Creating more sustainable businesses will pave the way to a better economic future overall. Although responsible business practices that respect the environment and integrate positive social practices haven't always been first and foremost on many investors' minds, more and more long-term shareholders see the important connection.
Sadly, most corporate managements are way behind the curve on this common sense, even survivalist, strategy.
Ceres, a sustainable investment advocacy organization, held its 2012 conference this week: "Igniting Innovation, Scaling Sustainability." In addition, and in conjunction with environmental, social, and governance (ESG) research firm Sustainalytics, Ceres released a report revealing 600 publicly traded companies' sustainability progress -- or lack thereof.
Moving forward in the new century
First things first: despite some heartening areas of corporate progress, there's still a long way to go in constructing what Ceres has called "the road to 2020" and the creation of the "21st Century Corporation." Ceres' threw down the gauntlet in 2010, outlining the importance of corporate strategies that allow for survival and success in a low-carbon, resource-constrained future economy.
Ceres and Sustainalytics point out the benefits of better sustainability processes and planning from both economic and social standpoints: "We see it as a world of opportunity for companies to improve competitiveness, realize large savings through energy efficiency, invest in their workers, strengthen their supply chains and, in many sectors, reap the benefits of the enormous investment opportunities in clean technology and clean energy."
These moves sound like perfect common sense. However, common sense is not so common, as the old saying goes, especially when so many corporate managements and boards are too often stuck on this quarter or next quarter alone.
Unfortunately, two years in, a measly 26% of the 600 corporations evaluated have integrated sustainability into their governance and management processes. Only a quarter are disclosing details about supply-chain monitoring and performance, and just a third are setting specific goals for slashing greenhouse gas emissions.
Hall of fame
Although it's clear many corporations are just starting out or remain clueless about the importance of long-term sustainability planning, some companies are ahead of the game in integrating these concerns into their business plans. The report called out Intel
Some highly specific areas are either relatively weak or relatively strong in terms of corporate action and attention.
Nearly half the evaluated companies have some kind of supplier code in place. On the other hand, only 10% of the 600 companies specifically reference International Labor Organization guidelines. Nike
On the other end of the spectrum, a woefully small percentage of the companies ranked address human rights issues in a systemic way. Only 13% gained Ceres' highest "Tier 1" or "Tier 2" rankings on this metric, which evaluates policies covering discrimination, working conditions, and other human rights issues. 3M
Although only a third of the companies evaluated have specific goals for slashing greenhouse gas emissions, there is some good news. Nearly half -- 47% -- of the companies are at least making some progress in cutting electricity usage, using renewable energy resources, and increasing energy efficiency.
Looking for leaders
According to the data gathered by Ceres and Sustainalytics, very few corporations are leaders in sustainability measures. That's unfortunate, and doesn't bode well for a healthy economy or healthy investments in the far-flung future.
Given America's reputation for ingenuity, American corporations can do better than this, and hopefully this data will spark more movement by more companies in these areas.
As for those of us who are investors, let's keep a close eye on whether our stocks show signs that they're ready for the new century. If they're not, they may not make it to 2020 and beyond.
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Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on environmental, social, and governance issues.