A preliminary examination of sustainable disclosures on Fortune 500 company websites.

Author:Kunz, Michelle B.
 
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BACKGROUND

Sustainability has been termed an emerging megatrend (Lubin & Esty, 2010), as the environmental issues have steadily increased in the list of issues corporate executives consider when reporting corporate standing, as well as finding ways to create value for stakeholders. Furthermore, Holden (2012) cites a 2011 McKinsey survey that indicated one third of respondents indicated the top reason for pursuing sustainability initiatives was to lower operations costs and improve efficiency. This is also supported by Heffes (2010) as she reports that sustainability and green initiatives have a place in corporate strategy, but corporate executives still have difficulty conveying to their stakeholders how such actions create value. Finally, Stafford and Hartman (2013) echo these sentiments, stating that today's corporations recognize the value of increasing sustainability. The authors cite reduced costs and risks, preservation of resources, goodwill among regulators, stockholders, customers and other stakeholders. Thus business understands how sustainability will benefit the corporation, but still need to convey these benefits to stakeholders. Corporations recognize that it is imperative they meet stakeholder expectations, while addressing sustainability, however Ballou, Heitger, Landed and Adams, (2006) also emphasize business must demonstrate how sustainability also creates social and environmental value. In order to operationalize these efforts, essentially organizations are systematically implementing eco-effective management practices that are strategic in nature (Huppes & Ishikawa, 2005). Burnett, Skousen and Wright (2011) found empirical evidence to support the proposition that sustainable corporate effort goes beyond just environmental impact, to create long-term value for shareholders and the firm as well.

The push to provide information regarding sustainable actions and corporate social responsibility can be traced back to the social movements of the 1960s and 1970s (Kleine & von Hauff, 2009). In 1987 the Brundtland Report (Casimir & Dutilh, 2003) introduced the concept of sustainable development, stating that the needs of the present should be met without compromising the ability of future generations to meet their needs. By 1992, the United Nations Conference for Environment and Development was globally accepted (Kleine & von Hauff, 2009). Research in the area also has a history dating back to the 1970s (Montiel, 2008). Articles at that time addressed corporate social responsibility (CSR), while a couple decades later corporate sustainability (CS) began to appear. More recently, 2000-2005, articles that focused on environmental management (EM), were greater than the number of CSR and CS articles combined. Additionally, the Academy of Management implemented initiatives in this direction, including special issues of the Academy of Management Review and the Academy of Management Journal. As these topics merge and take a permanent place on the business agenda, it necessary to examine how corporations are disseminating information about their sustainable activities. In fact, there were 7,700 companies in 130 countries that voluntarily signed the UN global compact in 2008 (Lozano, 2012), and by 2010 this number had increased to 10,000 companies in 130 countries ("Overview of the UN Global Compact," 2011).

DEFINITION OF TERMS

In 1996, The International Organization for Standardization defined a corporate environmental policy as a "statement by the organization of its intentions and principles in relation to its overall environment performance"(Ramus & Montiel, 2005) . In turn, this provided the framework necessary to set environmental objectives and targets and allow corporations to commit to implementation of proactive policies aimed at sustainability. Yet today, confusion exists in terminology and definition of sustainability and related issues. Sustainability, environmental sustainability, sustainable development, corporate social responsibility, as well as corporate responsibility and corporate sustainability are all used, with similar, while varying definitions (Roca & Searcy, 2012). In some instances, terms are used interchangeably, and definitions can be as varied as the terminology used. Dilling (2010) indicated that there is no globally accepted definition of CSR or sustainability reporting. To add to this confusion, while many consider sustainability from the ecological or environmental perspective, others address sustainability from the "triple bottom line" approach, with the three dimensions of economic/financial, environmental and social responsibility (Montiel, 2008). Montiel continues by positing that CSR and CS are converging, with environmental issues a subset of CSR. Thus, corporate social responsibility could or would include an environmental/corporate sustainability component. This perspective of sustainability as a component included in corporate social responsibility is supported by others as well (Dilling, 2010; Katrinli, Gunay, & Biresselioglu, 2011; Matthews & Rusinko, 2010; Shih-Fang & Her-Jiun, 2007). Sustainability is part of the corporate vision for companies in which it is integrated across the business functions of the organization (Lubin & Esty, 2010), and as such may be integrated into annual reports or other reporting mechanisms of the corporate reporting function. To further add to the confusion, corporate reports also use various names, such as corporate responsibility or social responsibility, as well as sustainability report (Roca & Searcy, 2012).

CORPORATE EXAMPLES

Sustainability efforts have been implemented and integrated across many companies (Lubin & Esty, 2010). Some examples include: DuPont's attempt to become more eco-efficient through "zero waste" and increased future earnings by removing businesses with large eco-footprints from their operations. Coca-Cola for example, created new packaging which was modified to be more light-weight and saves the company tens of millions of dollars. By 2015 their new vending machines are to be HFC-free, reducing greenhouse gas emissions by 99%. Walmart launched Sustainability 360 initiative with goals of creating zero waste, cutting greenhouse gas emissions, purchasing 100% renewable energy, and selling products that sustain the environment and world resources. Companies are adopting sustainability approaches that create more efficient operations, positively affect the bottoms line, and engage outsiders to consider sustainability (Lubin & Esty, 2010).

The technology industry seems to be leading the charge, while banking and the oil and gas industries are poor performers. However, the report which identified the top 25 Global Corporate Reputation index included companies from across the board. Some of those identified as good corporate citizens were: Adidas, Apple, Avon, Bosch, Canon, Coca-Cola, Danone, Electrolux, Ford, Google, Heinz, Honda, Lego, McDonald's, Microsoft, Nestle, Mike, Nokia, Phillips, Puma, Sharp, Sony, Toshiba, Via and Volkswagen. Other corporations identified for their sustainability efforts include Campbell's Soup (Kruschwitz, 2012a), Dell (Kruschwitz, 2012b), Johnson & Johnson (Borkowski, Welsh, & Wentzel, 2010), as well as Coca-Cola's water stewardship program (Walsh & Dowding, 2012). Wal-Mart has invested heavily in sustainability, both within the corporation itself, both in-store as well as in productions facilities (Ladd, 2010). Furthermore, Wal-Mart has been aggressive in promoting sustainability in the processes of suppliers worldwide.

Intel is the largest purchaser of green power in the U.S (Kruschwitz, 2012c). According to Intel, sustainability creates value in four ways: brand value, operational excellence and cost savings, revenue and new market opportunities, and risk management. Intel realizes sustainability efforts may increase costs but has been willing to spend more on green energy as a way to increase future demand and long-term value for their company. To deal with sustainability-related issues, Dell has created a hub within the company (Kruschwitz, 2012b). Four individuals report to a director of sustainability. The areas in which they focus include: 1) environmental strategy, 2) social strategy, 3) operational strategies, and 4) services organization which focuses on performance and bottom-line effects. One goal reached by Dell included reducing power consumption of desktops and laptops by 40%. Also, packaging goals of the company follow three C's created by the company: 1) cube, reduce the size of the package, 2) content--make the materials used more sustainable, and 3) curb--package materials are recyclable or compostable. Greif, a leading manufacturer of industrial packaging indicates four keys to their sustainability agenda: 1) attention to sustainability by top management, 2) approach to sustainability collaboration, 3) business model innovation, and 4) new internal organizational structures (Kiron, Kruschwitz, Reeves, & Goh, 2013). In a survey created by Greif to analyze the response to sustainability within its business model, results indicated that 48% of the companies changed their business model, 46% said the sustainability activities added to profits. Additionally, of the half of survey respondents who made three to four changes to their business model, they profited from their sustainability activities in comparison to only 37% of those who only changed one aspect of their business model. Lastly, Timberland positions sustainability as the triple bottom line by focusing on what they refer to as the four pillars (Kruschwitz, 2013). These pillars include building sustainable living environments at their factories, community service and greening communities, corporate footprint, and product footprint.

Companies implementing corporate sustainability are creating stronger sustainability efforts that go beyond eco-efficiency and pollution control (Young & Tilley...

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