State Of Sustainability Communications

The State of Sustainability Communication A Study: How Effectively the S&P 100 Communicates Sustainability September 30, 2008

Introduction The rapid increase in the amount of communications focusing on sustainability topics, the growing controversy around “green” marketing, and the desire of various company stakeholders (such as customers) to uncover and dialogue about company practices all signal a larger shift occurring today: sustainability is now a critical part of many companies’ corporate communications strategies. The critical question this study focuses on answering is: “What defines authentic and effective sustainability communication?” To answer this question, imc² studied the current practices of the S&P 100 (specifically the 86 of the S&P 100 companies that currently have some level of sustainability communications) and

Sustainability is defined by BSR as achieving commercial success in ways that honor people, communities, the environment, and ethical values.

found that success could be evaluated through four major categories: h

Holistic Definition: Examines the breadth with which sustainability is addressed in the company’s communications. Indicates the company’s overall sustainability approach and priorities.

h

Integration: Evaluates how sustainability messaging is integrated within a company’s overall communications strategy. Indicates how integrated sustainability is within the company’s overall strategy.

h

Engagement: Explores the level of dialogue supported and the ease of interactivity among stakeholders. Indicates the company’s broader approach to engaging with its stakeholders.

h

Transparency: Determines the availability and ease of access to a sustainability report and subsequent updates. Indicates the company’s level of commitment and accountability to these efforts.

This paper provides details regarding the collective performance of the companies in each of the four categories and by specific industry. Also included is a discussion regarding best practices in each of the categories to help guide the improvement of sustainability communications for companies. Details regarding the methodology used for this study are included in the Methodology Section at the end of this document.

Opportunities to Improve Communications Stood Out Results from the analysis reveal that some companies and industries are more focused on their sustainability communications, and therefore, more successful in their efforts. However, there are opportunities to improve communications across the board. To provide a quantitative view of where companies stand in each of the four categories (holistic definition, integration, engagement, and transparency), imc² used a 4-point scale (0-3) to evaluate each company in each category. The following chart shows the average score for all companies by category.

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*Corporate websites were used as the most comprehensive source of information in the analysis. h

Holistic Definition: As the most developed category (with most of the companies scoring the maximum 3 points), the majority of companies approach the topic of sustainability broadly by addressing their people, community involvement, and environmental practices.

h

Integration: Although many companies have begun to integrate sustainability messaging into their core communications, it is far from common practice, leaving considerable opportunity for more aligned and consistent communications.

h

Engagement: Along with Transparency, this category presents the largest opportunity for improvement. A large number of companies provide no method of direct communication with stakeholders and only a handful of companies employ social technologies to actively dialogue about sustainability.

h

Transparency: Surprisingly, a large percentage of companies have not yet published a sustainability report, though they talk about their efforts through other company communications. Of those that do publish a report, only a few provide progress updates throughout the year.

The wide range of performance in each category suggests that although best practices are emerging, there are significant opportunities for improving sustainability communications in a holistic, integrated, engaging, and transparent manner.

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Best Practices As best practices are examined in each of the four specific categories studied, it is important to note that the strategy for effectively communicating about sustainability must approach all four categories equally.

Holistic Definition How a company defines sustainability determines its approach and priorities when making decisions. In turn, how a company communicates this definition impacts the range of stakeholders who perceive their efforts as authentic. It is important that the definition of sustainability be comprehensive and the communications reflect the following: h

A holistic definition of sustainability addresses a company’s people, products/services, community, and environmental practices. Accurately defined, sustainability is a holistic approach that may refer to any factor that potentially impacts the long-term health of an organization. Regardless of industry, a company’s human resources, products/services provided, communities of operation, and natural resources are likely material factors to sustainable growth.

h

Communicating a holistic approach brings authenticity to a wider range of stakeholders. A broad approach to sustainability is necessary to build authenticity with a wide range of stakeholders. If a company actively promotes environmental initiatives but fails to address workers’ rights issues in its supply chain, will that company be perceived as authentic by labor rights activists? Or by its employees? If a company promotes health initiatives in its local communities but fails to address health concerns about its product or service, will that company be perceived as authentic by consumers? Or by the very same communities it is attempting to positively impact?

Best Practice Example of Holistic Definition: Merck communicates a holistic definition by highlighting its approach to employees, products, environment, and community throughout its website. The coherent look and navigation demonstrate a broad but clear company approach to sustainability.

Website: www.merck.com/cr/

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Integration A company’s level of commitment to sustainability is reflected in how integrated sustainability is within its overall communications. Sustainability messaging impacts stakeholders’ awareness of company efforts and their impression of the brand. The more integrated the communications, the clearer the commitment by the company to its stakeholders. For companies providing messaging about sustainability practices, it is important to ensure: h

Marketing communications are aligned with company practices. Any misalignment between the two can result in a lack of authenticity around sustainability efforts as the messaging may come across as corporate speak. The relationship between a company’s sustainability department and the rest of the company’s communications efforts is critical. If business goals are not aligned, it is unlikely that the company is effectively communicating sustainability as an integrated part of its business.

h

Communicate about sustainability with consistency and persistency. If sustainability is integrated into the company’s strategy, it should be reflected in its communications. For stakeholders not yet engaged with a company’s sustainability efforts, less communication means less opportunity to build a relationship around these efforts. For stakeholders who are engaged and tracking company efforts, less communication gives the perception that performance is being hidden.

Best Practice Example of Integration: Alcoa clearly highlights sustainability efforts on its homepage and leads visitors directly to relevant content. The page emphasizes the company’s commitment to sustainability while still communicating core business information.

Website: www.alcoa.com

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Engagement Willingness to dialogue with stakeholders is a critical component of any successful sustainability communications effort. Simply put, engagement with stakeholders is critical to the long-term health of any company. The mechanisms available for stakeholders to provide feedback and participate in a company’s sustainability efforts directly impact the level of relationships that will be formed. Given this, the following are some best practices for starting this dialogue: h

Facilitate sustainability-specific dialogue with stakeholders. Although most companies provide some form of general (online and offline) communication, they do not facilitate communication specific to sustainability. Stakeholders who want to actively communicate and engage with the company will likely view limited interaction as a company’s unwillingness to form a relationship that goes beyond a transaction.

h

Build stakeholder engagement into the report process. The first place to begin a more active dialogue with stakeholders is through a published sustainability report. Enabling this conversation not only meets a common reporting guideline, but also yields important insight for subsequent reports and most likely even for broader sustainability efforts.

h

Engage with stakeholders online. Social technologies such as blogs, wikis, and social networks have transformed the level of engagement possible between companies and stakeholders. Companies should develop and execute a strategy to facilitate the use of these technologies to create an ongoing dialogue.

Best Practice Example of Engagement: General Motors built the sustainability conversation into its initiative to proactively engage online visitors using social technologies. The corporate site aggressively directs visitors to GM Next, which houses blogs, wikis, and chats on a wide range of topics. GM Next has a variety of contributors and displays a willingness to tackle even the toughest questions, including “Does GM greenwash its image?”

Website: www.gmnext.com/details/thoughts.aspx?id=53d0f36f-1b55-4171-8802-8d3f5e382c34

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Transparency The content, format, and frequency of reporting sustainability performance impacts a company’s perceived authenticity and accountability. Without frequent and transparent updates on progress, stakeholders may question a company’s commitment. Even for companies that have started communicating about their efforts, there are additional ways to leverage transparency more effectively: h

Publish a sustainability report. If a company has not yet published a sustainability report, it should be the next step. A company cannot communicate authentically without first making commitments and then ensuring it will be held accountable to those commitments. The Global Reporting Initiative (GRI) is a starting place to determine appropriate measures and goals for a report.

h

Actively share progress during the year. Formal reports are giving way to timelier, stakeholder-friendly methods, such as quarterly updates. These frequent updates allow for more transparent communication with external stakeholders and drive internal accountability and performance. News archives, email newsletters, and RSS feeds demonstrate a company’s commitment to its sustainability performance. In an online environment with abundant sources of information about corporate behavior, these proactive updates display authentic commitment and accountability.

Best Practice Example of Holistic Transparency: Dow Chemical clearly communicates its long-term commitments as measurable goals and then provides data-driven quarterly updates. The update demonstrates an impressive measurement capability and a willingness to deliver transparent results.

Website: www.dow.com/commitments/pdf/2Q_2015_SustainabilityReport_090408.pdf

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Industry Findings and Recommendations When the company results were totaled and aggregated by industry, the following trends emerged regarding which industries were leading in terms of their sustainability communications. Scores by industry were calculated by averaging the scores for companies in each industry (each company could receive a maximum possible score of 12 as there are four categories with a possible score of 3 in each category).

Although every company has unique strengths and areas of opportunity, three distinct groups emerged: h

Leading Players: The Automotive, Forestry, Chemicals, and Pharmaceuticals industries are Leading Players, as they have well-defined, significantly more transparent, and more integrated sustainability communications. These industries have likely developed competency faster than others as a result of added government regulation and public scrutiny. The greatest opportunity for these industries is in engagement.

h

Emerging Players: The Mining/Energy, Transportation/Shipping, Technology, Communications, and Consumer Product/Retail industries are Emerging Players. Their sustainability communications, while welldefined, have opportunities for growth in integration, engagement, and transparency. Expect these industries (especially Energy and Technology) to catch up quickly with increased regulation and public.

h

Lagging Players: The Financial Services and Media/Entertainment are Lagging Players. Not surprisingly, their sustainability communications have considerable opportunity for growth as they are more serviceoriented industries and have not had the same scrutiny to date as the other industries. It is reasonable to

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expect these industries to improve their efforts quite quickly given their regular, direct contact with consumers as they continue the conversation around sustainability. Despite the distinctions among the industries, according to a recent article in the Environmental Leader, there is evidence that consumers still have trouble identifying leading companies when it comes to sustainability (http://www.environmentalleader.com/2008/05/10/green-marketing-campaigns-not-sticking/). Leading Players still have opportunities to further improve their communications, while the rest of the industries can quickly catch up through employing the best practices provided in this paper.

Conclusion How a company communicates about its sustainability practices is integral to developing deeper relationships with its stakeholders. This study revealed a wide variation in how companies are communicating about their efforts as well as highlighted some emerging best practices in the areas of holistic definition, integration, engagement, and transparency. One starting place for companies to improve communications is through their existing websites. By employing interactive tools such as RSS feeds, videos, and e-newsletters to report progress updates, starting a company blog and/or building an online community to initiate stakeholder dialogue, a company can quickly embrace many of the opportunities presented in this paper.

Methodology imc² developed the methodology based on two years of research related to sustainability and trust-based communications. Based on this expertise, a scorecard was developed around the following four categories: h

Holistic Definition: The breadth with which sustainability is addressed in communications.

h

Integration: How sustainability messaging is intertwined within company communications.

h

Engagement: The level of dialogue enabled and ease of interactivity around sustainability.

h

Transparency: The availability and ease of access to a sustainability report and subsequent updates.

Each category was evaluated on a 4-point scale (0-3), with 12 being the maximum possible score. A team of professionals then used the methodology to review 86 of the S&P 100 companies known to have digital properties dedicated to sustainability efforts, referencing the findings from the recent SIRAN report (http://www.siran.org/pdfs/SIRANPR20080717.pdf). Corporate websites (assessed in August 2008) were the primary data source.

Contact Information For questions about the study, methodology, or specific scores for any company in the S&P 100, contact Beth Bengtson, imc²’s vice president, corporate social responsibility, at [email protected] or 212.430.3282.

About imc² imc² is dedicated to transforming the practice of marketing by advancing relationships between brands and people. The agency has offices in New York City, Dallas, Philadelphia, and Cincinnati. With more than 400 talented staff members, imc² provides digital services in the following areas: strategy and insight, media and promotions, Web and application development, relationship marketing, and measurement and intelligence. Please visit www.imc2.com for more information.

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Companies Reviewed in This Study: 3M Company Abbott Laboratories AES Corp Alcoa Inc. Allegheny Technologies Inc. Allstate Corp Altria Group Inc. American Electric Power Company Inc. American Express Company American International Group Inc. Anheuser-Busch Companies Inc. Apple AT&T Inc. Avon Products Baker Hughes Bank of America Corp. Bank of New York Mellon Baxter International Inc. Boeing Company Bristol-Myers Squibb Burlington Northern Santa Fe Co Capital One Financial Caterpillar Inc. CBS Corp. Chevron Corp. CIGNA Corp. Cisco Systems Citigroup Inc. Coca Cola Co. Colgate-Palmolive ConocoPhillips Dell Inc. Dow Chemical Du Pont (E.I) El Paso Corp. EMC Corp. Entergy Corp. Exelon Corp. Exxon Mobil Corp. Fed Ex Corporation Ford Motor General Electric General Motors

Goldman Sachs Group Halliburton Co. Harrah's Entertainment Heinz (H.J.) Hewlett- Packard Home Depot Honeywell Int'l Inc. Intel Corp. International Bus. Machines International Paper Johnson & Johnson JPMorgan Chase & Co. Kraft McDonald's Corp. Merck & Co. Merrill Lynch Microsoft Corp. Morgan Stanley Oracle Corp. PepsiCo Inc. Pfizer Inc. Procter & Gamble Raytheon Co. Rockwell Automation Inc. Sara Lee Corp. Schlumberger Ltd. Southern Co. Sprint Nextel Corp. Target Corp. Texas Instruments Time Warner Inc. Tyco International U.S. Bancorp United Parcel Service United Technologies Verizon Communications Wachovia Corp. Wal-Mart Stores Walt Disney Co. Wells Fargo Weyerhaeuser Corp. Williams Cos. Xerox Corp.

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