Posts tagged ‘csr’
NAEM Board of Directors: What project are you most excited about working on this year?
As part of NAEM’s 2012 Member Appreciation Week, we sat down with members of the NAEM Board of Directors to chat about trends in environment, health and safety (EHS) and sustainability management. Featuring Kelvin Roth of AMCOL International Corp.; Sandy Nessing of American Electric Power Co. Inc.; Pat Perry of CVS Caremark; and John Reichling of CDM Smith.
Sustainability Strategy and Long-term Performance
Kimberly Gladman
At the NAEM conference in Fort Lauderdale last May, I spoke about recent academic research on the link between corporate responsibility—in particular, positive environmental policies—and stock price performance. (For a review of the studies I talked about, see my paper, “Ten Things to Know about Responsible Investing.” ) I promised NAEM staff that I’d stay in touch and keep them updated when I heard of additional research that might be of interest to the membership. A paper just out from Harvard Business School definitely fits the bill.
In “The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance,” Professors Bob Eccles, Ioannis Ioannou and George Serafeim began by identifying companies that disclosed a set of environmental and social policies in 2003-2005. They then conducted over 200 interviews with corporate executives to ascertain which companies had already begun to implement these policies internally in 1993.
Once they had a set of 90 early adopters, they created a matched sample of companies that had few sustainability policies, but were otherwise similar to the first group in terms of size, sector, growth stage and capital structure. Comparing shareholder returns for the two groups, they found that the high-sustainability group outperformed its low-sustainability peers by an annualized 2.3 percent on an equal-weighted basis,between 1993 and 2011.
The authors also demonstrated, based on a statistical analysis of keywords in analyst calls, that high-sustainability companies are more likely to discuss long-term trends and non-financial matters with investors. They study ownership and show that high-sustainability companies attract longer-term investors with more concentrated holdings. They also show that high sustainability companies also are more likely to have a board oversight of sustainability, to incorporate sustainability metrics into executive compensation, and to disclose non-financial performance. (The full study can be found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1964011).
While the study’s performance numbers may be welcomed by corporate environment, health and safety (EHS) managers as evidence that sustainability pays, it would be interesting to know the relationship between a company’s survival rate and its sustainability activities. For example, does management of social and environmental issues acts as a kind of insurance policy, making a company more likely to be around long-term?
NAEM members would probably have valuable opinions on this question. They would also be able to offer useful perspectives on one of the study’s key follow-up questions: What ensures that companies stay the long-term course in terms of sustainability culture? Why do some companies’ programs fall apart if a key manager leaves, while other firms seem to have environmental consciousness baked into their “DNA”? These questions are just part of the lively discussion this paper is provoking.
What do you think?
Dr. Kimberly Gladman is the Director of Research and Risk Analytics at GMI, a leading provider of corporate governance, accounting, environmental and social research and ratings. Before joining GMI’s predecessor, The Corporate Library, in 2008, Dr. Gladman managed a team of associates researching global corporations at Domini Social Investments, a prominent socially responsible investment fund manager. She also served as Lead SRI Analyst for Domini’s European equity fund, and spent several years participating in the firm’s shareholder advocacy on social, environmental, and governance issues.
She began her career in academia, focused on interdisciplinary research and teaching. She earned a B.A. from Yale University in 1990, and a Ph.D. from New York University in 2001. Dr. Gladman also holds the Chartered Financial Analyst designation.
Can engaged employees transform the U.S. economy?
Alex Pollock
Now that the world population has surpassed the seven billion marker, the “sustainability” word is getting lots of play once again. The call-to-action bugles are again warning us of a pending global catastrophe. What could suddenly create “worldwide peace, global well-being and extraordinary advancement in human development?”
In a new book, “The Coming Jobs War,” author Jim Clifton says a solution is the appearance of a whopping 1.8 billion “good” jobs. These are jobs that provide at least 30 hours of work per week and a steady pay check. Clifton believes that the country that can best achieve job growth coupled with GDP growth will be the dominant world force.
Can the United States be this global force?
Clifton believes the explosion of entrepreneurship that GDP growth requires won’t happen here until the country doubles its number of “engaged” employees: those who are using their talents every day, yielding great results, emotionally committed and are working consistently with high energy and enthusiasm.
This number currently stands at 28 percent nationally. Going from 30 million to 60 million engaged workers will “change the face of America more than any leadership institution, trillions of stimulus dollars, or any law or policy imaginable,” Clifton argues.
But as long as “one in five U.S. managers are “dangerously lousy,” these “high-energy workplaces” will elude us, Clifton says. “Fire all lousy managers today” is an imperative, he argues, because nothing fixes bad managers: not coaching, competency training, incentives or warnings. In his experience “bad managers never get better.”
What’s your reaction to his analysis? Clearly there is an opportunity for each of us is to contribute to the creation of these attractive “high energy workplaces” where we willingly give our best every day. We just can’t just afford to be a passive observer on this one.
Increasing EHS Value in Tough Economic Times
Mark Posson
Can we do more with less? Absolutely! This tough economy is affecting all aspects of an organization and environmental management is not immune. Today’s reality in most organizations is stagnant or declining resources and a continuing mandate to increase environmental performance. We need to resist the tendency to pull back in tough economic times and instead be introspective and improve the way we execute. We can free up the resources to meet the demands of expanding requirements by continually improving our business processes. The increased efficiency will free up resources and the increased effectiveness will boost performance and stakeholder value.
Strategically, what processes provide the greatest value to our stakeholders? Where can we get our biggest return for the time invested? These basic questions will help prioritize your improvement targets and possibly identify processes that can be eliminated. A ranked list of processes for improvement will guide your pace of change and tactical execution.
Tactically, the simplest path to improve a process is to follow the elements of lean:
- Identify the value to the stakeholder (your customers)
- Determine the sequence of activities (current process flow)
- Identify the activities that create value
- Eliminate activities that do not add value
- Identify process inefficiencies and their cause(s)
- Eliminate the cause(s) of inefficiencies
- Create the new process (future process flow)
- Implement the new process
- Measure results
The steps are simple but often challenging to implement in light of day-to-day execution pressures. We can’t expect different outcomes by following the same processes. The investment in process improvement will provide the payback in better results with fewer resources.
What strategies do you use to do more with less?
Mark Posson is the former Director of Environment, Safety and Health at Lockheed Martin Space Systems Co. and the current Chair of the city of Pleasanton’s Energy and Environment Committee. He recently began offering consulting services to help organizations improve their environment, safety and health performance.
