Archive for June, 2008
In the race to put metrics around enterprise sustainability initiatives, there is now a published study that grades California public companies on their sustainability reporting. In this report, our client Chevron got an A+, while a leading IT company got an F. It’s not about what you say you are doing — this study grades how you are REPORTING what you are doing. The PDF of the report is available for download. The Roberts Environmental Center of Claremont McKenna College of Claremont, California, conducted the study and concluded that many companies do not adequately report their sustainability efforts on their websites.
This is a move to promote greater transparency in EHS and CSR reporting, much as Sarbanes-Oxley requirements encourage greater transparency in financial reporting.
On the environmental side, the most frequent reporting subject is accountability and the most frequently reported environmental performance topic is energy usage. Many companies have posted their intent to be accountable for executing on their sustainability goals. The one objective where they seem to have made the most progress is energy efficiency. Companies are reporting energy savings that are clear and measurable.
The Roberts Environmental Center rates sustainability reports on the basis of intent (based on a discussion of a topic and an example of an initiative undertaken on a reported topic); reporting (transparency in public discussion of the issues); and performance (measured by meeting industry standards, external awards or achievement of numerical goals).
We are moving in the direction of greater transparency and greater inspection of sustainability efforts, which can only be proven by better data. How is your organization’s data? Why not share in the comments section what your company is doing and how you are measuring your efforts.
Tags: csr reporting environmental roberts environmental center sustainability reporting
June 27th, 2008
New international product laws and regulations are impacting nearly all industry sectors. According to a report recently published by Ernst & Young, regulatory compliance risk is the greatest strategic challenge facing global businesses in 2008. “The continually escalating burden, as well as ever more complex compliance challenges, means this is still the biggest business risk to be addressed.” The report went on to say that “as companies become more and more global, compliance becomes an even greater challenge, forcing them to manage diverse regulations in different markets. Industrial groups have speculated that by 2010, more than 75% of all electronic products will be sold in countries with legislation similar to the European Union (EU) Directives.”
Recent international environmental laws and regulations require comprehensive product requirements and chemical substance registrations designed to restrict the toxic effects of chemicals in products during one or more phases of the products’ life cycle. The most comprehensive regulations are referred to as “directives,” and have been adopted by the EU. It’s not just EU driving this trend. Similar environmental regulations are being adopted around the world, including China, Taiwan, Korea, Japan, Central and South America, as well as several Canadian provinces, and U.S. states.
Noncompliance is really not an option for companies selling their products internationally. Companies that fail to comply with such directives may not be able to sell their products in the EU and other countries. Market pressures like this now require companies to manage the health and environmental impacts across their products’ life cycles.
Three of the most important new EU regulations are the Waste Electrical and Electronic Equipment Directive (WEEE), the restriction of the use of certain hazardous substances in electrical and electronic equipment, or RoHS and the Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH).
WEEE requires producers of electrical and electronic equipment to register, arrange and pay for a product’s end-of-life collection and recycling. WEEE shifts responsibility from governments and the key enforcing authority to the manufacturers themselves.
RoHS requires manufacturers to restrict the use of certain metals and chemicals beyond a specified concentration value in electrical equipment. These substances have historically been critical components in the production of electronic products.
As I’ve mentioned in earlier posts, REACH impacts nearly all chemical manufacturers. The directive requires companies to identify and manage risks from chemical substances and provide safety information to all downstream users. Specifically, REACH requires every importer or producer of more than 1 metric ton of a chemical substance to register the substance and provide detailed information on the risks, hazards, uses and end-of-life characteristics.
As supply chains continue to become more global, these directives will have a significant impact on companies, their production processes and their ability to compete globally. For example, the U.S. electronics and automotive industries have spent millions of dollars complying with the WEEE and RoHS requirements since 2002, and more recently, U.S. chemical manufacturers, pharmaceutical companies and other manufacturers are working toward achieving compliance with other directives such as REACH.
To insure successful compliance with these directives, organizations need to take a proactive approach. This starts with developing a sound strategy, a regulatory road map and incorporation of information management systems to collect the required data, organize it and enable reporting both internally and externally. We are working hard at ESS to insure our software makes this effort easier, faster, more reliable and reduces the costs of compliance.
Tags: chemical substances ernst young eu regulations product stewardship reach rohs weee
June 25th, 2008
Deere & Company is one of a growing number of companies that have announced plans to reduce their total global greenhouse gas emissions by a specific number — in this case 25 percent per dollar of revenue from 2005 to 2014. The company has committed to the reduction goal in conjunction with its participation in the U.S. Environmental Protection Agency’s (EPA) Climate Leaders program, which Deere joined in 2007.
Climate Leaders is a voluntary industry-government partnership that works with companies to develop long-term comprehensive climate change strategies. Participants set a corporate-wide greenhouse gas emissions reduction goal and annually report their progress to EPA. Through program participation, companies create a credible record of their accomplishments, reduce their impact on the global environment and identify themselves as corporate climate leaders.
Becoming a corporate climate leader can’t be easy for companies in industries such as oil, energy and equipment because direct greenhouse gas emissions are generated from both plant operations and from the final product. Monitoring and collecting data across the organization as well as tabulating and benchmarking against publicly stated goals requires an enormous amount of data integration and reporting capability.
We have been seeing this trend across the enterprise lately, in all industries, as corporate social responsibility becomes a matter of setting and reaching sustainability goals that are expressed in numbers and percentages. Moreover, we’re seeing a need to allow this kind of data aggregation and reporting from mobile platforms as well as from desktop PCs. As a result, we have set out a product roadmap that meets these needs for our customers more completely and fully than any of our competitors. Fortunately, we have the talent on our team to get this done!
Tags: climate leaders deere & company epa ghg greenhouse gas emissions
June 19th, 2008
Be careful with uncontrolled use of spreadsheets to track and manipulate corporate data. Spreadsheets can become a huge problem for companies that have regulatory reporting requirements or planning requirements, according to a KMPG study. The study concluded that the basis for as many as 95 percent of financial models were flawed. Spreadsheets that collect and manipulate data were deemed inadequate to save companies from corporate risks associated with data quality.
I just finished reading an article in Information Age about analysts at market intelligence company, The Data Warehousing Institute (TDWI), which in 2007 set out to investigate the uncontrolled use of spreadsheets by end-users when undertaking data analysis tasks.
The findings make for sobering reading: of the 200 companies surveyed, including companies of all sizes and from a wide range of industry sectors, 90 percent reported that they were living with the problem of so-called spreadmarts. Spreadmarts are shadow data systems that extract, transform and format data and publish reports.
If you have EHS reporting requirements or if your CSR reporting goals will be measured, you can’t afford to have data aggregated from separate PCs across the enterprise. You must have an integrated platform to collect, analyze and report out uniform data.
In case I haven’t alerted you sufficiently, the article highlights the experience of a major U.S. utility that hiked consumer gas prices by between $200 million and $1 billion due to a mistake in a spreadsheet file. In another example cited in the article, a U.S. mortgage company was forced to write down $2.4 billion in mortgages due to a change control error in a spreadsheet. Spreadsheets over 200 lines long are almost guaranteed to be flawed.
Companies continue to allow employees to take corporate data out of their primary systems, massage it and write it back to a core transactional system because it is very hard to stop that process. We are trying to alert the key decision makers worldwide about the risks associated with inconsistent and poorly manipulated data and encourage the use of an integrated data collection and management platform to reduce the associated complexities, costs and risks.
Tags: csr reporting data quality risks ehs reporting information age kmpg spreadsheets
June 16th, 2008
As a result of ESS’ continued expansion and the growth in global adoption of our sustainability software platforms, ESS has hired Scott Lockhart as Chief Operating Officer. Scott will be responsible for executive oversight of ESS operations, as well as a member of our executive strategy council.
Scott has 15 years of experience in leveraging enterprise software for asset optimization, EHS and compliance with clients representing a variety of vertical industries, including oil and gas, electric utilities, chemicals, aviation, metals and pulp industries.
Scott comes to us from his previous position as Vice President and Executive Board Member of Data Systems & Solutions (DS&S), a division of Rolls Royce. He was focused on enterprise asset management and optimization, equipment health monitoring, process safety and compliance. In addition to business management and growth objectives on DS&S’ executive board, Scott was responsible for the operations, services and software groups. His previous experience also includes key leadership roles at Trinity Consultants and SAIC.
I have known Scott for many years and admired his proactive approach and success in connecting the dots between environmental, health & safety (EHS) and crisis management software and asset management and optimization information systems (EAM) to enhance enterprise-wide business performance and operational excellence. We both strongly believe that by more closely integrating these key information systems, organizations can identify and ensure common data work together to drive improved levels of EHS compliance while increasing reliability and performance of assets. This translates to increased availability of critical assets to improve both compliance and profitability. Reducing complexity and risk that is associated with disparate data silos within EHS and EAM information systems also ensures higher quality data is delivered to the other sources throughout the enterprise that rely on that information.
I am very excited to have Scott on board and look forward to his contribution toward our future growth and success.
Tags: chief operating officer compliance coo eam ehs enterprise software ess scott lockhart
June 9th, 2008
I saw an article this morning from the CSR Reporting Manager of Timberland that underscores what I was talking about in my post earlier this week regarding emerging trends in CSR reporting. While Alex Hausman admits that CSR reports now contain more data, he goes on to make a point I think is the crux of the entire CSR problem: It’s not more data that is needed; it is better, more consistent, data that is material to stakeholders.
“I think the duty of corporate CSR reporting managers is to relentlessly refine the information they release in public reports. Their guidance should be based on what is most material for their stakeholders,” Hausman said.
This clearly indicates the need for the same quality of data that is used in financial accounting.
“Focus on material impacts, provide quantitative targets and then, next year, tell us your progress against that metric. Trend data leads to the understanding of trends. This insight allows companies to allocate resources to the areas of business that most need them,” Hausman concluded.
Today, CSR reporting is an important component of an organization’s overall strategic focus on sustainability. Once the right pieces are in place - strategic alignment, trend data, collaboration, sustained effort - we can start to see progress against some of the most significant challenges our society faces.”
Data. Good, consistent data. Integrated. If you can measure something, you can manage it. We have always believed in this management principle. It’s a trend that helps our business keep growing, too.
Tags: alex hausman csr reporting financial accounting sustainability
June 6th, 2008
Maxine Orens is ESS’ Reference Program Coordinator, supporting our Solutions Management team from our Rockville, Maryland office, near Washington D.C. Maxine has nearly 30 years experience in the EHS and Crisis Management software industry. She has been with the company since 2002 when ESS acquired Essential Technologies.
This is the second installment of our series ESS’ Greatest Asset: Our People.
Tags: crisis management ehs ess maxine orens reference program coordinator
June 5th, 2008
As a result of increasing public interest in CSR reporting in the boardroom—a trend that primarily is being driven by a vocal minority —many 2007 CSR reports are showing a trend toward more data-intensive reporting and less emphasis on “soft” information, such as community activities. While they used to be about cleaning beaches and adopting schools, these reports now provide information such as percentage reductions in GHG emissions.
Interest in environmental “accounting” seems more evident, as evidenced by the detailed and data-focused 2007 CSR reports of such industry leaders as ExxonMobil, Chevron and BP. More demand from institutional shareholders such as Goldman Sachs for good benchmarking information is encouraging this trend and companies are starting to back up their claims with non-financial accounting systems like the kind we sell that can be third-party assessed against standards such as the GRI G3.
Non-financial accounting systems enable a company operating Facility A and Facility B to generate data that are consistently calculated, so that when it is rolled up by division and geographic region, you can count on the numbers at each level of the organization. That’s not so certain with companies that have not yet implemented an integrated, enterprise-level solution. Many companies still record their environmental reporting on spreadsheets, like they used to do their financial accounting more than 20 years ago. Would that be acceptable for financial data today? We see a continued trend as organizations migrate to more accounting-style platforms, including auditable work processes and links to other enterprise systems, to bring non-financial reporting up-to-par with financial systems.
Tags: csr reporting financial reporting ghg emissions goldman sachs gri
June 3rd, 2008
