The One Thing You Can’t Find on Google
The world will not soon forget the power and significance of Google’s decision this past January to stop censoring search results in China. That bold action will likely be seen as a watershed moment in the history of corporate social responsibility. Google deserves accolades for its environmental and social behavior in many respects. The company ranked first among Fortune magazine’s top places to work in 2007 and 2008, and its charitable arm has taken innumerable important steps towards addressing our economy’s dependence on carbon based fuels.
Hence, many people are surprised to learn that the company has completely failed to meet a cornerstone of corporate responsibility: an annual sustainability report.
Sustainability reporting is a linchpin because (1) what gets measured gets managed, and (2) reporting facilitates transparency, and therefore accountability. That is, sustainability reporting provides stakeholders with a way to keep companies accountable for their social and environmental impacts. Perhaps not too surprisingly, companies that measure and report on their social and environmental performance also appear to be better financial performers.
Many observers understand comprehensive sustainability reporting to be best practice for a large company like Google, the 16th largest stock in the S&P 500. The consulting firm KPMG conducted a survey recently that showed that nearly 80 percent of the orld’s 250 largest companies now produce a sustainability report.1
According to the Corporate Register (www.corporateregister.com), corporate sustainability reports published in 2008 numbered 3,100, a 55 percent increase from the previous year; the corporate reporters included two-thirds of the Global FT 500. A report for the Sustainable Investment Research Analyst Network (SIRAN) written by KLD Research & Analytics, Inc. found that 66 firms in the S&P 100 produced a formal sustainability report with performance data in 2008, a 35 percent jump from 2007.2
It also appears that sustainability reports may be associated with good performance. A study released by RiskMetrics Group found that sustainability reporters have outperformed the MSCI World Index over the past two years. The research found that a set of public companies whose reports were singled out for praise by the U.N. Global Compact had consistently outperformed the MSCI World Index by an average of 7.3 percent since March 2007.3
Google is often criticized for its lack of transparency.
Forbes recently noted:
Among this year’s high-profile no-shows (on the Corporate Responsibility Magazine list of responsible companies): Google, which [CR Magazine editor] Whitehead describes as “one of the least transparent companies ever.” “Google’s opacity is high for a tech company,” he says. “They made a conscious decision early on not to disclose a lot, because they thought it would make them less competitive. ‘Don’t be evil’ is their motto, but ‘Don’t be transparent’ is part of their culture.”4
Google received an “F” in sustainability reporting by the Roberts Environmental Center of Claremont McKenna College.5
While Google provides some information about its environmental, social and governance (ESG) goals, practices and policies, it is mostly expressed as percentages, goals or qualitative objectives, rather than, for example, concrete data on greenhouse gas emissions, which is reported on by its peers.
The company also provides no hard data on its emissions reduction goals, total electricity consumption, water usage, and other such quantified metrics either for company buildings or data centers. Instead, it presents percentage goals for reductions, information on its goal to be carbon neutral by 2007, and percentage of water from recycled sources. This is particularly troubling given the increasing emphasis at the Securities and Exchange Commission (SEC) on climate change and sustainability reporting in SEC reporting. Google’s reporting also provides no data on employee diversity such as percentage of females or minorities.
For all of these reasons Trillium filed a shareholder proposal with the company calling on it to begin annual sustainability reporting. We were joined by the Treasurers of Oregon and Connecticut as well as the First Affirmative Financial Network as co-filers. Shares cast in support by non-insiders totaled 34%, so we are hopeful that the company will decided to adopt the proposal so that a re-filing will be unnecessary in 2011.
1. KPMG (October 27, 2008) “KPMG Analysis Shows Number of U.S. Companies Reporting Sustainability Data Has Doubled Since 2005”,
press release, retrieved June 9, 2010.
2. “S&P Sustainability Report Comparison,” SIRAN, December 16, 2010.
3. “Notable Reporters Outperform Key Stock Index,” United Nations Global Compact, June 17, 2009.
4. “The 100 Best Corporate Citizens,” Forbes, March 3, 2010.5. http://www.environmentalleader.com/2008/06/19/chevron-a-google-f-in-sustainability-reporting-efforts/.