What is Natural Capital? Natural Capital is the term used to describe the value of the resources and flows of goods and services that ecosystems provide (e.g. food, water, and clean air) which are essential for economic growth but have traditionally been overlooked.  According to the most recent State of Green Business Report, “natural capital isn’t just a handy buzzword. There are principles undergirding the concept. They include the idea that one species’ waste is another species’ food; that materials cycle endlessly through the web of life; that species live off current solar “income”; that resilience comes from diversity; and that everything is interconnected. Each of these can be translated into everyday business practices, as well as overall strategy.” http://www.greenbiz.com/research/report/2013/02/state-green-business-report-2013

Why is it important? Water supply crises, food shortage crisis, extreme volatility in energy and agricultural commodity prices, and rising greenhouse gas emissions are considered the top six global risks over the next 10 years as measured by likelihood and scale of global impact by the World Economic Forum’s Global Risks 2012 report. http://reports.weforum.org/global-risks-2012/

What’s being done?

A Natural Capital Declaration was signed by 39 global financial institutions — primarily from Europe and South America, but no major U.S. banks. The declaration committed them to develop methodologies to value and account for nature’s vital role in the global economy, and integrate those methodologies into their institutions’ financial decisions. http://www.naturalcapitaldeclaration.org/

Coalitions are forming:

The Economics of Ecosystems and Biodiversity (TEEB) for Business Coalition http://www.teebforbusiness.org/

PUMA plans to start an industry coalition on Environmental Profits and Loss (EP&L).  Check out PUMA’s 2010 EP&L Statement http://about.puma.com/wp-content/themes/aboutPUMA_theme/financial-report/pdf/EPL080212final.pdf

Benefit Corporations- The new wave of businesses

Benefit Corporations are the next wave in business performance with the Sustainability movement at the forefront. According to Matt McDermott, “As for Benefit Corporation itself, there are three prime directives: It has to 1) create a material positive impact on society and the environment, 2) expand fiduciary duty to require consideration of non-financial interests when making decisions, and 3) report on its overall social and environmental performance using recognized third party standards” (http://www.treehugger.com/corporate-responsibility/patagonia-becomes-california-benefit-corporation.html)

The new law for Benefit Corporations

The new law for Benefit Corporations will protect companies that make decisions that help society and the environment, even if they don’t maximize profits.  “Under the old law, if a corporation did something that didn’t maximize profits, the company’s shareholders could sue the company for that money back,” said Andrew Greenblatt, an assistant to B Lab (http://www.thirteen.org/metrofocus/2011/12/will-benefit-corporations-change-the-way-nyc-does-big-business/).

There are currently 11 states which have passed the law and 16 more moving forward. For information on State by State status visit: http://www.benefitcorp.net/state-by-state-legislative-status

What are the Requirements?

Benefit corporations are subject to the same codes that govern traditional corporations except for the three major provisions of benefit corporation statutes concerning the following:

For more information on the requirements: http://www.benefitcorp.net

Why are Benefit Corporations important?

• Remove legal impediments preventing businesses and investors from making decisions to use sustainability and social innovation as a competitive advantage, particularly in liquidity/sale scenarios;
• Legitimize and accelerate development of a more inclusive and sustainable economy by providing legal recognition for businesses that adopt higher standards of corporate purpose, accountability, and transparency;
• Rebuild public trust in business by demonstrating that businesses are willing to be held accountable to create value for both shareholders and society.

For more information on the importance: http://www.benefitcorp.net

The Private Equity Industry encompasses a significant percentage of the world economy. Within it, we have seen the emergence and focus toward Environmental, Social, and Governance (ESG) issues; which is good news for both the Sustainability Field and Private Equity industry.  The Malk Sustainability Report on ESG in Private Equity (2012) has found that many companies are seeing financial benefits from their focus on such issues as waste reduction, energy efficiency,  and new product lines influenced by environmental focus.  ESG focuses on environmental sustainability, social equity, and corporate citizenship.  Another major influence pointing companies toward a stronger focus on ESGs is pressure from investors. This is more than just a simple trend.  Given the significant cost savings, LP (limited partners) expectations, competition, and regulations, companies are driven, and even compelled to focus their attention deeply on ESG topics.

A recent study conducted by Malk Sustainability Partners in collaboration with the Environmental Defense Fund (2012) provides perspectives and best practices for managing ESG issues.  They recommend the following:

• Leadership
  • Adoption of a specific policy for managing ESG issues throughout the investment cycle
• People
  • Recruitment of experts or consultants to plan and execute ESG related initiatives
• Operations
  • Collaboration with portfolio companies to enhance ESG performance at the operational level
• Diligence
  • Enhanced integration of ESG considerations into the due diligence process
• Metrics
  • Metrics and reporting to manage ESG efforts and measure improvements
• Communications
  • Development of communications tools highlighting ESG accomplishments

Two key resources have been instrumental in providing ESG guidance to the international community are:

-UN PRI (United Nations- Principles for Responsible Investment)

• Based
  on six principles for responsible investment

*For more information on these principles click here.

-US PEGCC (US Private Equity Growth Capital Council’s)

• Based on nine principles for responsible
  investment

*For more information on these principles click here.

For this trend to be sustainable the Private Equity Industry needs to develop international standards and key performance metrics in order to quantify the value of ESG issues in relation to value creation.  Ultimately, communication between peers and investors is paramount toward the success of using these issues to elevate the industry as a whole according, to the Malk Sustainability Report (2012).  There is now a shift in thought, the question
amongst Private Equity leaders is not “What is ESG?” but rather “How can we incorporate ESG into our investment cycle?”

For more information regarding ESG and Private Equity visit these websites:

UNPRI

US PEGCC

Malk Sustainability Partners Report on ESG in Private EquityFund 

Managers, Investors Increasingly Focus on Environmental, Social and Governance Issues article by Andrew Malk and Zach Goldman

Sustainability is a trend that is here to stay, but when not in conjunction with health and safety a true sustainability program is lacking.  A large reduction in a company’s carbon footprint doesn’t go very far when employees are being injured on the job.  The Center for Safety & Health Sustainability has made it a goal to educate businesses on the importance safety plays in corporate governance and corporate social responsibility/sustainability.  This includes the safety of workers, customers, and surrounding communities.

Johnson & Johnson’s 2011 Responsibility Report is a great example of how one company is emphasizing the important role health and safety has in sustainability.  The company reports on their management of safety and many key performance indicators such as:

• Serious Injury Illness Rate
• Lost Workday Case Rate
• Fleet Car Accidents
• Ergonomic Injuries
• Fatalities

Johnson & Johnson has also set improvement goals in employee health and safety such as a 15 percent improvement in employee, contractor and fleet safety performance by 2015.

What are some ways safety professionals can get involved in corporate sustainability?

1.  Managing Business Risk , resulting in the reductions of injury/illnesses, fines, and penalties
2. Track, Manage, & Communicate, reinforcing the success of the health and safety programs
3. Support Global Operations, ensuring the safety culture is adopted on a global scale in all areas of business
4. Support Supplier Responsibility Program, protecting the company’s reputation from supplier safety risks and reducing the disruption of supplies
5. Drive innovation, incorporating user’s health and safety into the creation of new products
6. Receive External Recognition, increasing the company’s reputation as a responsible corporate citizen and making employees feel proud to be employed, which helps with retention and growth

Did you know that over 3,000 commercial facilities projects are competing this year to improve their energy efficiency and lower their utility costs, while at the same time protecting human health and the environment?

They are all a part of the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR ® Program 2012 “National Building Competition: Battle of the Buildings.”

The competition was established by EPA to:

• Encourage implementation of energy saving measures
• Save money for participants on their energy bills
• Recognize leaders for their efforts in energy sustainability
• Protect and preserve resources by reducing national energy use

This is the 3^rd year of the competition, which has seen a huge increase in participation since its inception, when just 14 participants competed.  The business trend toward implementation of sustainability measures seems to be worth the effort.  Competitors come from US territories and all 50 states and range from a K Mart on the island of St. Thomas to a federal office building in Nome, Alaska.  They track their progress using Portfolio Manager, which can help:

• Manage Energy and Water Consumption for all Buildings
• Rate Building Energy Performance
• Estimate Your Carbon Footprint
• Set Investment Priorities
• Verify and Track Progress of Improvement Projects
• Gain EPA Recognition

But you don’t have to be a “Battle of the Buildings” competitor to star in your own energy savings success story.  Here’s how you too can reap the benefits of sustainability:

Get Local Guidance

Check out the guidance of your local municipality, which may have economic incentives and awards to recognize your sustainability efforts in the community.

Ask the Feds

Go to www.energystar.gov  for guidelines, tools, and resources to evaluate your own energy use and sustainability priorities, identify needed energy saving steps, and calculate savings.

Experience EORM Expertise

Reach out to EORM.  For over 20 years, EORM has been helping companies protect the environment, keep people safe and deliver social value – the cornerstones of Sustainability – while reducing costs, enhancing their reputation, and not just meeting, but exceeding the growing requirements and expectations of government, industry and their customers.

For more information on how EORM can help you attain your own sustainability goals, go to www.eorm.com/services/sustainability.php

GRI’s fourth generation of Sustainability Reporting Guidelines “G4” are currently available for public comment until Sept 25^th.  Use this link to download the G4 Exposure Draft and provide your feedback:

https://www.globalreporting.org/reporting/latest-guidelines/g4-developments/Pages/default.aspx

The following areas have undergone content revisions:

• Application Levels
• Boundary
• Disclosure on Management Approach
• Governance and Remuneration
• Supply Chain Disclosure

A brownfield site which was a huge industrial area was transformed to a world class sporting facility for the 2012 Summer Olympics in London.  The biggest challenge was to convert a Hyde Park-sized area which was contaminated and abandoned for years to a Sustainable Olympic Park.

How did they do it?

• Over 20 million gallons of contaminated groundwater was treated using innovative techniques, including injecting compounds into the ground, generating oxygen to breakdown harmful chemicals.
• Materials were reused and recycled on site, reducing waste and the amount sent to landfill.
• The foundations for venues and roads utilized recycled materials.   For example, Olympic Stadium’s roof truss is made of unused gas pipelines.
• To reduce the number of motor vehicles on the roads and the resulting carbon emissions, rail and water routes were used to get materials delivered to site and waste taken away.
• Buildings were well engineered to be of simple construction with lightweight materials, taking advantage of natural resources.
• The white roof has rows of skylights crossing the complex, providing daylight and allowing overhead lights to be off during the daytime.
• Strategically placed roof lights allow natural daylight, reducing lighting expenditures.
• The porous timber exterior cladding facilitates natural cross ventilation. The roof is perforated to allow convective cooling of the interior.
• The roof collects rain water as well, which is stored for later use in the facility.
• The bike track is the fastest in the world, designed to evenly distribute noise from the cheering crowd to keep from distracting riders.

To read more:

Corporate sustainability is the balance between environmental, social and economic components in business decisions and has now become an expectation of customers, shareholders, employees, non-governmental organizations (NGOs) and other corporate stakeholders in most businesses. Prioritizing and managing the many different aspects of sustainability can be a challenge. Idea sharing of challenges and best practices can shed light on new ways to address sustainability issues. Through this report, learn about the top sustainability challenges facing Environmental, Health and Safety (EHS) and Sustainability Directors along with effective solutions for addressing these challenges uncovered through an informal market study conducted by Environmental and Occupational Risk Management Inc. (EORM) in early 2012.

Video about the Market Study

Sustainability Challenges and Solutions Market Study

Benchmarking is the process of comparing one’s business processes and/or performance metrics to customers, competitors, industry bests or best practices from other industries.  The information gained from benchmarking can provide valuable insights and help an organization make more informed decisions.

Benchmarking can be used in sustainability to help develop strategies and answer questions like…

• What sustainability issues are relevant to my industry?
• How are others in my industry approaching sustainability?
• Where do I stand against my competitors with regards to sustainability?
• What do my customers expect?

EORM likes to utilize an internally developed benchmarking methodology based upon the Global Reporting Initiative G3 guidelines to qualitatively and quantitatively measure sustainability performance.  The GRI produces a comprehensive sustainability reporting framework which is the most widely used around the world.  EORM’s research methods include reviewing publicly available information (websites, press releases, published reports, indexes, rankings, news articles, etc.), conducting interviews and applying a ranking scale to the information which measures both transparency and performance.  EORM has used benchmarking to help our clients develop sustainability strategies, select performance goals, choose the most appropriate KPIS and find a competitive advantage.

Contact us today for more information on our benchmarking capabilities.