a $20 bill, because if it were, someone would have picked it up.’ But Haldane’s analysis shows a persistent market failure because of habits of mind, compensation structure, and other real-world factors that make investors undervalue long-term returns.”

A perfect example comes courtesy of this month’s Harvard Business Review’s “Best-performing CEOs in the World.” For 2015’s report, the authors factored in 20 percent sustainability performance with its standard financial measures, profit and change in stock value. Eight years after the Wall Street Journal endorsed sustainability, Harvard has come around too. Should be great news right?

Predictably, Jeff Bezos, founder of Amazon, was first last year. Also predictably given Amazon’s abysmal sustainability record, Bezos dropped to 87^th this year.

But the market didn’t punish Bezos at all. The week the rankings were released, Amazon’s price was unaffected, bouncing around within its normal range. Even more telling, when the company’s “bruising workplace’” was excoriated by the New York Times then universally critiqued for weeks on end, the stock barely budged. Sustainability affects long term returns, which just don’t matter to most investors.

So what’s the news here?

By adding sustainability as a factor to its Best Performing CEOs ranking, HBS is supporting its mission to “Educate Leaders Who Make a Difference in the World. Yet the market’s “habits of thought” are to value short term over long term returns and reward ambitious leaders who fail to understand the inter-connectedness of the world.

You have to applaud the change in CEO ranking criteria, celebrate the SASB credential and admire those who proselytize sustainable investing. But we still have a long way to go to change real world habits.

Photo courtesy of Andy Blackledge via Flickr CC.

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 15,000+ companies from 135 industries in 132 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.

By Cynthia Figge

In a recent study by the White House on the status of women, its first since 1963, women now make up 57% of college enrollment. Yet in 2009, at all levels of education, they earned only 75 percent as much as their male counterparts. How far have we come, and where are we going?

1963 was the auspicious year of Betty Friedan’s publication of feminism’s cornerstone text, The Feminine Mystique. Revisiting the book, I was surprised to discover new meaning in Friedan’s message—one with a decidedly progressive bent, even for 2011.

Stephanie Coontz’s book A Strange Stirring provides a compelling critique of the impact of The Feminine Mystique as an impetus for the profound changes brought by the women’s movement in the 60s and 70s. In the event you think women are not doing well enough, she outlines that we have come a long way since 1963. Clearly Friedan encouraged women to embrace, rather than repudiate, their aspirations for a life beyond the home.

What I did not know was that Friedan urged both women and men to use their education and talents in meaningful work that served a higher purpose. It is this call to integrate our work with a higher purpose that may be one of the most critical drivers of the sustainability movement.

Considering the vast transformation required to evolve our global economic system towards sustainability, the yearning for social utility in work is motivating many young people today to be a part of the solution. At both Harvard and Columbia Universities’ business schools, about 25% of all students are members of their environmental and sustainability clubs. Demand for work in this area is intense and many MBA graduates say they would sacrifice pay for work where they can solve social problems and make a difference in the world.

Although all are welcome, women may be particularly called upon to lead the sustainability movement. I recently joined with other sustainability leaders in the Northwest to launch the Seattle chapter of the Women’s Network for a Sustainable Future (WNSF). Last fall, Jean Brittingham kicked off the inaugural gathering of over 70 women by saying that female memes have been absent for the past five to seven thousand years, and now is the time to bring our feminine traits – passion, curiosity, a solutions-first focus, intuition, relationship-based action and multitasking—to the sustainability movement.

Costco’s head of sustainability, Sheri Flies, added that we must understand the balance of women’s and men’s traits, and that she has seen some 30-something year old men embracing their own feminine attributes in their work styles.

Gifford Pinchot, co-founder of the Bainbridge Graduate Institute, spoke about the risk facing our civilization, pointing out that as we move from knowledge work to creative work, women are the drivers of sustainable organizations, enterprises, and culture.

In her article Gender and the Sustainable Brain, Andrea Learned argues that encouraging the relational and empathetic aspects of human thinking [those aspects which are more typical of women] – and “better balancing that which has been perceived as masculine and feminine – will lead us to a more sustainable, enduring and productive global economy.”

So is this the time for women to “dominate” and “take over” to lead corporations and the world to sustainability? The recent article, The End of Men, in The Atlantic, indicates that this may be “our time.” Women’s growth in leadership has been barred by the dearth of women in the pipeline for the C suite, and too few female mentors. However, this is finally changing.

Joanna Barsh (a classmate at Harvard Business School) raises provocative issues in her book, How Remarkable Women Lead, such as whether feminine leadership traits (for women and men) are better suited for our fast-changing, hyper-competitive, and increasingly complex world. The good news is that women are tracking into sustainability and corporate social responsibility (CSR) roles, and bringing a rich reservoir of strength, optimism for the future, and grounded ways to change the world. After five to seven thousand years, it’s about time.   

Cynthia Figge, Cofounder and COO of CSRHUB is a forerunner and thought leader in the corporate sustainability movement. In 1996 she co-founded EKOS International, one of the first consultancies integrating sustainability and corporate strategy. Cynthia has worked with major organizations including BNSF, Boeing, Coca-Cola, Dow Jones, and REI to help craft sustainability strategy integrated with business. She was an Officer of LIN Broadcasting/McCaw Cellular leading new services development, and started a new “Greenfield” mill with Weyerhaeuser. She serves as Advisor to media and technology companies, and served as President of the Board of Sustainable Seattle. Cynthia has an MBA from Harvard Business School. Cynthia is based in the Seattle area.