By: Alexandra Kueller
Last week we introduced SSC’s latest peer benchmarking analysis, and this week we will take an indepth look at each dimension.
Corporate governance traditionally refers to the system of obligations, structures, and duties that corporations are directed and controlled by, but for SSC’s peer benchmarking process, our governance dimension is focused on how the company has integrated sustainability into its organization. A company might have strong governance in the traditional sense, but it is important for us to analyze whether or not the company is being proactive about integrating sustainability into the core of the company.
Overview
Points:
- Nike – 17
- Adidas – 16
- Puma – 11
- Lululemon – 4
- Under Armour – 3
In our benchmarking analysis, the highest governance scores went to the large companies, who generally face higher pressure to disclose issues like sustainability risk and corporate ethics. Sustainability-related communications proved to be a strong point among all companies, with everyone at least having a page on their website dedicated to sustainability. And materiality is still an emerging issue with two companies receiving no point in this area.
Materiality
When analyzing the materiality of the five companies, there was a divide between the large and the midsized companies. The larger companies – Puma, Adidas, Nike – all had sections dedicated to materiality, while Lululemon and Under Armour never touched upon the subject. Nike and Adidas had strong materiality policies laid out nicely in their reports and alongside Puma, all three companies had well thought-out programs to help back their commitment to materiality.
Ethics
It is important for companies to have strong business ethics that not only applies to all aspects of business conduct, but also to every member of the organization. All five companies analyzed had some form of a code of ethics listed either in their report or on their website, but Nike and Adidas go a step further by providing examples of programs and activities they use to help make sure they adhere to their ethics policy.
Risk
Just like materiality, only the large companies addressed risk either in their report or on their website. Nike, Adidas, and Puma each had a strong risk policy and supporting programs, while Lululemon and Under Armour failed to mention risk at all. One area for improvement in the risk category would be the addition of performance metrics; the three companies that addressed risk in their reports provide no supporting data.
Communications
As companies continue to grow their corporate sustainability, it is important for them to increase how they communicate their programs, policies, and performance. One simple way is to have a sustainability section on the company website, and every company in our benchmarking analysis has at least one page of their website dedicated to corporate sustainability. Four out of the five companies also released some form of sustainability report in the last year (either an annual sustainability report or a CDP report), while Under Armor was the only company to not release any form of a sustainability report.
Missed our introduction to peer benchmarking blog? Catch up right here!