A couple of weeks ago, the team at Strategic Sustainability Consulting reviewed a report called Six Sustainability Trends to Watch in 2012 by the brand strategy and communications design firm Addison.
Overall, we thought it was right on the mark, and we recommend that readers hop over to the Addison website to read all the details. Here's a snapshot -- plus an additional trend (#7 below) that we're predicting will be one to watch in the coming year.
1. Return on Investment in Sustainability Initiatives
The authors predict that companies will continue to emphasize the economic benefits of sustainability and corporate social responsibility. With the struggling economy, we totally agree -- companies need to make sure that their sustainability efforts make good business sense. (In many cases, that's why they hire us!)
2. Sustainability Topics in the Annual Report
The authors cite a number of well-known companies (including Pfizer, Philips, GE, and BASF) that have moved to integrate their sustainability reporting with their annual reporting. While we're not sure that integrated reporting will ever become the norm, we agree that more companies will be adding sustainability KPI metrics (or sKPIs, as we like to call them) to financial review documents and discussing them in non-traditional venues, like annual general meetings and investor conference calls.
3. Supply Chain Transparency
Supply chain engagement was one of Addison's 2011 Sustainability Trends to Watch, and they decided it was still worthwhile in 2012. We couldn't agree more. In fact, it's our belief that supply chain issues will be one of the most important (and challenging) areas for companies to tackle when developing a sustainability strategy. Whether it's carbon footprinting, conflict minerals, human trafficking, or conducting a life cycle assessment -- companies need to make sure they are paying close attention to their supply chain in 2012.
4. External Assurance
The authors cite a KPMG report that states 46% of all sustainability reports also include a formal assurance statement in their report and that this number is expected to increase in 2012. Here is one area where we diverge from Addison's opinion. We're finding that external assurance of sustainability reports is rarely worth the time and money for clients. In almost all cases, we believe that those resources would be better spent improving internal controls, implementing new programs/initiatives, or reaching out to supply chain vendors to include them in sustainability planning initiatives. (To be fair, sometimes we do advocate for external assurance of sustainability data, but rarely find that assuring the entire report is necessary.)
5. Employee Engagement on Sustainability
According to Addison, "an increasing number of companies are realizing that introducing innovative employee volunteer programs as part of an integrated environmental, social and governance (ESG) platform can enhance their “employment brand.” At Strategic Sustainability Consulting, we're particularly excited about the new software platforms that make it easier for employees to suggest green ideas, collaborate on office sustainability projects without needing management involvement, and track the impact of their green activities.
6. Shareholder Activism
Addison cites the nearly 400 environmental and social shareholder resolutions filed in 2011 and the Occupy Wall Street movement as key drivers in the trend towards increased shareholder activism. Honestly, we're a little on the fence with this one -- if pressed, we would say that social media is really the driving factor around activism. Just look at how quickly the big banks retracted their debit card fees after being swamped with complaints online. Just imagine what could happen if consumers begin using that power to leverage sustainability.
7. Retailers Drive the Market
While not one of Addison's "trends to watch" we believe that the real driver of sustainability for 2012 will be the big retail companies -- like Safeway and Walmart. While there is certainly pressure for consumer brands to "go green" -- we're hearing loud and clear from our clients that it is actually their private labels (products or services manufactured or provided by one company for offer under another company's brand) that are being scrutinized and pushed on sustainability. With government silent on sustainability issues, consumers unwilling to pay extra for "green" products, it looks like the retailers will be the ones calling the shots in 2012. (And that's one of the reasons we're so delighted to focus on supply chain issues!)
What do you think? Are there other key trends that we've missed? Agree or disagree with the Addison report or SSC's opinions? Leave a comment!