2016: The Year of the Sustainable Business
2016 can be called the year of the sustainable business. This year, businesses prioritized sustainability over profitability. According to the BSR/GlobeScan State of Sustainable Business Survey 2016, 49 percent of companies claimed that sustainability is among their CEO’s top five priorities (from 35 percent in 2015). The survey added that respondents identified human rights, workers’ rights and climate change as their top three corporate sustainability priorities for 2017.
Businesses’ shift of emphasis from short-term profitability to long-term sustainability in 2016 may be attributed to the establishment of the Sustainable Development Goals (SDGs) for 2030 and the Paris Agreement. In 2015, businesses pledged to help achieve the SDGs. In 2016, they fulfilled their pledge by adopting and implementing sustainable operations.
BMW is the world’s most sustainable company this year, according to Corporate Knights’ 2016 Global 100 Most Sustainable Corporations in the World index. The luxury car and motorcycle giant earned the index’s top spot for its “wide range of [sustainability] measures, from energy, water and waste reduction to innovation and diversity.” The battery-powered BMW i3 vehicle, along with the plug-in hybrid BMW i8 and X5 models, has enabled the company to reduce its average fleet carbon dioxide emissions per kilometer to 152 grams in 2014, from 159 grams in 2013. In addition, BMW’s volume of consumed resources and the emissions per vehicle produced in 2014 was 6.7 percent lower than in 2013.
Since 2015, more than half of BMW’s electricity worldwide is derived from renewable sources. Moreover, the company aims to decrease waste per vehicle produced by 45 percent by 2020 compared to 2006. At BMW, the compensation of senior executives is tied directly to their teams’ sustainability performance. The better the sustainability performance, the higher their pay is.
In 2015, General Mills announced that it will cut its greenhouse gas emissions by 28 percent in the next 10 years. The US food conglomerate likewise pledged to reduce its greenhouse gas (GHG) emissions by 50-70 percent by 2050. General Mills is striving to achieve these goals by implementing several sustainability measures, including reducing fuel use through more efficient and innovative transportation and logistics planning. Cargoes are moved using transportation with less impact, such as rail or ship, instead of truck.
In 2013, General Mills started using 16 new semitrailers powered by compressed natural gas (CNG) to transport products to retailers in the US Midwest. In 2015, the company used 20 new CNG-powered semitrailers. The company’s CNG-powered semitrailers travelled more than 136,000 miles in 2015—140 percent higher than in 2014. Using CNG-powered semitrailers helped General Mills reduce its diesel consumption by over 23,000 liters and associated GHG emissions by 28 percent per shipment in 2015.
General Mills’ Direct Plant Ship program allows customers to bypass the company’s distribution centers and buy participating items by the truckload directly from the General Mills plant in exchange for incentives. During fiscal year 2015, the Direct Plant Ship program helped General Mills eliminate more than 20,000 truck trips and more than 3.8 million vehicle miles.
As a result of these measures, General Mills ranked 29th and 69th in Newsweek’s Top Green Companies in the U.S. 2016 and Corporate Knights’ 2016 Global 100 Most Sustainable Corporations in the World index, respectively.
Intel has been the US’ largest voluntary purchaser of green power since 2008. In 2013, the technology company bought 3.1 billion kWh of green power―enough to meet 100 percent of its electricity needs for the said year. In 2015, Intel joined the White House Climate Pledge, a White House initiative to curb GHG emissions and invest in clean energy. With its GHG reduction and energy conservation efforts, Intel managed to save 1.75 billion kWh.
Intel also implemented a number of strategies to reduce its water consumption. The company recycles ultrapure water (UPW, highly-purified water used for cleaning silicon wafers during fabrication) for irrigation and industrial purposes, and some of Intel’s facilities use graywater from local water treatment centers. These two strategies helped the company conserve approximately 4.1 billion gallons of water in 2015, which is roughly equivalent to 45 percent of its total water withdrawals for that year.
Since 2008, Intel has recycled at least 75 percent of the total waste generated in its operations. Several Intel sites, including those in Ireland; Bangalore, India; and Shanghai, China, already have a recycling rate of more than 90 percent for non-hazardous waste. In 2015, the company was able to reduce the amount of hazardous waste it sent to landfills by 2 percent.
Intel Ireland won Ibec’s Environmental Management Award in January 2016, ranked second in CR Magazine’s 100 Best Corporate Citizens 2016 and 38th in Corporate Knights’ 2016 Global 100 Most Sustainable Corporations in the World index.
L’Oreal is proof that beauty does not have to come at the expense of the planet. In 2015, the French cosmetics company pledged to become “carbon balanced” by 2020. To fulfill this pledge, L’Oreal will reduce its industrial activities’ carbon emissions and generate carbon gains by using responsibly-sourced raw materials.
L’Oreal is working hard to keep its aforementioned promise. Its Sharing Beauty with All Report 2015 revealed that 74 percent of its products launched in 2015 have an improved environmental or social profile (compared to 67 percent in 2014). In addition, the carbon dioxide emissions of L’Oreal’s plants and distribution centers were 56 percent lower than the company’s 2005 baseline. The number of L’Oreal brands that evaluated their environmental or social impact rose from 22 percent in 2014 to 66.6 percent in 2015. Approximately 34.4 percent of L’Oreal brands conducted a consumer awareness initiative in 2015, from 25.4 percent in 2014.
The report added that L’Oreal has a two-pronged water conservation strategy of optimizing water use while creating water reuse and recycling initiatives at production sites. The company developed Waterscan, a tool that categorizes water consumption at each stage of a production process and can identify opportunities for reducing water use at each site. Moreover, in 2015, L’Oreal built 10 wastewater recycling facilities at sites in Karlsruhe, Germany; Rambouillet, France; Aulnay, France; Libramont, Belgium; Burgos, Spain; Settimo, Italy; Istanbul, Turkey; Pune, India; Suzhou, China and Montreal, Canada. Its two-pronged water conservation strategy helped L’Oreal reduce its water consumption between 2005 and 2015 by 45 percent.
L’Oreal also involved its suppliers in its sustainability efforts. According to the report, the company evaluated and selected 51 percent of its strategic suppliers based on their CSR performance in 2015 (from 43 percent in 2014). The number of L’Oreal’s strategic suppliers that were assessed by CSR ratings firm EcoVadis rose from 50 percent in 2014 to 74 percent in 2015.
In March 2016, L’Oreal was recognized by the Ethisphere Institute as a World’s Most Ethical Company. The company also ranked 14th for the second consecutive year in Corporate Knights’ 2016 Global 100 Most Sustainable Corporations in the World index.
BNP Paribas, a bank, actively promotes sustainability and environmental responsibility. The bank notes on its official website that its “[climate change] commitment aligns with the Paris agreement, which aims to make financial flows compatible with low-carbon development.” Inline with this claim, during COP21, BNP Paribas committed USD 16 billion for climate change projects.
In addition, BNP Paribas strengthened its management of Environmental, Social and Governance (ESG) risks. To help achieve the Paris Agreement’s goal of maintaining global warming at less than 2°C, it decided in 2015 to no longer finance coal mining projects and coal mining companies that have no diversification strategy. Furthermore, BNP Paribas will no longer finance coal-fired power plants in high-income countries. It will, however, consider financing coal-fired power plants in other countries, provided that the host country has made a commitment to limit GHG emissions as part of the COP21 framework. Companies that own coal-fired power plants will likewise be asked to create a diversification strategy.
BNP Paribas’ sustainability measures also include improving society through financial education and microfinance. The amount the bank spent on support for social entrepreneurship and microfinance rose from €227 million in 2014 to €279 million in 2015, meaning the bank was able to meet its target of spending €200 million on social entrepreneurship and microfinance (excluding social enterprise loans). In addition, BNP Paribas’ financial education programs trained 479,900 people in 2015, from 300,822 people in 2014, meaning that the bank was able to meet its target of providing financial education to 180,000 people.
In October 2016, The Banker magazine named BNP Paribas “Most Innovative Investment Bank for Climate Change and Sustainability.” BNP Paribas ranked 35th in Corporate Knights’ 2016 Global 100 Most Sustainable Corporations in the World index.
Sustainable Businesses: Investments for the Future
In 2016, companies realize what experts continue to point out—that sustainability makes good business sense. Businesses' shifting emphasis to include sustainability alongside profitability is an investment for the future. Sustainable business operations lead to numerous benefits, including resource conservation, greater business continuity and a healthier and more productive workforce, which, in turn, ensures that businesses will last in 2017 and beyond.