May 05 2010
How Bay Area Companies Stack Up on Sustainability
Sustainability Communications by Bay Area Companies
Those of us who live or work in the San Francisco Bay Area think of it as a progressive region, leading the nation in various aspects of environmental awareness and sustainability. Laws like Assembly Bill 32 (The Global Warming Solutions Act of 2006), Title 24 Energy Efficiency Standards, and carbon tax regulations by the Bay Area Air Quality Management District are forward-thinking evidence of such progressiveness. But how do Bay Area companies stack up when it comes to sustainability reporting? We took a close-up look at the largest Bay Area companies to see how they were reporting their environmental impacts and efforts. Download the executive summary.
Who Reports?
Of the companies on the San Francisco Chronicle’s Chron 200 list, approximately 1 in 4 issued environmental sustainability communications of any kind – whether as a response to a questionnaire like those from the Carbon Disclosure Project, filing a report with a registry such as the Global Reporting Initiative or EPA Climate Leaders, or simply including such information in a corporate social responsibility report or in a section of their websites.
It turns out that size does matter when it comes to reporting. There seems to be a line of demarcation right at $1 billion in annual revenue. Almost 60% of the companies over that size reported about their efforts compared to just 8% of those with revenue below $1 billion.
How Well Do They Communicate?
Of those companies that did provide information, how well did they communicate? Did they cover material issues of relevance to key stakeholders? Did they set and report against specific performance targets? How complete was their reporting? Using a 100-point rating system that covered these and other key attributes, EcoStrategy Group reviewed the publicly available sustainability communications of the largest Bay Area companies. Based on their ratings, the companies were grouped into four tiers or quartiles. Twelve companies made up the top tier (listed in alphabetical order):
Top Tier Reports
- Adobe
- Agilent
- AMD
- Apple
- Applied Materials
- Cisco
- eBay
- HP
- Intel
- PG&E
- Symantec
There is still plenty of room for improvement, as those companies scoring in the top tier averaged only 82 points on the 100-point scale. Even the top scorers could do a better job covering material environmental impacts, clearly communicating reductions targets and their progress against them, and providing reports that cover a broader range of operations.
Best Reports by Company Size
The very best reporting came from some of the largest companies, with Cisco, Hewlett-Packard, and Intel earning the best scores overall. However, some of the very large companies did a relatively poor job of communicating and some of the comparatively smaller companies produced outstanding reports. For example, Oracle, in the $10+ billion segment, scored significantly lower than Agilent, one of the top scorers in the $2-5 billion segment.
Some Companies Choose Silence
Surprisingly, a number of companies chose not to communicate externally about their efforts and impact, despite the fact that they have robust sustainability programs in place. For example, Intuit, NetApp and The Gap are very conservative in their external communications even though they have ongoing sustainability programs with substantive goals. A number of factors fuel the decision not to report, and these range from resource constraints to concerns about risk of regulatory actions and vulnerability to activist organizations. In some cases, such restraint is simply a reflection of the company’s culture.
Trend Toward More Transparency
The “Trends in Sustainability” report identifies numerous forces that are driving companies toward greater transparency about their environmental practices. Among these are a desire to better manage reputation and brand image, an increasing number of queries from customers, investors and employees, and the desire to stay ahead of future regulations. While the current state of the art for sustainability reporting is voluntary, most of the larger Bay Area companies expect this to change. Standards are evolving, and reporting is expected to be mandatory for many California companies in the next few years.