Ceres and Sustainalytics published a joint report on the sustainability progress of 613 of the largest, publicly traded United States companies. The report, Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability 2014, looks at three broad categories of sustainability performance: Governance, Stakeholder Engagement, and Disclosure.

The report helps companies assess their performance against peers. It allows them to see what businesses are doing across several economic sectors.

In some cases, companies have accelerated and broadened their sustainability efforts. These companies provide leadership. They show that sustainability is an essential strategy for building long-term shareholder value.

Key areas of improvement from the 2012 evaluations, and where improvement is still needed, are:

Governance

  • Percentage of companies that have executive compensation tied to sustainability performance: 24% in 2014, an increase in 15% from 2012
  • Percentage of companies in which directors formally oversee sustainability performance: 32% in 2014, an increase from 28% in 2012

But corporate boards are not taking enough responsibility for overseeing sustainability efforts.

Stakeholder Engagement

  • Percentage of companies engaging stakeholders on sustainability issues: 52% in 2014, an increase from 40% in 2012

  • Only 3% of companies are in the top performance tier for stakeholder engagement. These companies are using several tactics to engage investors. They include communicating with investors about sustainability performance and innovation at annual meetings. They also engage shareholders in two-way conversation on sustainability topics.

  • Only 36% of companies are disclosing information on how they engage stakeholders on sustainability issues.

But stakeholders are not involved in the sustainability planning process on a consistent basis.

Employee Engagement

  • Percentage of companies that have some program in place to engage employees on sustainability practices: 40% in 2014, an increase from 30% in 2012.
  • Only 6% of companies of are in the top tier. These companies systematically embed sustainability into company-wide employee engagement. In some cases these leaders compensate employees for reaching sustainability performance targets.

One key to the success of a sustainability plan is deeper employee engagement on sustainability practices.

Supplier Engagement

  • Percentage of companies with some program to engage suppliers on sustainability issues: 33%
  • Percentage of companies that engage suppliers in dialogue on sustainability: 6%

A company’s supplier sustainability program is ineffective without direct engagement on sustainable practices.

GHG Emissions

  • Percentage of companies with time-bound targets for GHG emission reductions: 35%
  • Percentage of companies with quantitative targets to increase renewable energy sourcing: 6%

Though many companies are taking steps to reduce GHG emissions, few companies have the necessary time-bound targets for such reductions.

Water

  • Percentage of the 103 water-intensive companies evaluated that assess water-related business risks: 50%, down from 55% in 2012
  • Percentage of the 103 water-intensive companies evaluated that prioritize water sustainability efforts in water stressed regions: 26%

Companies are not doing enough to address the major concerns of an increasingly water-constrained world.

Human Rights

  • Percentage of companies with supplier codes of conduct that address human rights in supply chains: 58% of companies, an increase from 43% in 2012
  • Percentage of companies with formal policies protecting to human rights of their direct employees: 31%
  • Percentage of companies which explicitly prohibit both forced and child labor: 13%

Many companies have addressed human rights in their supply chains in some fashion. But a general lack of explicit and enforceable supplier codes of conduct leaves between 21 and 27 million people in forced labor situations.

The report found that many companies are taking small steps to improve their sustainability. Yet, given our environmental and social challenges, many companies are not doing enough to meet the required level of change. Those companies have gone above and beyond in their sustainability efforts are providing essential leadership. They convey the message that suitability is the only strategy for building long-term shareholder value. Ceres believes that more businesses need to up their level of action. Doing so will better help the world face and thrive in the changing, resource-constrained 21st century economy.