Sustainability analysis in companies Flashcards
Why should companies care about sustainability?
- increasing pressure to report transparently
by government, society, media - increasing use of environmental management systems, standards, reporting guidelines, labels
- increasing initiatives with influence on policys (e.g. PEF)
Why is the life cycle perspective relevant for companies?
sustainable impacts often occur in early stages of the supply chain
(tier 3 & 4: raw material processing & raw material production)
these impacts have a significant influence on environment & society
What is CSR?
Corporate Social Responsibility
- concept whereby COMPANIES (not products) integrate social & environmental concerns in their business operation & interaction with stakeholder
Goal is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on:
– Environment (e.g. pollution prevention, resource efficiency)
– Consumers
– Employees (e.g. training, human rights, equality, health)
– Communities (e.g. community development)
– Stakeholders etc.
What are challenges of CSR and sustainable ratings?
Lots of guidance is available (e.g. GRI for reporting)…but implementation varies significantly, e.g. because:
- it is voluntary & flexible
- data is missing for the whole supply chain
- greenwashing risk
- reporting can become burdensome because value chain assessment is too complex
- not enough transparency i.e. not all methods for the rating calculation are disclosed
What are the benefits of CSR and sustainability ratings?
for enterprises:
- more informed decision making
- better risk management
- increasing safety & health of workers
- better reputation
- investments
for society:
- sustainable companies
- sustainable economic system
- increased transparency
- communication
Who provides important tools and guidelines for CSR?
Global Reporting Initiative (GRI)
–> International, independent organization who Helps businesses, governments etc. to understand and communicate the impact of business on critical sustainability issues, such as climate change or human rights
- Produce standards for sustainability reporting, the GRI standard
- Strategic partnerships with international organizations, UN Global Compact,
What aspects does CSR cover?
- human rights
- labour
- employment practices
- combating bribery
- corruption
- environmental issues
For whom is CSR reporting done?
for different stakeholders:
company
government
consumers
…
Are CSR reports mandatory?
For companies in the EU with a size of > 500 employees
What is corporate sustainability performance?
Measures the extent to which the companies implement the:
- environmental
- social, and
- economic
factors in its operations and their impact on the business and society.
Give examples of sustainability ratings of companies.
Dow Jones Sustainability Indices
- Benchmark for sustainability,
- tracks the stock performance of the world’s leading companies in terms of sustainability criteria
–> different ratings consider different aspects and have different rules
How does the criteria definition work in CSR?
Criterias are defined for all three dimensions.
- 50% general criteria for all sectors
- 50% industry specific criteria
how does the weighting function of CSA function?
- Dimensions: consists of 6-10 criteria
* Criterion: 2-10 questions
What is the question score of CSA?
number of points received (questions)
- question weight (within the criterion)
- criterion weight (within the questionnaire)
Summer der question scores = total score
What are general criteria for the environment?
environmental reporting
What are general criteria for the economy?
risk & crisis management
What are general criteria for the social dimension?
social reporting
What is greenwashing?
- attempt to capitalize on the growing demand for environmentally sound products
- false impression that a company or its products are environmentally sound
What can be done against greenwashing?
- laws & regulations enforced by the government
- transparent & open communication & reporting about the methods used, where the data is coming from and so on
- monitor the companies actions
- governments and interested stakeholders should work together to collect and spread information on sustainable business practices
Why sustainability ratings for companies? How are they done and what aspects do they consider?
provide stakholders with infos about the sustainability performance of a company
according to predefinded rules for investements, communications and ideas (–> the rules differentiate depending on who is doing the assessment)
just to see how the company is doing
done by a third party
companies are asked for additional information
considered aspects: economic, financial, environmental, social
–> one single score in the end to rate a company
