The old-school view of environmental and social responsibility as a financial drain is being replaced by a new awareness by corporations that sustainability is crucial to their bottom line, says an energy research expert.
Good corporate stewardship has become a critical driver of a company’s future profitability and competitiveness, said Devin Crago, a research analyst with New York-based Innovest Strategic Value Advisors, which provides advice to investors in the mining, energy and communications sectors.
“What we are seeing nowadays is that more and more financial institutions are viewing sustainability as a key strategic issue that can add value for shareholders,” Crago told a Canadian Association of Petroleum Producers (CAPP) luncheon in Calgary last week.
A company’s effective management of such non-financial aspects of their business can bode well for superior financial and stock market performance, said Crago, adding that traditional accounting-driven analysis that looks solely at static past performance figures misses up to 85 per cent of a company’s “true value” picture.
Such intangible values include: n Stakeholder capital, which includes labour relations, a key aspect of a company’s productivity and profitability.
* Human capital, which includes effective recruitment and retention strategies, attention to health and safety issues, and progressive workplace practices.
* Eco-value, where a company explores new business opportunities in areas such as clean fuels and renewable energies.
* Sustainable governance, including the ability to adapt to best practices.
Crago said tightening environmental regulations, international treaties such as the Kyoto accord, globalization and increasing investor pressure for full risk disclosure are making Innovest’s brand of research more relevant.
“One way to think of us is like a ‘green’ Moody’s – we rate companies on their social and environmental performance and investors, in turn, use that research in their investment decisions.”
Meanwhile, Alberta’s oilpatch honoured some of its greatest and greenest with Steward of Excellence awards, which were presented at the CAPP luncheon.
“The high-quality entries we received bear witness to the fact that stewardship is becoming more than a program, but deeply ingrained as an ethic in the fabric and the mainstream of the business culture in this business,” said Gary Mann, CAPP Stewardship Committee chair.
The first-ever awards were presented to three CAPP-member companies that demonstrated their commitment to the principles of responsible development in three categories – environment, health and safety, and socio-economic areas. The winners were:
* Northrock Resources, for its work to reduce greenhouse gas emissions
* Burlington Resources Canada Ltd., for efforts to improve employee wellness with an ergonomics program
* Suncor Energy, for its positive community-based initiatives and aboriginal relations.
The stewardship program, a mandatory initiative for the 140 producer members at CAPP, is in its fifth year.
“We need to drive the stewardship ethic as far into our operations as we can, but just as importantly, we need to drive it out into the communities where we operate,” added CAPP president Pierre Alvarez.