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

Free market environmentalism

AlfedPalmersmokestacksI believe in the power of markets.

I believe in environmental protection.

I believe in limited government.

Can those beliefs be reconciled?

I believe they can, even though environmental problems are often seen, correctly, as a form of market failure. We can’t allow businesses or individuals to pollute public goods such as rivers, or the air, or the earth’s atmosphere. The question is, how do we best correct those failures?

My preference is for strong and simple regulation or taxation, designed to (1) recognize the power of competitive markets to generate wealth and aggregate information to devise the best solutions to problems and (2) minimize, as much as possible, the ability of powerful interests to game the system, i.e., crony capitalism.

These are, obviously, complicated questions, perhaps best left to environmental economists. But I took a crack at the issue of clean energy policy in a column just published by Ensia, a lively, online environmental magazine published by the by the Institute on the Environment at the University of Minnesota.

The column ran under the headline A Market-Friendly Approach to Energy. Here’s how it begins:

The world needs clean energy. Clean energy subsidies? Maybe not.

Consider the Fisker Karma, an electric car with a base price of $95,900.  A friend of mine bought one. He earned $7 million last year, and took advantage of a $7,500 U.S. federal tax credit available to buyers of electric cars.

Fisker itself got government help, too, in the form of $192 million from the U.S. Department of Energy. So did A123 Systems, which sold battery packs to Fisker; it got $129 million in energy department grants and another $125 million in tax credits and grants from the state of Michigan.

None of this helped Fisher, A123 or, more importantly, the planet.

The column goes on to argue against the vast array of subsidies to clean energy and fossil fuels favored today by the federal government and many states, and instead proposes a carbon tax. (Ideally, a revenue-neutral carbon tax.) A carbon tax would discourage dirty energy and promote  clean energy, without favoring solar or wind or biofuels or nuclear or electric cars.

The column concludes:

…Contrary to popular wisdom, we don’t need a comprehensive national energy policy any more than we need a comprehensive food strategy to stock supermarket shelves or a comprehensive laptop strategy to keep Apple or Dell in business. What markets do very well is separate winners from losers. As the economist Michael Giberson put it: “When values are diverse and knowledge is dispersed, letting a thousand energy strategies bloom really is the best approach.” To do that, we have to get the government out of the way.

You can read the rest here. While you’re at it, take a look at the excellent journalism being published by Ensia.

Deep green investing: a closer look

A divestment rally at Harvard

A divestment rally at Harvard

As you’ve no doubt heard, Bill McKibben and his allies at 350.org have launched a  a national campaign to persuade colleges, universities, churches, foundations and, yes, people like you and me, to stop investing in the fossil fuel industry. The campaign raises interesting questions as, I’m sure, McKibben hoped it would. Among them:

Does divestment make sense as a strategy to curb climate change?

If those of us who are concerned about climate change want to align out investments with our beliefs, what options are available?

In a column called Deep Green Investing published last week by Ensia, a lively new online magazine about environmental solutions, I argued that, by itself, divestment will probably not accomplish much. Having said that, the campaign could prove useful as one of a number of tactics being deployed by 350.org, the Sierra Club and others that are aimed at bringing about political change–namely, taxes or caps on global warming pollutants, EPA rules to curb coal-burning, etc.

In The Nation, Mark Hertsgaard argues that these grass-roots climate efforts have already produced results–350.org galvanized opposition to the Keystone Pipeline, which may have persuaded President Obama to delay a decision after the election, and the Sierra Club’s Beyond Coal campaign has, along with cheap natural gas, helped drive the decline of coal in the US. Hertsgaard writes:

As important as the victories themselves was how they were won. Both the Sierra Club and 350.org eschewed the inside-the-Beltway focus and top-down political strategy of big mainstream environmental groups, as exemplified by the cap-and-trade campaign. Instead, they emphasized grassroots organizing at the local level on behalf of far-reaching demands that ordinary people could grasp and support. Their immediate goal was to block a specific pipeline or power plant, but their strategic goal was to build a popular movement and accrue political power.

This is the political context in which the divestment movement makes sense. It won’t shake up the oil industry–the Ensia story explains why–but it’s a useful organizing tool.

But what might the campaign mean for investors? Today, I’m taking a closer look at a couple of “deep green” broadly-diversified mutual funds that have decided, unlike most other funds that market themselves as green or socially responsible,” to cleanse their portfolios of companies that extract fossil fuels. [click to continue...]

Welcome, Ensia!

Ensia calls itself “a new magazine and event series showcasing environmental solutions in action.”

Read that description carefully and you’ll see how this media venture  got its  name. It took me a while.

Even as the traditional press continues to shrink–my former employer, Time Inc., just this week eliminated another 500 jobs, or 6% of its workforce–new outlets arise. I’ve been particularly impressed lately by the work of such nonprofit underwriters of journalism as Pro Publica, EnvironmentalHealthNews and the Food and Environment Reporting Network. Ensia, too, is a nonprofit, published by the Institute on the Environment at the University of Minnesota, which formerly published a magazine called Momentum, and funded by a major grant from the Gordon and Betty Moore Foundation, which supports environmental causes.

voice-green-investing-gunther-mainI’m pleased to be a contributor. Jon Foley, director of the Institute on the Environment (and a lively presence on Twitter as @globalecoguy), asked me to write an occasional opinion piece about business and sustainability. My first one looks at some issues raised by Bill McKibben’s campaign to get institutional investors to divest from fossil fuel companies, and how individual investors might want to think about divesting. Here’s how it begins:

In the investing world, past performance is no guarantee of future returns. When it comes to climate science, predicting the future is more straightforward: If we burn all of the fossil fuels on the books of the big oil, coal and gas companies—2,795 gigatons, to be precise—or even most of them, we’re headed for trouble. Bill McKibben, the writer and environmental activist, calls this global warming’s terrifying new math. In response, McKibben and his allies at 350.org have launched a coast-to-coast campaign to persuade colleges, universities, churches, foundations and, yes, people like you and me, to stop investing in the fossil fuel industry.

“It does not make sense,” McKibben says, “to invest my retirement money in a company whose business plan means that there won’t be an earth to retire on.”

His logic is unassailable. But divestment alone won’t deliver the change we need—only political action can do that. And, while it is possible to cleanse your personal portfolio of fossil fuels, it’s not as easy as it sounds. Here’s why.

You can read the rest of the column here. I’m going to dive into this topic in more depth here on the blog in a day or two.

Meantime, browse around Ensia. I think it’s off to a good start.