Waste Management 2010 CSR Report: Ambition and Clarity

Waste. The byproduct of consumer culture is the bane of environmentalists. We have chanted the mantra of "reduce, reuse, recycle" for more than a generation, yet our entire economy is based on wasteful consumption with packaging, material byproducts and the like rising exponentially throughout the Age of Convenience. As a result, waste processors have become dominant forces in helping manage the systemic byproducts, facilitating the convenience we've come to expect with routine weekly curb-side pickups. The simple act of separating recyclable materials from the landfill-bound waste has been enabled by the curb-side pickup, which many now take for granted. No longer are we in the dark ages of recycling when clear glass was separated from brown and green, newspaper was separated from cardboard, and only collecting plastic containers with a neck was allowed, followed by a hauling to a trailer parked behind the supermarket for collection. Now it's easy, thanks to companies like Waste Management (WM) who have shifted their practices from being collector/dumpers to being true waste managers: diverting millions of tons of waste from landfills and into recycling and composting facilities, reducing the amount of landfill waste, and generating the energy equivalent of nearly six million tons of coal and more than 20 million barrels of oil.

The purpose of sustainability reporting is to measure, disclose, and ultimately be accountable to stakeholders for sustainable development and performance. Many companies that are just getting into reporting utilize the report as a marketing tool in ways that avoid accountability, in particular by ignoring the negatives about their business operations and only highlighting the positives, or by framing questionable behaviors in a sustainability context. In their 2010 CSR report (pdf), WM utilizes the GRI guidelines with a self-reporting grade of "B," indicating the number of GRI indicators being covered in the 68 page (and 36 page appendix) report. They include an impressive 81 indicators fully or partially included in the report. Their commitment is strong, the content is straight forward and accessible, and the efforts are ambitious. Although they did not receive the "+" grade due to a lack of external assurances - an important but expensive step in report transparency - they assert that all quantitive data was audited by their Corporate Internal Audit Department.

This report is uniquely arranged into three "books," or sections. First is an introduction section, including the required letter from the CEO, and summaries of the report and the key performance indicators (KPIs). The second "book," titled "From Waste to Resources," is the bulk of the report. This section covers their efforts in providing environmental services, sustainably managing their own business and value-chain, as well as employee and community engagement. The third and final section, titled "Transforming Our Business," discusses their internal and external ambitions regarding improving WM's own practices and helping meet customer needs in a world shifting towards greater awareness and lesser impact. Each section is addressed below.

The CEO letter is one of the more important sections of a good CSR report because it sets the tone and purpose of the report as well as displaying the organization's overall vision and commitment to sustainability. The letter should include: strategic priorities as they relate to organizational strategy; broad trends affecting the organization and their sustainability efforts; key achievements and failures during the reporting period; views on performance in regards to prior set targets; and an outlook on the primary challenges and goals for the coming reporting cycle as well as mid- and long-term projections. WM CEO David Steiner accomplished most of these parameters in his introduction, celebrating some quality achievements on goals set in their 2008 report as well as establishing further goals.

These goals include increasing waste-based energy production, a persistent topic addressed throughout the report; increasing the volume of recyclable materials processed, (a challenge given that recyclable commodity prices tanked during the global economic downturn); investing in cleaner technologies such as alternative fuels efficiencies for their vast fleet of vehicles and machinery; and protecting wildlife habitats across North America. This last goal is impressive considering Steiner's assertion that the company achieved the 2008 goal of completing Wildlife Habitat Council certification at 100 landfills, covering more than 25,000 acres, 10 years ahead of schedule.

Where Steiner falls short is in explaining where WM fell short. Addressing failures is a key component of reporting and transparency since acknowledging shortcomings establishes trust with stakeholders, and though these issues are addressed later in the report, GRI guidelines dictate a reference in this letter.

Otherwise this is a thorough and thoughtful introduction to what is a thorough and engaging report. Steiner effectively trumpets WM's efforts to redefine what it means to manage waste - in fact, redefining the entire concept of waste - in the modern era. What was once a collect and dispose industry is shifting towards a system that actively recaptures the environmental and economic value of discarded materials, and as he states, "They say one man's trash is another's treasure. At Waste Management this is literally true...Waste is no longer something to get rid of - it's a resource." Considering that half of WM's revenue comes from their "green services," these appear to be genuine efforts.

The heart of the report is in the second "book" in which WM describes their efforts to redefine waste in great detail. They provide an interesting graphic describing the pre-diversion material throughput collected, comparing 1960 data to 2008. This graphic shows the changes in Americans' disposed materials by percentage, most notable the decreases in glass, ferrous materials and yard trimmings, and the increases in textiles, aluminum and plastics, which increased from 0.4% of total waste volume in 1960 to 12% in 2008 - a 3,000% increase. Besides recycling six million tons of paper, 175,000 tons of plastic, half a million tons of glass and more than 400,000 tons of metals in 2009, WM is capturing other materials as well, including construction and demolition waste and coal combustion residuals. They also processed 1.25 million tons of organic waste for compost and two million tons of e-waste, with goals to provide e-waste recycling facilities within 20 miles of 95% of the US population. They describe a great deal of partnerships with companies like Tropicana to make paper/plastic cartons recyclable and with Sony and LG to develop voluntary take-back programs on e-waste.

As mentioned earlier, a good amount of the report is dedicated to discussing WM's waste-to-energy (WtE) efforts, an area where they have become a true industrial leader. Utilizing two primary methods of conversion - recovering energy through waste combustion and harvesting energy through landfill gas-capture, their contributions to the overall renewable power mix in the US is staggering: more than 60 percent of the US landfill gas production and more than 20 percent of the waste combustion power generation come from WM facilities. The importance of WtE generation in a new energy economy cannot be understated; according to the report, every ton of waste processed at a WtE plant prevents one ton of carbon dioxide equivalents from entering the atmosphere.

The internal sustainability analysis includes an impressively detailed account of the company's GHG footprint, 91 percent of which comes from landfilling and power generation. Most of these emissions are from methane, the primary byproduct of waste degradation, and methane has 25 times the greenhouse effect of CO2 per unit. They have shown a continual improvement in regulatory compliance and a decrease in the numbers of violations. A company of this size is bound to have accidents, and a key to improvement is transparency, so their inclusion of information on the violations in the report and the appendix is commendable (and required by the GRI guidelines). The report covers in depth the sustainable operational practices WM is implementing with an interesting description of the feedback loop scorecard they use to "align stakeholder perspectives and market opportunities into a plan and a set of targets that guide the organization over a year." They include a detailed account of their stakeholder engagement process, even including a six page list in the appendix of every business association and multi-stakeholder group with whom they engage. This is an impressively thorough list, and these practices have paid off: WM was the only environmental services or waste industry company to be named to the Ethisphere Institute's list of the 99 "Most Ethical Companies."

The report goes on to discuss at length WM's community and employee engagement, workplace diversity and safety, employee development and education as well as support for collective bargaining. In 2007 they launched greenopolis.com, a sustainability social and educational network promoting conservation, recycling and renewable energy awareness, and provide educational tools at their thinkgreen.com site. Partnerships with organizations like Habitat for Humanity, Keep America Beautiful and the Wildlife Habitat Council expand and provide verification for their community and environmental involvement. They even dedicate two pages to the discussion of environmental justice, calling attention to their efforts to dispel the perceptions that waste disposal facilities are only concentrated in low-income neighborhoods. While it is true that these facilities have disproportionally been sited in such areas, WM has been working to improve the existing sites, cleaning up brownfields, examining the locations of their proposed sites and reducing the risk of harm to local communities. They even include a detailed analysis of income and race to landfill location, showing that only a third of their facilities are sited in communities with a higher minority representation than the state average, and none are located in communities below the federal poverty level.

Where can this report improve? First, they can get external assurances and verification, earning the "+" on top of their self-assessed "B" grade. The biggest difference between a "B" and an "A" is the reporting on all KPIs with a "reason for omission" on non-reported indicators, as well assector supplements. These omissions do not indicate a a lack of quality of sustainability performance of an organization, simply a more detailed level of reporting.

As innovators of single-stream recycling, WM has made recycling easier. They are working with companies to make products more recyclable, and they are creating value out of waste that at one time was destined to be piled away, never to been seen again. This is a company that is actively working to help close the loop of our severely flawed production/consumption system, turning "take, make, waste" into "take, make, generate, take, make..." and so on. The best GRI reports link a company's strategy and sustainability, describe the process of determining report content, describe the dialogue with internal and external stakeholders, and are material to the company and industry. WM has surpassed these expectations with a detailed, thorough, accessible and material report, further confirming their leadership in the waste and environmental services industry.