GAAP Shattering – Puma’s Green P&L

The result after all revenues and expenses have been accounted for is known as the “bottom line”.  Just yesterday Puma shattered all generally accepted accounting rules by announcing it’s adding one more bottom towards the “triple bottom line”.
Its new accounting method (commissioned to Trucost and PwC) promises to at least attempt to measure Puma’s economic impact on ecosystem services.  The idea behind it has been long advocated by environmentalists – until ecosystem services have a price tag, they won’t be valued and protected as they should. The lifestyle brand hasn’t yet said which will be the report to first mix up the two greens – profit and the environment – but is urging other athletic companies to producing their own integrated statements.  Nike? Just do it!

The unbearable lightness of self-commitment – UN Global Compact

For its 10th anniversary this year, the UN’s Global Compact gave itself a good little present – practicality.  What had been years of a good initiative but lose commitments, if any, from corporations, is now taking shape to become a more structured validation program.  The Global Compact is the UN’s policy initiative to get companies to align their operations with ten principles in the areas of human rights, labor, environment and anti-corruption.  Its main weakness, or strength, depending on whether you see the cup half empty or half full, is precisely the fact that it is merely a self-commitment program, with no obligation other than a yearly letter saying “yes, we are working on it”.

Or it used to be.  Now, the 4840 active business members were kindly offered the Global Compact Management Model to follow.  Simple, broad and flexible, the model hopes to guide companies of all sizes through the process of organizational change to embrace corporate sustainability.

 

click for UN publication

 

 

 

The concept itself – assess, define, implement, measure, communicate – is not innovative, but that is the beauty of it; it is natural to any change process evaluation.

Although the next steps are not defined, some stakeholders are already holding their breath on whether third-party validation, either by the UN or another party, is soon to follow. Oh did I mention the Model was developed in partnership with Deloitte?

Taking the bull by its horn – Tracing supply chains

November 14, 2010 Leave a comment

“Throw away the Monday morning to-do list – we´ve got us an issue here!” Timberland´s CEO Jeff Swartz wrote as his recollection of the first few angry e-mails started to arrive June last year.  He might as well have said “Houston, we´ve got a problem” since it all came down to satellite images – Greenpeace had just published a report based on satellite analysis that revealed significant supplies of cattle from Bertin’s ranches were active in recent and illegal deforestation in the Amazon.  Although Bertin is “merely” one of Timberland’s leather supplier, it´s always the big one in the chain that takes the hit.

The angry e-mails questioned what Swartz recognizes he couldn´t answer then: “How can you ensure me my Timbs are not destroying the Amazon?” I’m unsure whether it was the idea of tracing the bulls or answering 65,000 emails that was more nerve-racking, but he bravely took the reins of both.  Two months later, Greenpeace acknowledged the company’s leadership position as Timbs became one of the founders of the Leather Working Group (LWG) and started to carefully monitor its leather supply chain.  Swartz’ proud the company came out of the episode neither bully nor victim, but his frustrations are still caught in his half jokes: “Our logo is a tree, for crying out loud!”

Orange trees to the side, he today recognizes that millions of trees planted in regreening projects are not, and should not be, substitutes for taking your  operation and supply chain by the horns.  As more “big name” companies take on their responsibility over supplier selection (ie. Pepsico just released its first-ever Responsible & Sustainable Sourcing Guidelines), be sure your company performs its satellite analysis before someone else does.

Or the Other Way Around – Strategic Corporate Responsibility

“I want to help but what can I do?” Due to the number of sustainability reports that enumerate fragmented social projects with little more than annual investments to back-up “impacts”, the question sounds pertinent to me.  The winners of the Harvard Business Review’s 2006 Annual McKinsey Award thought so too and answered the existentialist question quite elegantly.  Porter and Kramer lay out a self-help framework suggesting companies reflect on their interdependence with society to grasp the difference between responsive and strategic corporate social responsibility (CSR).  And hopefully migrate from the former to the latter.

"An affirmative corporate social agenda moves from mitigating harm to
reinforcing corporate strategy through social progress". - Porter & Kramer

Interdependence, although may ring as idealistic, is in fact quite pragmatic.  A companies depends on a society´s demand, suitable infrastructure and qualified work force.  Communities need businesses that offer decent jobs and innovative technology.  However, the penny drops only when Porter and Krammer suggest companies leverage competitiveness through CSR where the “inside-out” (company influence on community) and “outside-in” (society influence on business) link are the strongest.  Below is a linkage cheat-sheet to help you hit the ground running:

Inside-Out Link                                                                    Outside-In Link



With the links mapped, the path to identifying social issues that bolster the drivers of competitiveness becomes clear.  “AIDs in Africa” may be a value chain program for a pharmaceutical company, but for a mining company that depends on labor in Zimbabwe, it’s a strategic CSR.  UPS has a carbon emissions program that is a value chain CSR, but Toyota will tell you their program is certainly a competitive context one.  By no means value chain socio-environmental programs are any less important in achieving good citizenship, but by converging to competitive context CSRs, businesses maximize social gains as well as corporate benefit.  Or the other way around.

Italian Job Gone Green – Reducing Fleet Emission

I was never a SUV fan. For me, the minis have way more personality.  But unless you’re in the making of “The Italian Job” (32 Minis used throughout the movie shooting), you generally won’t see a fleet of them.  Nonetheless, greenhouse gas (GHG) awareness has grown and fleets are getting smaller.  In car size, at least.  The Environmental Defense Fund and PHH Arval recently issued their annual American industry-wide survey of fleet managers’ green initiatives.  Half of all fleets are now measuring their emissions (up from 28% in 2008), of which 68% have established goals.  Those that implemented PHH’s GreenFleet program have reduced emissions on average by 14%. It’s not too small a deed if you consider that a typical fleet of 500 vehicles can annually put over 6,000 tons of GHG emissions into our already not-so-thin air.  (To give you some perspective, the US emit 7,000 million tons in 2008.)

A penny for their thoughts might be on the cheap end of the implementation costs, but there are low-hanging fruit – right-sizing vehicles and putting drivers in the most efficient vehicle in each class. Molding driver behavior is also a popular one but they must focus on few factors that most impact fuel economy and that drivers can substantially control. It makes sense since multi-tasking isn’t for all of us. Here are some of their tips:

Minimize idling. Idling for more than 10 seconds uses more gas and emits more GHG than restarting your car.

Avoid aggressive driving behaviors. Accelerate gradually and anticipate stops.

Keep your vehicle in good shape. Maintenance schedules are key, but small things such as proper tire pressure also make a difference.

So whether fleet is your core business or just one more item in your supply chain, be sure you aren’t missing some easy routes to lower emissions.

Help me help you - Teleworking

September 24, 2010 Leave a comment

June is the month companies’ coffee tables are covered with numbers, but increasingly, we’ve been seeing a leaf or two in between the graphs.  AT&T, for example, reported that its industry has the potential to reduce greenhouse gas emissions by 22% by 2020 in the U.S..  Since ideally the two greens – sustainability and balance sheet – should speak the same language, the Telework Research Network (TRN) recently published a study translating those savings into USD numbers.  Each American employee that works half of their time from home can save their company about $10,000 per year. Just be sure to tell your boss the conclusion is based on 250 case studies and research papers before you propose any ideas.

Although few of us are given the opportunity to contribute to the company’s savings this way (less than 2% work from home most of their time), the number of employees that are willing to personally make an effort to aid their company to save this amount is expected: 80% of workers want to telecommute and 30% would take a pay cut to telecommute. Did I mention it saves the employee up to $6,800 per year?

So I don’t give off the impression I am biased towards the sustainable solutions I offer, here is a webinar on “How Companies Profit from Eliminating Waste” by GreenBiz that will take place July 29 2 PM EDT.

Open Source – Eco Patents

September 6, 2010 Leave a comment

Companies like HP, Dow, Bosch, DuPont, IBM, Nokia and Xerox, only to name a few, believe the old saying that it’s sometimes not important to know something, but to know who knows it.  Together they have pledged over 100 green patents by adding them to Eco-Patent Commons, first-of-a-kind business effort coordinated by the World Business Council for Sustainable Development (WBCSD).  Hoping to become something like an open source “green” community, the intellectual property varies greatly in their technical aspect, from eliminating anti-oxidant metal coating, to self-contained battery recycling station, to wastewater treatment.

So, if your company competencies do not include high-tech eco-solutions or your engineers need a little hand, be sure to check out the Commons.

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