Several new ideas have been suggested as the next iteration of CSR, from “shared value” to “impact investing.” All offer innovative plans for more robust strategies to move “beyond” traditional CSR to achieve longer term and more profitable goals.
From the Editor
In 2013, India passed the first national law to require CSR spending. The Companies Act mandated that some 6,000 large corporations must spend at least two percent of their three-year average annual net profit on CSR activities. Despite a lack of clarity on government-approved CSR activities and tax-related regulations, 83 percent of these companies expect to increase their CSR spending for 2016-17, according to a recent survey by Ficci.
The renewable energy sector is doing its part to address income inequality. Wind farms in the US contribute $222m annually to rural landowners, according to Re News, quoting the American Wind Energy Association's 2015 US Wind Industry Annual Market Report. Data shows that 70% of rural wind farms in the US are located in low-income counties where median household incomes fall below the US median.
Venture capitalists are investing in new health insurance companies at a record pace. Health-insurer and insurance-technology startups raised more than $1.2 billion in venture funding in 2015, according to Modern Healthcare. That's more than double the $570 million raised in 2014, and 10 times the $123 million raised in 2013. Healthcare spending makes up 17+ percent of the U.S.
The S&P 500 Index includes 80% of market capitalization, so when a large majority of its member companies do something, it’s big news. Here's the story: 81% of them have published corporate responsibility reports in 2015, according to the Governance & Accountability Institute, a sustainability reporting firm. This compares with only 20 percent in 2011, when G&A began its analysis. Why does this rapidly growing, now critical mass of sustainability reporting matter?
Unusually for a developed country, a large part of Canada’s GDP draws on natural resources. From logging and paper products to oil and gas drilling and commercial fishing, from hydropower to agricultural products, the country’s abundant resources contribute 20 percent of the Canadian economy and account for 1,600,000 jobs. The new prime minister, Justin Trudeau, has called for a progressive re-set of the Canadian “brand” to acknowledge this anomaly.
Some large retailers doing good things in a big way have made headlines lately. Target announced that sales for its “Made to Matter” initiative totaled $1B last year. Now in its third year, the program includes a selection of healthy, eco-friendly brands within a dedicated area in Target stores and a marketing campaign. The products are goods that are “better for you, and your world.” Whole Foods plans to install 100 rooftop solar systems on its stores and distribution centers. SolarCity and NRG Energy will provide the resources for this ambitious program of renewable power sourcing.
The terms CSR, sustainability, ethical, and responsible indicate a fundamental shift in thinking about the purpose of business. All describe strategies that assume a mission larger than just profit. The Ethisphere Institute uses a morality filter as the benchmark for its annual list of The World’s Most Ethical Companies.
When reading the business pages of mainstream media, it sometimes seems as if the headlines mimic the scandalous tone of the other news. Allegations, lawsuits, claims of fraud, and criminal prosecution are not uncommon in such business headlines, even among brands that have worked hard to earn profits with a purpose and therefore earn a good reputation.
An action plan for ESG integration across the U.S. financial services sector has been released in a report by the Principles for Responsible Investment.
These days, CSR is not only the common practice of large corporations with considerable resources. Small and mid-size businesses are getting in on the action as well. It makes sense that local companies, which depend on their local communities for customers, would embrace social responsibility as a matter of basic brand strategy. In small markets, transparency is a given; businesses known for treating their employees well, producing quality products, and investing in community development do well. But how do small and mid-size businesses know which CSR initiatives have sustainable impact?
The southern states are a prime location for solar power. More sunlight hits the South than anywhere in the country except the desert Southwest. At a time of Federal and state tax credits for solar power, utilities across the region are building large, utility-scale projects. But the South lags far behind in residential solar power. The reason is protectionism by monopoly utilities. Just seven states in the U.S., all in the South, ban third-party solar power purchase agreements, the business model that has led to an exponential growth in solar power for homes and small businesses.
“The first innovative thing we’ve seen in a long time,” says one health care professional. That “thing” is Intermountain Healthcare, a nonprofit health system in Salt Lake City that has set up a business model to cut health care costs—“sharply”—rather than pass them along in higher premiums. Its new health plan, SelectHealthShare, guarantees that it will keep yearly rate increases to one-third to one-half of the average, according to the New York Times.
In a first, energy ministers from the U.S., Canada, and Mexico have agreed to share clean energy innovations. It’s a big step toward a comprehensive North American energy strategy that addresses energy security and reducing emissions.
In the same week that the Supreme Court issued a temporary stay of the EPA’s Clean Power Act, the Administration advanced its plans to increase solar use across the government by signing a deal to install solar panels on 18 federal buildings.
The numbers keep coming, in report after report, adding up to show that Exchange Traded Funds (ETFs) tracking socially responsible indices have outperformed those that track the parent indices. The latest evidence comes via UBS Global Asset Management. It finds that outperformance by socially responsible investment has been a fact on a global scale over the last five years, according to Financial Times Advisor.
An energy bill to update the country’s power grid and oil and gas transportation systems is before the U.S. Senate—and it has support from both Democrats and Republicans. If you’re keeping count, it’s been 11 years (2007) since the last major energy law, according to the New York Times. The proposed bill has “wins” for both parties. It would require electrical grid operators to install new, large-scale storage systems for renewable power.
If you thought “innovation” was worn out as a business concept, think again. A new study finds that 91% of business leaders say innovation is a strategic priority. Most (66%) view innovation as a way to develop entirely new products or services. And a majority (52%) now look to innovation as key to the development of new business models. This study, the third annual such survey conducted by StrategyOne for GE, draws on interviews with 3,100 senior business executives in 25 markets.
As sustainability reporting is integrated into mainstream reporting, more demands have been made upon the once-subsidiary activity to become as available and credible as traditional reports. Now, the distribution and benchmarking of sustainability reports are getting a big boost from a new partnership.
From stock exchanges to investors to consumers, the pressure coming at companies from all quarters to provide substantial sustainability reporting. Whether the starting point is risk management, requirements and regulations, or profit opportunity, these once-supplementary reports are now essential documents—and required reading. It’s no wonder that the volume and quality has stepped up markedly in the last few years. So have insights on how to producing better ones.