Sustainability Performance Term Paper Sample
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Intel, ConAgra & Walt Disney Sustainability Ranking in 2013
Voluntary corporate sustainability reporting by Disney, Intel and ConAgra reveals great awareness to the social and environmental performance, coupled with a concomitant desire to report their respective efforts to the public. This is part due to the increasingly stringent ethical and regulatory frameworks, but perhaps most importantly, because of the public’s expectation of companies to conduct business ethically. Corporate citizens is critical to improving investor relations, reducing and streamlining operating costs, better environmental visibility, possible sustainable competitive advantages stemming from a resource-based view of the firms and perhaps most importantly, the seeming fear by companies to lose legitimacy by falling behind their closest competitors in social responsibility reporting/initiatives. All the three organizations appear to realize that social responsibility is a societal norm and aspire to live up the expectations of their varied stakeholder constituencies. Even so, the initiatives by individual companies are dependent on their respective industries, nature of operations, and core businesses, which means that despite the existence of standardized reporting frameworks there still are differences.
Walt Disney is easily among the largest and most iconic players in the global entertainment industry, operating media networks, cruise liners, domestic television stations, theme parks and resorts, consumer products and studio entertainment. The company affirms its commitment to responsible business conduct as integral to its brand, its relationship with stakeholders. The company focusses on six key areas i.e. ethical conduct, responsible content, environmental stewardship, respectful workplaces, civic engagement and responsible supply chain (Walt Disney 56). Ethical conduct premise hinges on the integrity, compliance with the law and integrity while responsible content involves the creation and marketing of quality products. Disney also strives to engage with communities in which it operates (civic engagement), support sustainable production of its merchandise (supply chain), besides fostering respectful, inclusive and safe workplaces. The company also works to ensure improved children welfare by promoting healthy living, environmental conservation creativity and strong communities.
Intel’s report fully or partially includes content as recommended by the International Integrated Reporting, the UN Global Compact, and the Global Reporting Initiative. The company is the largest voluntary purchaser of green energy according to the US Environmental Protection Agency (EPA). Further, Intel’s water conservation efforts resulted in saving 46 billion gallons of water between 1998 and 2013, enough to meet the needs of 430,000 average households. In addition, the company’s employees were involved in a program to give back to society, volunteering more than 1.2 million hours ($28 million worth) working in their communities in 2013. The company also achieved its objective to source inputs for its microprocessors in ways that did not benefit parties involved in conflicts across the world (blood minerals), attained excellent safety performance relative to the US semiconductor industry average, launched programs to promote gender education, accelerate supplier sustainability practices, and encourage transformation and innovations in education.
ConAgra also excelled in conservation and safety enhancement, having reduced its water use by 6%, reduced environmental impact by $26.6 million and repurposed 93% of leftover materials that would otherwise have been wasted. The company enhanced its safety performance by implementing a robust safety program founded on accountability, teamwork and leadership, leading to a reduction in the Occupational Safety and health Administration rating by 15%. ConAgra also promoted nutrition and health, provided leadership education, supported education and carried on with its efforts to mitigate child hunger in the United States.
Intel performed best overall with 77%, compared to Disney and ConAgra, which had 62% and 60% respectively. With regard to environmental intent, Intel also led the two companies. The topics under this category include the existence of a contact person, an environmental management structure, environmental education, management system, stakeholder consultation, accounting and policy statements on biodiversity, climate change, habitat, as well as an organizational vision on the same and recognition of potential challenges in attaining the said vision. ConAgra and Intel contact persons, but Disney only includes contact address(physical address) for the company, but all three companies include clear policy statements and visions that show recognition of the importance of environmental sustainability, seriousness of climate change and the need for them to lead the way in ensuring sustainability. Intel, ConAgra and Disney reports include clear and elaborate statements on caring for the planet, energy efficiency, climate change, carbon footprint reduction, and waste reduction. ConAgra does not include information on environmental stakeholder consultation, biodiversity promotion, habitat/ecosystem conservation, even though the company’s core business involves agriculture and the environment (unlike Disney and Intel). Intel excels more in this division because of a clear environmental management system, education, application of technology to environmental conservation, and clear vision among other aspects (Morhardt, 2006; Walt Disney, 2013; Intel, Inc., 2014).
With regard to environmental reporting, all the three companies include multiple PSI elements, the most important being greenhouse gas emissions reduction, energy use and green energy utilization, water conservation, and waste management. Disney has attained 50% of its long-term zero net direct greenhouse gas emissions reduction, reduced electricity consumption by the existing assets by 10%, reduced wastes sent to landfills by its parks/resorts by 50%, and minimized water utilization to just 8 billion gallons with plans to reduce usages even further. ConAgra did well too, reducing its water use by 6%, recycled 93% of leftover materials and cut back its environmental impact to the tune of $26.6 million. The company also pursued efficiency-enhancing strategies including the reduction of its natural gas and electricity utilization by 4.1% and 1.6% respectively, besides working with the EPA on the Energy Star Program. ConAgra also worked with its partners across the supply chain to ensure sustainability (especially transporters), developed and implemented a comprehensive sustainable transportation strategy. The total water utilization was down by 7% compared to 2008. The company’s use of third party accreditations/standards including the EPA, the Dow Jones Sustainability North America Index, the World Business Council’s Global Water Tool and the WBCSD’s Mean Annual Relative Water Stress Index among others also gave it an edge over Disney.
The company has also excelled in solid waste management, including the implementation of a zero Waste-to-landfill journey, which is similar to Disney’s, but while Disney had achieved about 50% of the objective, 75% of ConAgra’s facilities send less than 5% of the solid wastes to landfills. While this has a lot to do with the nature of solid waste by Disney and ConAgra, on paper, it appears that ConAgra did better. The nature of ConAgra’s wastes (including food) makes it feasible to repurpose them as against Disney. All the three companies have extensive supplier engagements to ensure sustainability, but ConAgra’s effort is reduced give the short backward and forward supply chains as an agricultural produce processor and marketer. Disney and Intel have considerably long supply chains, with Intel having to source for key minerals from across the world (ConAgra Foods, Inc., 2013; Intel, Inc., 2014; Walt Disney, 2013).
Intel performs similarly to Disney and ConAgra, but performed them in several key areas. These include high voluntary energy consumption according to the EPA, conservation of 46 billion gallons of water, which is higher than what was reported (or not) by both Disney and ConAgra. The ConAgra’s report is also potentially misleading because it presents the performance of individual segments of the organization as opposed to the entire organization, which gives the impression of ignoring areas that contrary to the position that the company wants to portray. The performance is summarized below.
Social Intent and Reporting
The areas of social intent emphasized in the three companies’ reporting include safety, community service, workplace environment and industrial relations. The three companies invariably include aspects of employee occupational health and safety, diversity, and inclusiveness, employee and community welfare, learning as well as development (Global Reporting Initiative, 2013; Morhardt, 2006). The similarity is also evident in the social performance area, but with several key differences that especially set Intel apart. Disney’s use of its cultural influence to promote social welfare certainly stands out, with the company’s employees having volunteered in excess of 8 million hours, compared to Intel and ConAgra’s 1,200,000 and 7,000 respectively. While all companies had elaborate occupational health and safety programs, Disney included efforts to promote the same across the chain, while Intel achieved the goal of sourcing its minerals from outside the Democratic Republic of Congo and other conflict-ridden countries, where warring parties use mineral proceeds to fuel more conflict. In addition, Intel attained the highest safety performance, twice higher than the semiconductor industry average, empowered employees to participate in community services and donated Galileo development boards to the education industry.
Intel also led in the combined social intent and social reporting, with 69%, while Disney and ConAgra posted 66% and 57% respectively. ConAgra’s low involvement in direct community service, coupled with marketing-oriented activities of distributing foodstuffs may have colored its ranking with respect to its continued efforts in fighting child hunger in the United States. Further, ConAgra’s community involvement and education covers a very narrow scope compared to both Disney and Intel. On the same score, while Disney invested considerably high person-hours into community service, Intel’s equally impressive investment and scope of its approach in empowering employees in doing so makes its efforts more sustainable. The company’s performance is bolstered even more because of the scope of its involvement in education, and the supply chain.
Intel’s dominance of the performance is also evidenced in the reporting and performance as shown in the chart below. Intel posted a score of 77%, compared to 66% and 62% by Disney and ConAgra respectively.
Comparison of Sustainability and Financial Performance
ConAgra posted the highest growth in assets, equity, sales, profit and debt to equity ratio. It however, had an average sustainability score, having fallen below both Intel and Walt Disney. However, ConAgra had the worst return on sales, debt to equity. On the other hand, Disney had a near average financial performance of the three companies, with the exception of the fact that it had the lowest expansion in liabilities and returns to equity. This performance mirrors its PSI score of 66%, which is just between the two companies. On the other hand, Intel’s financial performance was in a near complete contrast to ConAgra. The company posted declining sales, profitability, and EPS. The company also posted the highest returns on equity and sales, and as against ConAgra’s high debt to equity ratio, Intel had the lowest ratio. Overall, ConAgra had the best ranking with 16 points while both Walt Disney and Intel posted the same performance with 19 points each.
The financial and sustainability performance reveal little as to whether investments in sustainability is related to the company’s financial performance, in part because of the fact that ConAgra had the poorest PSI score in 2013 but had an impressive financial performance, with Intel posting an excellent PSI score but a mixed financial performance. It is also possible that sustainability investments are associated with certain measures of financial performance as against the overall financial performance. If this is the case, then Intel and ConAgra’s opposite performances in returns on equity, return on sales, debt to equity ratio and changes in EPS could be a pointer to their respective PSI performances. This possibility is, however, negated by Walt Disney’s PSI and financial performances, not least because it performed worse than Intel, but recorded a near similar financial score as Intel.
Linking sustainability performance to financial performance is, however, an easy answer to hugely complex strategic questions. This is in part because sustainability investments are expected to yield benefits to the company in subsequent periods as against instantaneously. For instance, if Intel’s sustainability performance in 2013 is great, then it is likely to gain a higher brand value and equity, which translates into positive increases in sales, equity values and credit ratings, etc. in the later years, which in turn translate to higher sales and equity performance among others. This not only supports the hypothesis linking PSI performance to some measures of performance, but also shows that the current financial performance is a function of past (as against current) PSI performances. However, the performance of any large and complex organizations such as Disney, ConAgra, and Intel is affected by a large variety of strategic factors that make it difficult to isolate the influence of corporate social responsibility. These include the respective investments in research and development, level of industry competition, technological changes, brand value and equity, success of key products, political and economic variables among others (Rugman & Collinson 164; Yip & Hult 84).
Intel’s strategic environment perhaps best illustrates the complex strategic environmental factors affecting their performances in the year 2013. Intel’s performance is affected by changing customer product needs competitive pricing pressure, customers’ inventories level, and the market acceptance of its products. Other factors include the prevailing business conditions, which include the downturns in the computing industry, global and regional economic performances. The consumer confidence and disposable income levels (influences by changes in market conditions such as government borrowing and expenditure, taxation, credit market movements, employment, inflation, and commodity prices) also shape demand, with high price products such computers and low price products such as ConAgra’s foodstuffs having different income elasticities of demand.
ConAgra Foods, Inc. "2013 Citizenship Report." CSR. 2013. Web.
Global Reporting Initiative. Sustainability Reporting Guidelines: Implementation Manual. Manual. New York: Stichting Global Reporting Initiative , 2013. Web.
Intel. Risk Factors. 18 Dec 2014. 17 Feb 2015. <http://www.intc.com/intel-annual-report/2013/10K/16-risk-factors.html>.
Intel, Inc. 2013 Corporate Responsibility Report. San Jose, California: Intel, 2014. Web.
Morhardt, Emil. "Pacific Sustainability Index 2.0." CSR. 2006. Web.
Rugman, A. M. and S. Collinson. International Business (6th Ed). London: Pearson Education, 2012.
Walt Disney. Disney Citizenship 2013 Performance Summary. Corporate Social Responsibility Report. Burbank: Walt Disney, 2013. Web.
Yahoo Finance. Walt Disney. 2015. 27 Jan 2015. <http://finance.yahoo.com/q/pr?s=DIS>.
Yip, G. and T. Hult. Total Global Strategy. New York: Pearson Education., 2012.
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