Korea leads all other countries in the Dow Jones Sustainability Index (DJSI) Annual Review with the flagship Samsung Electronics Co., Ltd. being named the world’s most sustainable technology company a few days ago. With a total of four Korean companies chosen as sustainability leaders in their respective supersectors, the green tide has shifted from Europe to Asia: the last time any country had four high achievers was with Switzerland in 2008. The four Korean eco-driven benchmarks are:
- Samsung Electronics Co., Ltd. (Technology)
- Hyundai Engineering and Construction (Construction & Materials)
- Lotte Shopping Co., Ltd. (Retail)
- KT Corporation (Telecommunications)
Although Lotte repeated its title as the most sustainable retail company worldwide for two years in a row, the prominence of Korea having four times the number of Supersector leaders in 2011 as it had in 2010 shows that the Korean government, corporations and associations hold Sustainability as their top priority. In June, this Blog included Why Samsung Can Win with Green (Eco) Products: Samsung’s DJSI result is another feather in its cap toward winning the hearts of green consumers in the consumer electronics market. This remarkable green momentum within Korea shows there is no turning back, for the sustainability bar has been raised.
The chart below shows how Korea has helped accelerate the gain in Asian market share of Sustainability leaders across the globe. The Asia region has doubled its share of EcoLeaders within a period of only two years. That share gain has come at the expense of Europe which lost 16% of share while the Americas region has remained flat.
Contrary to Asia’s trend, the U.S. only had one sustainability leader in the Food & Beverage Supersector: Pepsi Company. Coca-Cola Company was surprisingly dropped from the DJSI along with HP and PG&E because none met the minimum criteria in the DJSI index relative to their industry peers. The DJSI uses a composite index for its corporate sustainability assessment with criteria that include:
- Energy consumption,
- Climate change strategies,
- Human resources development,
- Knowledge management,
- Stakeholder relations and
- Corporate governance.
So what must US companies do to rebound from their lackluster Sustainability efforts?
1) Make Sustainability Goals part of the Corporate Charter. Companies can only manage what is measured. There is a reason Pepsi Co. has emerged as a leader. Indra Nooyi, CEO, identified Pepsi’s new strategy as “Performance with Purpose” and sought to invest in a healthier future for people and the planet. She made sustainability the foundation for future growth.
2) Appoint an Executive whose sole responsibility is the Sustainability Charter. The buck would stop here with the executive who is in charge of implementing a cohesive strategy for eco-friendly products, processes and services. Many of the Fortune 500 have begun to utilize Chief Sustainability Officers, yet the important step would be to ensure that the sustainability executive reports to a company’s CEO with accountability.
3) Benchmark the competition and revise the goals quarterly. As Andy Grove, former Chairman and CEO of Intel, said, “Only the paranoid survive.” The chain of environmental sustainability within a company will only be as strong as its weakest link. By benchmarking the competition, a company will know what it takes to be the best-in-class. Then the leaders can decide how much they are willing to invest in time, money and resources for never-ending improvement toward DJSI-qualified criteria.
4) Conduct an annual Sustainability Assessment. While the DJSI assessment may be the most well known metric for large corporations, there are other options available that will help a firm zoom in on areas for improvement with more objective insights than what could be obtained from an internal sustainability assessment.
How can the US best establish Eco-leadership among the other global leaders of corporate sustainability? Your comments are welcome.
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© 2011 by Ed Valdez
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