Monday, 8 April 2013

Global corporations are failing to meet the sustainability challenge

imageAccording to the latest Corporate Responsibility Review from sustainability ratings agency Oekom Research AG, only one in six (16.7%) of the companies from the global MSCI World equity index show a good level of commitment to sustainable development and none were categorised as ‘very good’. Around a third of the companies have some sustainability management initiatives, but efforts are still not being systematically integrated into management systems. Over half the companies (52.3%) have so far taken little or no action.

Oekom Research evaluates data from companies and independent sources on the basis of industry-specific criteria. The ratings are based on seven major sustainable development challenges:

  • Climate change
  • Biodiversity
  • Water
  • Forest protection
  • Poverty
  • Demographic change
  • Corruption

The results are used by their clients to help manage capital investments and for designing appropriate investment products. Oekom research says that its ratings currently influence the management of investments valued at over €520bn.

Companies from the paper and forestry industry achieved the highest average score for their sustainability management, but even then scored just 47.7 out of a possible 100. In second and third places were manufacturers of household products (45.4) and car manufacturers (40.8). At the bottom of the table were the retail trade (21.7), the property sector (20.6) and the oil and gas industry (18.9).

By country, more than 40% of Finnish, Italian, German and Dutch companies were found to be leaders in their sectors in terms of sustainability management. By comparison, in the US just 9.5% of companies were considered leaders and only 7.3% in Japan.

Matthias Bönning COO and Head of Research at Oekom Research said “Despite individual examples of good practice, the majority of companies are falling short of what is needed from the point of view of sustainability. Many of them did not even manage to achieve a score of 40 out of a possible 100. In the light of the huge challenges we face, this is clearly not enough.”


Review:  The fact that there is a market for this sort of data shows the growing importance of sustainability among investors. Companies will increasingly be obliged to adopt a more sustainable approach, even if there is no relevant legislation. There may well be a debate about what should be included under the umbrella of ‘sustainability’, but Oekom Research is reflecting what it, and its clients, see as the main issues.

Perhaps the most interesting comment is the lack of systematic integration of sustainability within management systems, a comment that is equally true of Green IT. While many companies have been implementing specific processes and technologies to reduce energy use and hence carbon emissions, this has generally been a piecemeal approach, rather than an integrated strategy. Addressing broader sustainability issue will require an even greater rigor.

One approach to achieving the necessary thoroughness is to use a green ICT governance model that links IT and corporate sustainability. An IT governance framework, such as the widely-used COBIT 5, provides an end-to-end business view of the governance of enterprise IT that reflects its role in creating value for businesses. It doesn’t take much to extend the principal to include aspects of sustainable ICT.

© The Green IT Review

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