7 Conflicting Trends: Fortune 100 Annual Reports and CSR (Part 2)

This is the final segment of our two-part series on defining and analyzing the main trends that will impact every company going forward, whether they already report on non-financial goals (social responsibility, corporate giving, sustainability, etc.) or continue to put it off for a variety of reasons.

Yesterday, I pointed out the first three trends: Rising Expectations, Increased Pressure from Shareholders, and Supply Chain Engagement. Here are the final four:

4. Shared Knowledge

Though corporate espionage is on the rise, the world’s most respected companies unite rather than compete to advance their own businesses and move markets.

Whether it’s the Sustainable Furnishings Council, Business for Innovative Climate and Energy Policy, EarthShare NY Green Teams or the Boston College Center for Corporate Citizenship, coalitions vary by industry, interest and region. Joining these groups multiplies every member’s gains - from those with a long track record in corporate responsibility to those just getting started – as they together seek innovative strategies that can help them enter new markets and create greater stock value.

As members of The Sustainable Apparel Coalition (SAC) found out -- Macy’s, Nike, Gap Inc, H&M, Levi Strauss, Marks & Spencer, and Patagonia -- working together to lead the apparel industry towards developing improved sustainability strategies and tools to measure and evaluate sustainability performance is the only way forward.

In partnership they will “develop plans to soften the apparel industry’s impact on water and industry consumption, while making commitments to improved waste diversion and the reduction in the use of chemicals.”

5. Clear Leadership

The winners in the battle over increasingly costly energy and natural resources are leaders capable of motivating teams, partners and customers to act as investors.

Over the past 10 years, the intensified competition for raw materials, natural resources and highly-skilled employees combined with the emerging middle-class in China and India have added fuel to strategic concerns for corporate leaders. Companies pushing to become a front runner in their market and community must look beyond the next quarter and communicate goals and vision to shareholders, suppliers and regulators.

For Johnson Controls, this realization has meant ensuring that global stakeholders— including investors—fully understand how the entire organization sees sustainable and responsible business practices as part of the corporate DNA.

Since 2005, Johnson Controls Business and Sustainability Report has effectively communicated their strategic goals and progress in at least six languages. The prominence of sustainability on their website ensures that visitors are always one click away from content that speaks to them like the environmental scorecards tracking progress towards a company-wide goal.

6. Localization

One of the many things companies have learned from the recent earthquake-tsunami-nuclear disaster in Japan is that today’s long supply chains are extremely vulnerable to fallouts from events far outside their control.

It does not need to take a natural disaster for organizations to reconsider distant just-in-time manufacturing and procurement. For decades, low wages, inexpensive raw materials and transportation costs have enabled China’s factories to supply the world with cheap goods . But a decade of rising materials costs, the distance between production and consumption, and a greater need for supply chain responsiveness has pushed organizations to revisit their love affair with global supply chains.

Sysco, a North American marketer and distributor of foodservice products, has pursued decade-long drive to diversify their product selection enables every regional operating unit to respond to local tastes. Rather than focusing on the lowest priced suppliers and the limits of efficient but narrow product lines, Sysco is providing meaningful connections to the people and places behind their food and limiting their exposure to increasing transportation and inventory costs — a serious weakness in its business model.

Their new value chain approach is a competitive advantage that looks beyond the transaction, providing more corporate legitimacy in sales and engaging, responsive product portfolios.

7. Increased transparency/Accountability/Integrity

Finally, the big 800-pound gorilla in the board room. Today’s consumer landscape is saturated with countless marketing campaigns that promise customer a green(er) service or product but are challenged to deliver substantiated data that empowers, educates and connects with buyers values. Don’t pity the company that tells a white lie. Today’s consumer is smart, better informed, and way better connected than ever before. And they are demanding equal treatment in every transaction.

Leadership on transparency and corporate responsibility comes from the top.

As Wal-Mart President and CEO Mike Duke said recently "We believe transparency and accountability are part of being a good and responsible company, and that they also make us a better company. Through the Global Responsibility Report, we are strengthening our commitment to transparency and holding ourselves accountable for what we do within our company and for our communities. We also know there are still many opportunities ahead for Wal-Mart."

Since 2006, when Wal-Mart and Sam’s Club launched the Sustainable Packaging Scorecard, it has been rolled out in Canada, Mexico and China and other countries. As of this spring, Wal-Mart has a total of 627,000 items for sale in stores and clubs that have been entered in the scorecard, a 90 percent increase over 2009 levels. They are striving for openness in a big way. And because of their sheer size, they are having significant impact.

Because customers ultimately touch, feel and engage with products and packaging at the shelf, Fortune 100 Companies are publicly sharing their current green achievements and continuing efforts to become more responsible.

In an increasingly mobile economy where information and misinformation may be found and shared in an instant, online engagement strives to provide every stakeholder open access to the facts. Each company is a work in progress. And while perfection is not yet expected, transparency and accountability are critical elements of any businesses strategy.

So, How Do We Move Forward?

Responsibility is today’s reality.

The stage is set for a year of more open and engaging corporate reporting with these seven issues continuing to influence annual reports and the broader conversation. Remember that each of this mainline issue, in the end, impacts not only your brand reputation, but also your ability to do business and make a bigger profit next year.

--By Michael Sater

Previously:
Part 1: 7 Conflicting Trends: Fortune 100 Annual Reports and CSR