More U.S. companies are stepping up to address sustainability risks, Ceres, a nonprofit focused on sustainable business, said in a Feb. 28 report. Among other things, the report found that nearly two-thirds of about 600 of the largest companies in the U.S. have now committed to reducing greenhouse gas emissions.
The Turning Point report looks at the governance, disclosure, stakeholder engagement, and environmental and social performance of the companies in 2017 compared to the last review conducted in 2014. Ceres works with other advocates, investors and companies to push for more action on environmental, social and governance, or ESG, issues, with a particular focus on climate change. Investors use ESG criteria to screen whether companies are adequately addressing future risks.
The report covers companies across several industries, including the energy, financial, telecommunications, technology, retail and health sectors.
It found that more than half of the companies now have formal policies to manage water resources while nearly half have policies to protect the rights of their workers. Only 36% of companies have set time-bound, quantitative emissions reductions targets. The report noted that the American International Group Inc. is among the companies that have identified climate change as a risk and an opportunity.
One of the biggest changes since 2014 is the increased level of board oversight. About 65% of the companies have boards that hold senior-level executives accountable for sustainability performance, up from 42% in 2014. And 8% of companies link executive compensation to sustainability practices such as diversity, greenhouse gas emissions and water management, compared to 3% in 2014.
Electric utilities Eversource Energy and Xcel Energy Inc., aluminum company Alcoa Corp. and packaged food company Kellogg Co. are among those that link compensation to some level of ESG performance. Eversource tied executives annual incentives to meeting the company's diversity goal of having woman and people of color comprise at least 35% of new hires and promotions — the company went four percentage points beyond its target. Xcel tied 30% of executive compensation to the company achieving CO2 emission reduction goals over a three-year performance horizon.
A number of companies are continuing to be aggressive in promoting renewable energy. In 2017, JPMorgan Chase & Co. set a goal to finance $200 billion in clean energy through 2025, the largest commitment by a global financial institution. Smartphone maker Apple Inc. mitigates its manufacturing impacts by investing in renewable energy.
The report said Apple is working on more responsible sourcing of minerals from conflict-affected countries. Among other things, all of the company's smelters and refiners for tin, tantalum, tungsten, gold and cobalt participate in an independent third-party audit.
In 2017, Apple and one of its biggest manufacturing partners revealed that some students had been working overtime in a Chinese factory, which violated labor laws. Apple has said it is working to improve the labor practices of its suppliers.
