Sustainabilty Is Good for Business

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James Cerruti is senior partner of strategy and research for Brandlogic, a full-service brand consultancy that published in June its 2011 Sustainability Leadership Report: Measuring Perception vs. Reality in partnership with CRD Analytics. The report measured actual and perceived performance of environmental, social, and governance (ESG) factors for 100 major corporations. The report is based on a survey of key audiences who are considered to be “highly attentive” to ESG issues: investment professionals, purchasing and supply chain managers, and graduating students in the United States, United Kingdom, Germany, Japan, India, and China. In March 2011, more than 16,000 responses were collected and summarized for this report.

BPI: The pharmaceutical industry stands out in your report, “with almost all surveyed companies leading in both actual and perceived performance.” What real activities does this reflect? Are the perceptions/realities aligned more toward environmental or social reponsibility?

JC: Using regression analysis, we discovered that among the three groups rating companies in our survey, social factors were roughly twice as important determinants of perceived corporate good citizenship in 2011 as environmental or governance factors. Our perceptual scores and index refect this weighting.

In most instances, there is the same order of magnitude misalignment on both social and environmental dimensions, with some marked exceptions. GSK’s, J&J’s, and Abbott’s real and perceived environmental scores closely align, but their social scores are misaligned roughly to the same degrees as for other companies. Also, Pfizer’s and Novo Nordisk’s social scores roughly align, whereas their real environmental scores quite significantly lag behind their perceived scores.

BPI: Shouldn’t taking a leadership role toward sustainability improve a biopharmaceutical company’s standing with the public and help the industry overall?

JC: Companies across all sectors are starting to come under closer scrutiny on their sustainability. Pressures are going to rise as leaders such as big pharma become known for their excellence in this area. It will create even more distance between themselves and companies that do nothing or just a little, which could be seen as increasingly irresponsible by comparison. This stepping up to corporate responsibility is a global, irrefutable trend. Many investors indicate that the quality of corporate sustainability programs and reporting are becoming some measure of quality of management today.

BPI: How important will real environmental sustainability activities be to branding in the 21st century?

JC: More corporations are bound to integrate sustainability themes and values into their branding. Corporate sustainability itself has become a new field of competition getting more attention from all constituencies. The most efficient and effective way to gain recognition for achievement is through the central route to cognition and retention, which is through brand messaging rather than separate secondary communications routes.

For more information, contact Brandlogic, 15 River Road, Wilton, CT 06897; 1-877-565-2255; www.brandlogic.com.

Sustainability By the Numbers

The online EcoDesk sustainability knowledge system measures carbon, energy, waste, and water data for businesses and publishes industry-focused reports on sustainability (with a pharmaceuticals report out in October 2011). Founded in 2006 by a group of private investors in the United Kingdom, EcoDesk offers a profile database in which companies can list themselves for free as well as webinars, analytics, and a desk-worker training program. It has published ∼17,000 profiles and boasts ∼60,000 registered users.

CEO Robert Clark says numbers “fluctuate significantly between industries. Office-based industries such as the banking and insurance sectors had a much lower footprint in comparison to their turnover. Oil, gas, and mining companies were 200–1,000 times more intensive in terms of the metrics studied. Electronics and pharmaceuticals were roughly on the same scale, with pharmaceutical companies 1.5–2.0 times more intensive.” Ecodesk’s key 2010 numbers came from totaling disclosed data for all companies reporting per sector. “The disclosure rate was much more consistent for the pharmaceuticals industry than others, with a large majority of the world’s top 30 publicly disclosing in some way,” said Clark.

I asked him what “intensity” means in those terms. He said it describes gross usage for each metric covered divided by gross annual revenue. “In our report, this is the amount produced per million dollars of revenue. Carbon footprint and energy use are closely entwined.” About 70% of companies with the top-10 lowest energy intensity levels were also in the top 10 for lowest carbon intensity.

“Although related,” Clark pointed out, “they are different measurements. One is the amount of energy used, and the other is the amount of carbon produced due to that use. So there is huge correlation, but no overlap.” If you use solar, wind, or geothermal energy, for example, your CO2 numbers could be quite low even if your energy use is high.

Annual Statistics for the Pharmaceutical Industry

Carbon footprint: 36,000,254 metric tons CO2

Energy use: 307,646,458 gigaJoules

Water use: 512,455,872 m3

Total employees: 1,343,397 people

Check out the Ecodesk website (www.ecodesk.com) to participate and see how the top companies in your industry rank in their sustainability efforts.

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