By Michael Muyot, President CRD Analytics.com
Microsoft was removed from the NASDAQ Global Sustainability Index (QCRD) on October 31, 2009 due to a failure to disclose at least two out of five quantitative environmental metrics that adhere to the Global Reporting Initiative (GRI) G3 guidelines. Two other NASDAQ listed companies were removed (Cisco and Oracle) for similarly inadequate disclosure. Microsoft’s removal appears to conflict with the company’s stated mission, marketing and new product lines which focus heavily on improving other large corporations’ environmental footprints through technological improvements, better energy management and overall reductions in energy usage and GHG emissions. So shouldn’t Microsoft be leading the pack in stellar reporting and disclosure themselves to set the right example?
Microsoft has two separate websites concerning sustainability (in the broader ESG sense of the word). The Corporate Citizenship site is mainly concerned with community efforts and charities. The Environmental Sustainability website serves two functions: to promote Microsoft’s “green” products and to highlight the company’s environmental initiatives.
For green products, Microsoft advertizes several solutions to help people capitalize on the energy saving opportunities that software can provide. These include: Microsoft Virtualization, which helps save energy by running multiple operating systems on a single server; Windows Vista, which has built-in power management features; Microsoft Unified Communications, collaboration tools which mitigate the need for business travel; and the Environmental Sustainability Dashboard in Microsoft Dynamics AX, which allows customers to track energy use and greenhouse gas emissions. The Sustainability Dashboard is designed specifically for 4 GRI indicators concerning energy and greenhouse gases. It is not offered for tracking water use or the emissions of other types of pollutants.
As for Microsoft’s reporting, the website is filled with scenic pictures and videos of specific initiatives such as biodiesel recycling at company headquarters, but does not provide useable data on the company. Most of the information refers to initiatives at specific locations, not to the company’s entire global operations. The GRI G3 index is extremely difficult to find and contains very little global data. Greenhouse gas emissions are the only total global data reported. The company reports Electricity and renewable energy use, but only for buildings owned by the company, not leased office space. Water use is not reported, nor is waste production or the emissions of non-greenhouse gas pollutants. Overall, Microsoft reported just 10% of all applicable 25 environmental metrics and just 1 of 5 core environmental metrics, failing to pass the initial screen to qualify for the QCRD index which requires a minimum of 40% reporting on core metrics. In addition, this report covered only 2007; no 2008 GRI index was made publicly available.
Fortunately, Microsoft reported this sparse data in the correct way, entering the information into a full GRI index. The report includes substantial qualitative information regarding governance and social impact. The main problem is a clear lack of quantitative data encompassing the company’s global operations. Also, the disclosed greenhouse gas emissions were audited internally, not by an independent 3rd party. For numerous blank indicators the company indicated that it was working on their future approach to measuring these metrics and setting goals. The 2010 report will be released this spring and hopefully it will be much more comprehensive, particularly regarding quantitative data.
We are hopeful that these rather obvious conflicting forces are really an indication that tech savvy firms like Microsoft, Cisco and Oracle are instituting enterprise wide solutions to gather, measure and analyze every possible piece of environmental performance data themselves and will actually be incorporating best practices into the very DNA of their company so they show their clients how easy it is to Walk the Talk. If they do this, it will lead to a very sustainable and profitable business segment.
Michael Muyot is Founder and President of CRD Analytics, Michael developed the SmartViewTM Platform as well as built a family of sustainability indexes, benchmarks and investment products, including the NASDAQ CRD GSI 50. Mr. Muyot is helping to create a market for long-term sustainable investing.
Ed Note: 3p, in partnership with ISOS consulting, is pleased to offer a certificate course in GRI Sustainability Reporting methods in July. Please click here to get more information and sign up.
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