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Environmental and Social Reporting: Ceres and Sunoco

By Melissa J. Anderson (New York City)

Following last month’s oil leak in the Gulf, there has been an intense focus on BP, owner of the exploded rig, as well as on the environmental ramifications of deep sea drilling. Should the company be unable to stop the leak, says Secretary of the Interior Mark Salazar, “There are scenarios that it could be worse than the Exxon Valdez.”

In 1989, the Exxon Valdez tanker spilled 10.8 million gallons of oil near the Alaska coastline, destroying the wetland habitat. In many ways, this spill was a wake-up call for corporations, that their behavior could have a major effect on the planet. Six months after the accident, a small group of individuals formed Ceres, a non-profit aimed at bringing “investors, environmental groups and other stakeholders together to encourage companies and capital markets to incorporate environmental and social challenges into their day-to-day decision-making.”

Membership in the group comes with a strict set of requirements including executive level commitment toward improving environmental and social performance, public disclosure of performance “in a sustainability report, Global Reporting Initiative report, annual report, environment and/or community report,” continuous improvement, and an “annual fee scaled to reflect corporate revenues, ranging from $2,000 to $40,000.” Companies must also be responsive to Ceres stakeholders’ questions and concerns regarding environmental and social performance.

Today Ceres has about 75 corporate members spanning a wide range of industries. Companies include companies Sodexho, Dell, Citi, The Body Shop International, Clif Bar, and Green Mountain Energy Company. Given the group’s genesis in response to the Exxon Valdez spill, it is surprising that only one major oil corporation appears on the listSunoco, Inc.

Sunoco and Ceres

Sunoco has long held to the importance of environmental stewardship. In fact, according to a press release, in 1993, “Sunoco became the first Fortune 500 company to endorse the Ceres Principles, a 10-point code of environmental conduct that includes public reporting of environmental performance.”

It may be interesting to note that the Ceres principles were originally referred to as the Valdez principles.

Having just released its 2009 Corporate Responsibility Report, the company shows its continued commitment to improving its performance in what it refers to as “health, environment and safety (HES).” This transparency enables it to show customers, stakeholders, and employees what it is doing to be a better corporate citizen.

In her letter, Sunoco Chairman and CEO Lynn L. Elsenhans writes:

“In 2009, Sunoco’s performance in these areas was mixed. While the company had its best historical environmental performance in spill management, its results in other key areas, such as water and air exceedances, as well as personal safety, fell below our high expectations. These are areas receiving even closer attention in 2010.”

She continues:

“It is with profound thanks to all of my Sunoco colleagues that we present the 2009 Corporate Responsibility Report. This publication reflects our long tradition of being a good corporate citizen, beginning with our 1993 endorsement of the Ceres Principles, a 10-point code of environmental conduct, as well as our strong commitment to our communities.”

Employee and Community Engagement – Frankly Addressing Challenges

As Elsenhans explained, the company is working to address problem areas. For example, in the report, the company notes that its safety performance has declined. The report states:

“As mentioned, our safety performance is not where we feel it should be. Our Total Recordable Incident Rate (TRIR) of 1.18 could certainly be lower as even though Marketing, Chemicals, and SunCoke Energy experienced improvement, the refineries incident rate rose significantly.”

This kind of frank reporting, required by the company’s Ceres commitment, ensures the company is responsive to issues like these, and empowers employees to hold the company accountable for them.

Also as part of its Ceres commitment, the report explains, the company is committed to open dialogue with stakeholders (which includes its employees, its customers, and the communities in which it operates). It has introduced Community Advisory Panels to strengthen those ties. According to the report, “CAPs are our first line of external review for issues such as clean fuels, turnarounds (regularly scheduled maintenance of processing units), etc. that affect our plants. All our refineries and chemical plants participate in a CAP or CAC (Community Advisory Committee).”

External Enforcement of Principles

As a measure of external governance, the Ceres Principles ensure the company is actively engaging with its employees and its community. But the company wouldn’t be a part of the group if it didn’t see the benefit of membership – help and advisement on environment and social issues. Ceres membership

is dependent on top-down commitment by company leadership, and is another way member companies, like Sunoco, show employees that they are committed to corporate responsibility.

Commitment to these goals encourages success in the broader sphere. For example, the report also mentions that the company was named “2009 Partner of the Year for outstanding energy management and reductions in greenhouse gas emissions by the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE).”

A positive response to the 1989 oil spill, Ceres encourages and empowers companies to go beyond average in their commitment to environmental and social progress. How will companies respond to this year’s oil leak?

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