Novelis: Towards a circular economy

novelis_evercanAs regular readers of this blog know, I find the circular economy to be one of the most exciting ideas in corporate sustainability. This is the idea, sometimes called closing the loop, that when we are done with products, they can be recycled and made into something else, with zero waste. It’s inspired by nature, of course, where nothing goes to waste.

To show the way to the circular economy, consider the aluminum can. Aluminum has the wonderful property of being able to be recycled after use, with no degradation in quality (as opposed to say, PET plastic, which tends to break down every time it is recycled.) Recently I heard about a company called Novelis that has made aluminum recycling the core of its business model. A $9.8 billion company based in Atlanta, Novelis has created a new product called the ‘evercan’ which is guaranteed to have at least 90 percent recycled content–a breakthrough that the company hopes to produce and market with a big beverage company.

Novelis is profiled in my latest story for Guardian Sustainable Business. Here’s how it begins:

Recycling aluminum is a no-brainer – or, at least, it should be.

Producing aluminum beverage cans out of recycled scrap, instead of by mining bauxite and manufacturing new ingots, saves energy, carbon emissions and money. The same is true for the aluminum that goes into cars, planes, electronics and buildings.

If businesses and consumers want to get serious about creating a circular economy – where everything, once used, is made into something else and nothing goes to waste – aluminum is a very good place to start.

Yet the recycling rate for aluminum cans in the US is a mere 55%. That’s below the global average of about 70% and well below rates of better than 90% than Scandinavian countries can boast – or Brazil’s 98% recycling rate.

The low US rate represents an enormous waste of materials and energy – and a big opportunity. Atlanta-based Novelis is aggressively seizing that opportunity.

The $9.8bn firm converts aluminum into flat sheets, most of which is then turned into beverage and food cans. Novelis is already the world’s biggest aluminum recycler, and it aims to do more. Its chief executive, Phil Martens, says the company wants to turn its “whole business model from a traditional linear one to a closed-loop one”.

I’m delighted that Novelis’s CEO, Phil Martens, has agreed to speak at Fortune Brainstorm Green, the magazine’s conference about business and the environment. Next year’s Brainstorm Green will be May 19-21 at the Ritz Carlton in Laguna Niguel, CA. I’m once again co-chair of the event. Watch this space for future announcements of speakers and topics.

Chip Bergh: Vegan, triathlete, Levi’s CEO

Levi's Wellthread

Levi’s Wellthread

You’ve heard about slow food.

You may have heard about slow money.

Now it’s time for slow fashion.

Last night, Levi Strauss & Co. unveiled a new collection of sustainable mens clothing called Wellthread, part of its Dockers brand. Wellthread, which the company has described as the antithesis of fast fashion–the cheap, throwaway stuff that is sold by places like Zara and Forever 21–is an attempt to produce a line of clothing that meets the very highest standards for environmental and social responsibility. I wrote about Wellthread for The Guardian, here.

chip-bergh-ls-co-ceoAt the dinner, I was fortunate enough to be seated next to Chip Bergh, the CEO of Levi Strauss. He’s an engaging guy, and while I can’t quote from our conversation–we were having dinner, and so we decided to keep his comments off the record–I can tell you that he is not your run-of-the-mill CEO. He’s a vegan, for health reasons, he told me. (The second vegan CEO I’ve met–Coca Cola’s Neville Isdell was the first.) Chip is marathon runner, biker and triathlete who has raised thousands of dollars for the Dana Farber Cancer Institute in Boston. (His parents and grandparents died of cancer.) He’s also committed to the values that have made Levi’s a social-responsibility leader for more than two decades. Those facts may sound random but they are likely connected–so many people I meet in the world of sustainable business are outdoor lovers or athletes who take care of their own health, and thus understand the connections between what they do at work and the health of the planet. That may sound like a stretch, but the sheer number of marathon runners in the sustainability world has persuaded me that it’s true.

In any event, Bergh these days has more to worry about than the sustainability performance at Levi Strauss. The company has been in a long slide, and he was hired in 2011 to turn it around. Levi’s sales had fallen from a peak in 1996 of $7.1 billion to $4 billion, give or take a few hundred millions, for much of the 2000s. Even as a privately-held company that doesn’t have to answer to Wall Street, that was unacceptable.

Bergh, who spent 28 years at Procter & Gamble before joining Levi Strauss, has reorganized the company, replaced much of the senior leadership team and exited some business. In FY2012, net revenues fell slightly to $4.6 billion and net income was $144 million, up a tick. For the first three quarters of FY2013, Levi’s has enjoyed modest top-line and bottom-line growth. Through it all, he said, the company’s commitment to doing business in a principled way has remained intact.

He seemed genuinely excited by the potential of Wellthread, which for now is a modest venture–almost like a beta test, or pilot project–but nevertheless represents a forward-thinking approach to sustainable fashion, one that begins with the commitment of a designer. here’s how my story begins:

Sixteen years of work as a fashion designer in New York was enough for Paul Dillinger. He quit and took a job teaching design at his alma mater, Washington University in St Louis. “I had become somewhat disillusioned – really challenged morally or ethically – by the industry,” he says.

Then a friend recruited Dillinger to work for Levi Strauss & Co Today, he’s leading a cutting-edge initiative to take sustainable design to new heights at the 160-year-old company: a Dockers line of clothes called Wellthread. The line brings together the best practices in materials sourcing and garment manufacturing, providing social and economic benefits to factory workers in Bangladesh and delivering durable khakis, jackets and T-shirts to consumers.

Dillinger wants to weave responsibility into every stage of design, manufacturing and usage, from the cotton fields to the factories to the market and beyond.

“I saw all these different nodes of activity in the company that were tackling different problems,” Dillinger said, when we met this week at Levi’s Eureka Innovation Lab, a research and development unit near the company’s headquarters in San Francisco. “The opportunity, to me, was to string all of these ideas together and create a systems approach to change.”

You can read the rest here.

The NFL and brain injury: That’s entertainment?

Are you ready for some brain injuries?

Are you ready for some brain damage?

Fifteen years ago, with my friend and co-author Bill Carter, I wrote a book about the TV show Monday Night Football, which helped build the phenomenal popularity of the NFL. I was a big football fan then. So much so that I didn’t notice until last week that the opening sequence of Monday Night Football — ARE YOU READY FOR SOME FOOTBALL!!! — featured the helmets of the opposing teams crashing together.

A prescription, in other words, for brain injury.

The image flashed by briefly in the gripping and occasionally horrifying PBS Frontline documentary League of Denial, based on the book of the same name by investigative reporters Mark Fainaru-Ward and Steve Fainaru. Watch the program if it comes around again, or watch it on the web.

As regular readers of this blog know, I gave up watching the NFL about a year ago. But I decided to revisit the topic in my latest story for Guardian Sustainable Business.

Here’s how it begins:

Garment workers in Bangladesh and coal miners in India risk injury or death on the job. Their plight evokes outrage from advocacy groups and corporate-responsibility gurus.

Players in the National Football League are at risk, too – at risk of losing their mind, quite literally. Yet professional football remains America’s favorite sport, generating close to $10bn a year, with not much more than an occasional murmur of concern.

Strange.

Of course, any football fan knows that the game is violent and dangerous, especially at the pro level. Powerful men collide at high speed, and a bone-jarring tackle can break a leg or, occasionally, a neck.

But football is dangerous in another, more insidious way, as we were reminded last week by the publication of League of Denial: The NFL, Concussions and the Battle for Truth, an examination of football’s concussion crisis by investigative reporters Mark Fainaru-Ward and Steve Fainaru. As the book and an accompanying PBS Frontline documentary vividly demonstrate, football also is inherently dangerous to the brain – an inconvenient truth that the NFL went to extraordinary lengths to hide, deny and muddle.

Of course, as I note in the story, NFL players are paid a lot better than garment workers or coal miners. And today’s players surely are aware of the risks they face.  But the price they pay – brain damage that robs them of their very sense of self – is terribly steep. And to what end? To make our Sunday afternoons and Monday nights a little more fun? So corporate sponsors can sell beer and cars?

Frontline is produced by a PBS station in Boston, which sent a reporter out to get reaction from Bill Belichick, the coach of the New England Patriots, and star quarterback Tom Brady.

Belichick said:

First of all, I’m not really familiar with whatever it is you’re referring to, whatever this thing is. But it doesn’t make any difference whether there is or isn’t one going on. We have our protocol with all medical situations, including that one and that’s followed by our medical department, which I’m not a doctor and I don’t think we want me treating patients.

What we do in the medical department, that’s medical procedures that honestly I don’t know enough to talk about. But I can say this, there’s nothing more important to a coach than the health of his team. Without a healthy team, you don’t have a team. We try to do everything we can to have our players healthy, to prepare them, to prevent injuries and then to treat injuries and to have them play as close to 100 percent as we can because without them, you have no team.

Hmm. The Pats do “everything we can to have our players healthy…because without them, you have no team.” And if they lose their minds after they retire, well, you win some and you lose some.This guy has a heart of gold.

In fairness, the NFL is doing a better job these days of treating and preventing concussions. There have been rules changes, medical personnel on the sidelines, better understanding among all of the real risks of contact. Finally. But, remember, football is played in college and high schools, too, where kids model themselves on the hard-hitting pros. Frontline put a spotlight on a college and a high school player who, shockingly, suffered from brain injuries that appeared to be–no, we can’t be sure–related to football.

Do they understand the risks they are taking? Who’s looking out for them? Clearly not the NFL.

Bankers, behaving badly, backing coal

india-coal-power-007The  big Wall Street banks say all the right thing about sustainability and corporate responsibility but investment bankers are, above all, driven by the deal. Turning away business is just not part of their skill set, or mind set.

That’s the best explanation that I can come up with for the fact that Bank of America, Goldman Sachs, Credit Suisse and Deutsche Bank, along with three India-based banks, are managing a share offering for Coal India, a company with an environmental and human rights record that is, at best, spotty.

Their decision to do so is the topic of my story today at Guardian Sustainable Business. Here’s how it begins:

If you’re an investor seeking to profit from the coal industry and you’re indifferent to the issues of climate change, forest destruction and human rights, Bank of AmericaGoldman SachsCredit Suisse and Deutsche Bank have a deal for you.

The four US and European banks, along with Indian investment banksSBI Capital MarketsJM Financial and Kotak Mahindra Capital Co., are managing a share offering in Coal India, one of the world’s biggest coal-mining companies.

They’re doing so despite Coal India’s dismal environmental record, despite the climate impacts of burning coal, despite allegations that the state-owned firm has run roughshod over tribal communities and despite objections by the Sierra Club, Greenpeace and the Rainforest Action Network, as well as by Indian environmentalists.

They’re also doing so despite their own rhetoric about sustainability and corporate responsibility.

I hope you take the time to read the story. It’s tough, I think, but it’s a reflection of the difficulty that the corporate-responsibility and environmental movements have had gaining traction on Wall Street. Most of the big financial institutions have made “green” commitments, and that’s great, but if they continue to finance fossil fuels on a grand scale, they could wind up doing more harm than good.

None of the banks would talk to me on the record for the story, and I imagine that if they did, they would say, correctly, that burning fossil fuels is perfectly legal in India, and everywhere else, as is dumping emissions into the atmosphere at no cost. That’s a political problem, and not a Wall Street problem, they could argue. True enough. But if the banks believe what they say about climate change and the environment, they should then make their voices heard more forcefully in the climate debate in Washington and elsewhere.

Until they do, their rhetoric about sustainability will remain hollow.

Sustainability at McDonald’s. Really.

coffee-cupHere’s a question. Which trio of companies has done more for the environment…

Patagonia, Starbucks and Chipotle?

Or Walmart, Coca-Cola and McDonald’s?

I don’t have an answer. Patagonia, Starbucks and Chipotle have been path-breaking companies when it comes to sustainability, but Walmart, Coca-Cola and McDonald’s are so much bigger that, despite their glaring flaws, and the fundamental problems with their business models, they will have a greater impact as they get serious about curbing their environmental footprint, and that of their suppliers.

Small and mid-sized companies create sustainability solutions, as a rule, but the impact comes when big global corporations embrace them. Size matters.

All that is by way of introduction to my latest story for Guardian Sustainable Business, about McDonald’s coffee-buying practices and the role of the consumer in driving them to scale.

Here’s how it begins:

Across the US, McDonald’s last week introduced pumpkin spice lattes made with Rainforest Alliance-certified espresso. No such assurance comes with McDonald’s drip coffee. Why? Because consumers haven’t yet shown Mickey D’s that they care.

That’s gradually changing, says Bob Langert, the vice president of sustainability for McDonald’s, and not a moment too soon. As the world’s biggest fast-food chain, which has 34,000 restaurants in 118 countries, seeks to make its supply chain more environmentally friendly, McDonald’s is trying to enlist its customers as allies.

That’s why the pumpkin lattes marketing features the little green frog seal of approval from the Rainforest Alliance. That’s also why McDonald’s fish sandwiches, for the first time, feature a blue ecolabel from the Marine Stewardship Council certifying that the pollock inside comes from better-managed fisheries.

By talking to consumers about its sustainability efforts, McDonald’s hopes to build brand trust and loyalty. Until recently, people had to dig into the company’s website to learn about its environmental performance.

“We’ve had sustainable fish for many years, but we didn’t tell people about it,” Langert told me during lunch in Washington DC. (He ordered fish.) “We feel there’s a tipping point coming. We see the consumer starting to care. Consumer expectations are rising.”

What McDonald’s is doing with its coffee isn’t innovative. Starbucks paved the way. But if McDonald’s, Dunkin’ Donuts, 7-Eleven, Walmart, Costco, Target and others follow, the world’s coffee farmers will be a lot better off.

Meantime, McDonald’s is leading the way as it encourages potato farmers to use fewer pesticides and less fertilizer, as the story goes on to say. And it could potentially have a huge impact as it tackles its most important supply chain–beef.

Elitists will scoff at everything McDonald’s does, of course, and some of their criticisms have merit. A Big Mac, it’s safe to assume, has a big carbon footprint. Eating too much food from Mickey D’s (or anywhere else) makes people fat. I’d like to see fast-food chains pay their workers better, even if that means customers will have to pay more for breakfast or lunch. But on the environment, McDonald’s is moving in the right direction. Just as important, the company is trying to move its customers along, too.

You can read the rest of my Guardian story here.

How to read a sustainability report

voices_gunther2It’s no exaggeration to say that a new corporate sustainability report is published nearly every day of the year. After all, most of the Fortune 500 now generate reports, many of which read like paeans to exemplary business behavior. If companies behaved as well as they are portrayed in these reports, the world would be a much, much better place.

Still, CSR or sustainability reports can be a useful starting point for looking at a company and its impact. In my latest story for the environmental website Ensia, I offer a guide to reading these reports. Here’s how it begins:

Corporate sustainability reports have been around since … well, it’s hard to say.  The first report may have been published by “companies in the chemical industry with serious image problems” in the 1980s, or by Ben & Jerry’s in 1989 or Shell in 1997. No matter — since then, more than 10,000 companies have published more than 50,000 reports, according to CorporateRegister.com, which maintains a searchable database of reports.

But who really reads them? As a reporter who covers business and sustainability, I do. Maybe you do, too — as an employee, investor, researcher or activist.

Here, then, are five tips to help you make sense of the next report that lands on your desk or arrives via email.

You’ll have to read the Ensia story to learn more but the key word to remember is context. The best corporate reports put their data in context, by comparing it with prior years or previous goals or industry peers or even the needs of the earth. Few reports meet this standard, alas.

Thanks to Steve Lydenberg and Bill Baue for their help with this story.

Illustration courtesy of Ensia

MillerCoors: A trickle-down theory of corporate sustainability

Beer-on-Bar-007Every big company understands that saving energy, water and raw materials in its own operations is good for business. You don’t need an MBA to grasp that efficiency reduces costs, which can lead to lower prices, gains in market share and higher profits.

Not as well understood are the opportunities that await companies that dig into their supply chains to drive efficiencies. If big companies can work with their suppliers to save energy, water and materials, everyone should gain, and we’ll waste fewer resources.

That’s the theme of my story today for Guardian Sustainable Business, about MillerCoors, water and barley farmers. It’s an example of what I’m calling the “trickle-down down theory of corporate sustainability.” By that I mean that  sustainability initiatives taken by the biggest companies trickle their way down into remote corners of the global economy.

Here’s how the story begins:

So you think you have a cool app on your smart phone? Meet Gary Beck, an Idaho barley farmer who, from the comfort of his living room couch, can control giant irrigation systems miles away, turning sprinklers on and off or adjusting their spray.

Every drop counts. “Right now, we’re in a huge drought,” Beck says. “Some of the old timers have never seen it this dry before.”

Beck manages a farm that grows about 2,500 acres of barley for MillerCoors, the US’s second-largest beer company (behind Anheuser-Busch InBev), with revenues of nearly $9bn last year. His thorough water-conservation efforts – including redesigning equipment, abandoning some fields and using more compost – have paid off big time, saving water, energy and money.

Even more notable, they have been guided – and partly financed – by his biggest customer, MillerCoors, with a nudge from its biggest customer, Walmart; by local utility Idaho Power, which wants to help its customers save energy; and by The Nature Conservancy, which owns the Silver Creek Preserve, a nearby high-desert fly-fishing destination that attracts an abundance of wildlife, including eagles, hawks, coyotes, bobcats and mountain lions – all of which, of course, need water.

It’s an example of how companies such as MillerCoors are reaching beyond their own boundaries to help solve environmental problems.

Note a few things about this story. First, although my focus is MillerCoors, you could easily argue that Walmart, with its supplier sustainability index, is equally responsible for the water-saving projects on barley farms. By asking aits suppliers–about 60,000, at last count–to track the lifecycle impacts of their products, Walmart forces them to think about where their environmental impacts are greatest, and urges them (to put it kindly) to make improvements.

Second, unlike Walmart, MillerCoors is getting its hands dirty and spending its own money as it works with suppliers. It’s investing in best practices on one barley farm, and helping to spread them. It’s the kind of thing Starbucks has done for years with its coffee farmers.

Finally, I couldn’t help but notice that the first (and, as of now, only) reader comment on this story says: “Adfomercial. Naughty Guardian.” This may be because SABMiller is a sponsor of the Guardian’s water coverage–a fact that I only learned when, to my dismay, the story was accompanied by a banner ad for SABMiller. All water-related stories on Guardian Sustainable Business, it turns out, run with a banner from SABMiller. You’ll have to trust me when I say I didn’t know that when I began to report this story.

But there’s a bigger issue here. My role, as I see it, isn’t to be a full-time corporate critic. Instead, I try to jeer companies when they screw up and cheer those that try to do the right thing. If I’m wrong about MillerCoors, by all means let me know. But I’d find it too depressing to spend all my time looking for bad news.

Are your investments tied to genocide?

SP1119147That’s a refugee camp in Sudan. If you are an investor in mutual funds, it’s possible–perhaps even likely–that you own a small share of one of a number of foreign oil companies that are doing business with the government of Sudan, and thereby helping to finance a genocidal, outlaw government that is directly and indirectly responsible for the deaths of millions of people, and the displacement of many more.

I’m returning to the subject of “genocide-free” investing with a column this week at Guardian Sustainable Business, about the puzzling and troubling refusal of a mutual fund managed by ING US to even consider divesting in holdings in foreign oil companies that do business in Sudan. US oil companies are prohibited by law from operating there, but US-based mutual funds are free to invest in Chinese, Indian and Malaysian oil companies that help finance the Sudanese authorities.

Despite the best efforts of an advocacy group called Investors Against Genocide, big US mutual fund companies including Fidelity, Vanguard, JP Morgan Chase and Franklin Templeton continue to invest those foreign oil companies. It’s not because they are unaware of the issue. I’ve covered the topic of “genocide-free” investing since 2007, beginning with a story for Fortune.com headlined Fidelity’s Sudan Problem, and followed a few months later by another called Warren Buffett and Darfur. By then, Harvard, Yale and Stanford had divested their holdings in PetroChina and Sinopec, demonstrating that divestment is both possible and practical. In 2009, as an investor in mutual funds managed by Fidelity and Vanguard, I voted for divestment (and blogged about it here).

A few mutual fund companies–notably T. Rowe Price and TIAA-CREF–have agreed to purge their holdings of the Asian oil companies, but most have resisted. Among the most egregious is ING US, whose own shareholders voted for divestment. If nothing else, this is a reminder that we’re a long way from achieving “shareholder democracy” in corporate America.

Here’s how my story for Guardian Sustainable Business begins:

Call me old school but, in my view, companies should be accountable to their owners.

They should also try to stay away from repressive governments like the one in Sudan, where millions of people have been killed in a long-running genocide.

So when, as part of a campaign to stop the flow of money to Sudan, investors voted to ask a mutual fund managed by ING US to sell its holdings in companies that “contribute to genocide or crimes against humanity,” you’d think that ING US would comply.

It has not.

You can read the rest here.

To put this in perspective: It has been more than 15 years since the U.S. imposed sanctions on Sudan, and nine years since the killings in Darfur were declared to be a genocide by the U.S. Congress. Yet financial institutions are still investing in the worst companies funding the genocide.

It’s another reason, not that we need one, why so much of Wall Street is rightly held in such low esteem by so many Americans.

My beef with B Corps

logoThere’s lot to like about the fast-growing B Corps movement, and one thing to dislike, as I explain in my latest column for Guardian Sustainable Business US.

If you’re reading this blog, you are probably aware of B Corps. The idea takes a bit of explaining. B Corps are businesses that are certified by a nonprofit organization called B Lab to meet what its backers call “rigorous standards of social and environmental performance, accountability, and transparency.” These businesses win certification much in the way that buildings are certified to have meet LEED environmental standards by the nonprofit U.S. Green Building Council; they have to complete an assessment of their performance, provide documentation and be open a review from B Lab, as the group explains here.

But the term B Corps is also used to describe “benefit corporations,” a corporate legal structure that has been set up by legislation that has now been passed by 20 states, including, most recently, Delaware. Benefit corporations need not be certified by B Lab, although many are.

It’s unavoidably confusing, but my beef with B Corps is simple.

The voluntary certification system makes sense to me, for reasons that I explain in the story–it’s a way to signal employees, customers and investors that a B Corps aims to do better than conventional companies. Most B Corps are small and privately held. Among the best known are Patagonia and Ben & Jerry’s, which is a unit of a conventional C Corps, Unilever.

The legal “benefit corporation” purportedly gives companies more freedom to serve society as a whole than conventional corporations have. I’m skeptical about this claim, to say the least, and I worry that it could be counterproductive–because it implies that conventional companies, which make up the bulk of the global economy, need to pursue profits, at the expense of broader social and environmental goals. This seems wrong on the face of it. After all, if Ben & Jerry’s can be certified as a “good” B Corps, doesn’t that mean that its parent company, Unilever, can be “good” too?

My worry is that the implicit argument — that most of the world’s companies don’t have the freedom to do the right thing for society — undermines faith in capitalism (which is fragile, at best, for good reason) and that it discourage reformers inside and outside of big companies who are pushing corporate America to do business better. It’s a bit smug to suggest that traditional companies can’t do as much good for the world as B Corps can.

Here’s how my story begins:

To the supporters of B Corps - benefit corporations that say they aim to serve workers, communities and the environment, as well as their owners – 1 August 2013 was an historic day. In what B Corps described as “a seismic shift in corporate law,” the state of Delaware, where one million businesses are legally registered, enacted legislation that will “redefine success in business” by giving the owners and managers of legally recognised B Corps protection as they pursue “a higher purpose than profit.”

The B Corps movement has much to be proud of: it has built a brand that stands for good business, attracted hundreds of committed followers and sparked debate about the role of business in society. But claims – sometimes made explicitly, sometimes implicitly – that B Corps have more freedom to take an expansive view of their social and environmental responsibilities is not only mistaken, but potentially damaging to the cause of sustainable business.

After all, if conventional companies have no choice but to focus narrowly on maximising short-term profits, at the expense of workers, communities and the planet, then we’re in a heap of trouble and unlikely to get out, because 99% of US businesses today are conventional C Corps, and most are likely to remain so.

You can read the rest here.

Will better disclosure help transform business?

accountingWhose sustainability performance is better, PepsiCo or Coca-Cola? Dell or HP? Microsoft or Google? Tracking sustainability metrics isn’t easy, but that hasn’t stopped numerous organizations from trying.

One of the newest and most ambitious efforts comes from the Sustainability Accounting Standards Board (SASB), a non-profit group based in San Francisco,which is trying to set standards for sustainability reporting, much in the way that the Financial Accounting Standards Board (FASB), has done for financial reporting.

I took a look at SASB (it’s pronounced sazz-bee) in my latest story for Guardian Sustainable Business. Here’s how it begins:

In the annual report known as a Form 10-K that is filed with the Securities and Exchange Commission, Coca-Cola outlines a variety of risks to its business, as public companies are required to do.

The global beverage giant, which booked $48bn in revenues in 2012, talks about how water is “a limited resource in many parts of the world, facing unprecedented challenges from over exploitation, increasing pollution, poor management and climate change.” Coca-Cola says that its plastic bottles could be subject to “deposits or certain eco taxes or fees.” And the company worries that growing concern about “the potential health problems associated with obesity and inactive lifestyles represents a significant challenge to our industry.”

PepsiCo also acknowledges the problem of water scarcity in its Form 10-K. But the company doesn’t cite the potential regulation of plastic bottles as a concern. And the word “obesity”does not appear anywhere in its annual filing.

What’s going on here? It’s possible that Coca-Cola is more aware of social and environmental risks than is its arch rival. More likely, the Coke and Pepsi lawyers don’t agree on what constitutes a “material” risk to their business, and thus has to be reported.

If nothing else, the different Form 10-Ks are evidence that the quality of sustainability disclosure varies widely – even though public companies are legally obligated to tell the SEC and investors about the social, political and environmental risks they face. [click to continue...]