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Posted: August 17, 2009

Corporate social responsibility

Do sustainable business practices really pay off?

Graham Russell

There are many examples of truly egregious behaviors in the business world. The public has every right to be skeptical of corporate claims related to green, sustainability, social responsibility and other virtuous forms of activity.

Is the momentum among larger corporations toward greening their operations a passing fad? Or is this new respect for the well-being of people, employees, customers and the community the genuine beginning of a long-term trend in which business and society demonstrate the mutual respect and interconnectedness that has been so elusive in the past?

With that said, companies are doing good things and making a difference. Wal-Mart, the world's largest company by revenues has had its share of publicity regarding questionable business practices, even when former CEO Lee Scott raised eyebrows when he announced a massive commitment to sustainability back in 2005.

Wal-Mart is not out of the woods on many of the criticisms leveled against the company. But it's worth looking at a few of its accomplishments, from the hundreds of initiatives, in terms of reducing its consumption of resources and other forms of sustainable activities.

In 2005, the company set a goal to double the fuel efficiency of its massive truck fleet by 2015 from six mpg to nearly 13 mpg. By the end of 2008, it had already exceeded its interim goal of a 25 percent improvement.

Since Wal-Mart has 7,500 heavy tractors on the road logging 900 million miles per year, a one-mpg improvement equates to a cost reduction of up to $50 million per year. By the end of last year, the company reduced its fuel consumption by 30 million gallons, saving the company between $50 million to $75 million in costs, depending on the price of a gallon of diesel fuel. 

In 2008, 57 percent of all waste generated at Wal-Mart stores and distribution systems was diverted from landfills. Wal-Mart China reduced energy use at its stores by 24 percent between 2005 and 2008.  Wal-Mart’s Japanese subsidiary was able to move 16 percent more goods over the same distance through improved routing and more efficient loading practices.

Imagine what could happen if every corporation in the world matched Wal-Mart's achievements.

Let's look at an example closer to home. Newmont Mining Corporation, with $6.2 billion in 2008 revenues, is headquartered in Denver and operates in gold mining, one of the dirtiest industries on the planet.

Newmont's track record on environmental and social issues hasn't been the best. A series of environmental disasters ranging from a major mercury spill in Peru in 2000 to the alleged dumping of toxic waste in Indonesia began to seriously jeopardize Newmont's license to operate in some countries in the early 2000s. But in the past few years the company has made huge strides in cleaning up its act.

The Global Reporting Initiative (GRI) is the best-known protocol for companies to report on their sustainability activities. Based in Amsterdam, GRI received just over 1,000 sustainability reports from major corporations around the world in 2008. In 2007, there was only one A+ level corporation based in the U.S.: Newmont Mining.  Newmont is also on the Dow Jones World Sustainability Index designed to track the financial performance of those companies worldwide judged to have the best corporate sustainability track records.

It's interesting to note that Newmont turned to Denver's local academic institutions to help it figure out how to build momentum in its sustainability efforts. Both the Daniels School of Business at the University of Denver (which was running courses in corporate social responsibility before most of us understood what the term meant) and the University of Colorado at Denver’s Business School have consulted with the company. 

The litany of initiatives recorded in the Newmont report is as impressive as those being made by Wal-Mart and thousands of other huge corporations in the world. You may not prefer Wal-Mart to your corner grocer and you may think gold mining is a non-essential activity, but these companies will continue to be part of our business landscape. Moreover, collectively, the resources they bring to the business of sustainability will move the needle in a way that others can’t. And most of them are doing it because they see the financial and competitive benefits.

It's not just the largest corporations that are making sustainability work to their benefit. Boulder Community Hospital is one example. A small, not-for-profit hospital, the organization is a world leader in sustainable healthcare practices. A switch in 2003 to reusable metal containers for sterilizing surgical instruments saved $150,000 a year. Ten years ago, the main hospital's waste was collected every two or three days. Now, the trash haulers collect it once every 10 days. The 42 percent landfill diversion rate through reuse and recycling represents a significant reduction in landfill tipping fees.

I encourage you to read the Wall-Mart, Newmont Mining and Boulder Community Hospital CSR reports and judge for yourself whether these organizations are serious about sustainability.

To learn more about how to implement sustainable business practices, visit www.corecolorado.org.

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Executive director of CORE, Graham Russell has nearly 25 years of CEO experience, primarily in the environmental services industry.

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