Is sustainability a major concern for U.S. companies, or is China moving to the fore?
Many Americans believe that the United States is the forerunner of sustainability and environmental initiatives. However, the United States may be falling behind when compared to other emerging multinationals in China and beyond.
There are many corporate sustainability initiatives that encourage responsible business practices that include social, environmental, and ethical issues. The United Nations Global Compact and the Global Reporting Initiative are two of the more influential initiatives. The United Nations Global Compact, launched in 2000, is the world’s largest corporate sustainability initiative with more than 1,100 participants. The Global Reporting Initiative (GRI), founded in 1997, helps businesses, governments, and other organizations better understand their various impacts on society. The United States, as well as the majority of countries worldwide, has several corporations and organizations involved in both initiatives.
Companies in the Global Reporting Initiative (GRI)
To meet GRI environmental reporting standards, companies must meet certain criteria regarding energy, biodiversity, and emissions, and embrace transparency. Aetna is an American healthcare company that is a part of the GRI. It has been working toward corporate sustainability by not only reducing energy consumption and use of environmental resources, but also applying various principles of sustainability wherever possible. In 2016, The Aetna Foundation gave $2 million in grants to 23 nonprofit organizations as part of its Cultivating Healthy Communities initiative, which aims to increase physical activity, spaces for walking and biking, and access to healthy foods. Aetna made various environmental goals for 2017, including encouraging the use of public transportation or alternative-fuel vehicles to curb pollution, promoting a reduction in energy consumption by 2 percent, and incentivizing renewable energy where feasible. It also has long-term goals such as reducing paper consumption by 5 percent and increasing renewable energy production by 15 percent within five years.
Haier, a Chinese multinational electronics and home appliance company, is also part of the GRI. It has been actively moderating its impact on the environment and has even conducted tree-planting events in local communities within China. Recently, it dismantled a smokestack, which cut sulfur dioxide emissions by approximately 56 tons per year. The company is committed to giving back to society as well as promoting education within China, since in some areas of the country, many children do not attend school.
When it comes to corporate sustainability, which almost 75 percent of Americans believe is an issue of extreme importance, the United States lags behind several countries worldwide. According to the GRI sustainability disclosure database, the United States has declined in the number of corporate sustainability reports filed, from 570 in 2015 to 563 in 2016 and only 367 by 2017. Other countries such as China, India, and Malaysia have been rapidly increasing in their number of sustainability reports. In 2015, 406 reports came out of China through the GRI. In 2016, this number rose to 681. By 2017, China had more than double the number of sustainability reports than the United States.
Companies in the United Nations Global Compact
Over 82 percent of companies involved in the United Nations Global Compact credit their sustainability progress to participation in the compact.
One company in the UN Global Compact located in China is Lenovo, a technology company that sells computers, smartphones, tablets, and other electronics. As part of the UN Global Compact, it has approached more sustainable business practices by focusing on its environmental footprint while also using sustainable products and manufacturing. The company does this by deploying recycled materials in many of its products and using plastic alternatives such as bamboo and sugarcane for packaging.
One of the participants from the United States is Kosmos Energy, an international oil company. It has put forth initiatives protecting marine life, most recently focusing on whales and sea turtles offshore São Tomé and Príncipe. The company conducts its seismic operations so as to reduce any impact on marine life. Kosmos Energy also increased its ability to quickly and effectively respond to an emergency and has greatly improved the quality of its equipment, having zero spills or fines since 2017.
When looking at data from the UN Global Compact, the United States has 548 participants while China has 265. However, other emerging multinationals are still ahead. Brazil has 834 participants, Mexico has 678, and Colombia has 565. The UN Global Compact is affiliated with the Global Reporting Initiative, though their standards are different. While the GRI aims to assist organizations to understand and report their impacts on various issues, organizations involved in the UN Global Compact must follow ten principles regarding human rights, labor, environment, and anticorruption. The three environmental principles state that companies “should support a precautionary approach to environmental challenges, should undertake initiatives to promote greater environmental responsibility, and should encourage the development and diffusion of environmentally friendly technologies.”
Moreover, with corporations from countries around the world rapidly becoming more involved with responsible business initiatives and mitigating their impacts on the environment, it is important for the United States to do so as well. To counter the decline of the past few years, the United States should incentivize participation in socially responsible business initiatives.
Opinions in this article are the author’s and do not necessarily reflect those of Cornell, Johnson, or the Emerging Markets Institute.
