The Tie that Binds - Connecting Corporate Environmental, Social and Economic Performance

We know that people and planet are indelibly tied. We know that employees, consumers and other stakeholders value companies that are operating responsibly. We know that companies are increasingly committed to addressing climate change. This convergence provides corporations with an opportunity; the opportunity to address environmental issues beyond its operations, beyond its supply chain and beyond its walls. To work alongside nongovernmental organizations (NGOs) across the globe in an effort to conserve resources and curb the catastrophic effects of inaction on climate change. 
 
This blog seeks to examine the current situation being faced by corporations, what trends are impacting a response, a look at who cares about this issue, why it matters and most importantly, what corporations can do next. 
 
COP 21: A New Global Framework
As government officials, business executives, community representatives and NGO leaders head home after two weeks at COP (Conference of the Parties) 21, we reflect on the many challenges and opportunities resulting in the climate change agreement. Most notably, the business presence at the 2015 Paris Climate Conference was significantly higher than the first large-scale U.N. Conference that addressed climate change in Rio de Janeiro in 1992 where only 13 people representing the business sector attended. Peter Bakker, President of World Business Council for Sustainable Development stated that “Most delegates thought that business was the cause of all evil.  What’s changed?” Bakker says, “Businesses now see that the cost of inaction is greater than the cost of acting to curb climate change.”  This year, at COP 21, more than 1,000 businesses were represented.  
 
Businesses are engaged in protecting the planet, its resources and the livelihood of future generations more than ever before. Companies today have an increased sensitivity to the environmental and social impacts of business activities and are proactively seeking ways to mitigate these while remaining true to their traditional fiduciary duty of strong economic performance.  
 
Transparency Wins!
Clear is the new black and companies are publically sharing non-financial data, typically through corporate sustainable development reports. These reports can include data gathered on the company’s environmental, social and economic performance. In fact, 92 percent of the top 250 Fortune 500 companies produce an annual report. In Silicon Valley, sustainable development reporting has been an ongoing trend for many years. According to a recently released report by KPMG, sector specific reporting for all technology companies has increased by 5 percent from 2013 to 2015 and now 80 percent of technology companies are reporting annually.  
 
What Does This Mean?
Sustainable development reporting encourages companies to employ a multi-stakeholder approach when identifying what environmental, social and economic issues concern internal and external stakeholders and/or have the ability to impact business. Of the 20 largest technology companies in Silicon Valley, 50 percent share what issues were identified by stakeholders as the most impactful to the company and community. Of those 50 percent, all identified at least one environmental issue as a top priority to these stakeholders. However, what is striking is that only 20 percent of the largest technology companies in Silicon Valley identify the environment as a key area of corporate giving.  
 
This trend is consistent beyond technology companies based in Silicon Valley. In fact, the 2015 CECP (Committee Encouraging Corporate Philanthropy) Giving in Numbers report, shows that total giving for participating companies reached $18.5 billion in cash and in-kind contributions. Yet only 2 percent of that total went to environmentally-focused nonprofits.    
 
What do Stakeholders Think?
Two key stakeholder groups that provide feedback to corporations as part of reporting processes include employees and consumers. Millennials are poised to become the majority of America’s workforce. A recent study conducted by Deloitte explains that Millennials care about a company’s social mission and alignment to their own personal views. Along the same lines, a recent poll commissioned by the Clinton Global Initiative and Microsoft, found that 76 percent of Millennials are focused on the environment, compared to only 24 percent from their parents’ generations. 
 
According to The Nielsen Global Survey on Corporate Social Responsibility, more than half of global consumers (52 percent) reported purchasing one product or service from socially responsible companies in the past six months. Participants in Asia-Pacific and Middle East/Africa both exceeded the global average at 59 percent and Latin America with 65 percent. Four in 10 survey participants in North America and Europe say they have chosen to purchase a sustainable product or service in the past six months over a product or service perceived as less environmentally favorable.  
 
What Can a Corporation Do Next?
There are many opportunities for companies to align their corporate responsibility programs with environmental goals. A corporation could consider the following:
 
Include environmental causes as a focus area of corporate giving, channeling some of its philanthropic dollars toward environmental NGOs.  
Identify volunteering opportunities with local environmental nonprofits. 
Develop a strategic partnership or flagship program with a nonprofit working on a specific environmental cause. 
Encourage employees to give to environmental organizations as part of a matching gift program
 
In summary, a corporation has many opportunities to impact the future of this planet and its people while increasing its performance in the social, environmental and economic space.
 
For more information on how Silicon Valley Community Foundation can support your corporate responsibility work, please contact donate@siliconvalleycf.org