Skroupa: How can a company thoroughly evaluate external frameworks? What steps are necessary to establish a sustainable value strategy?
Krut: We constantly scan the external environment for additional intelligence that might relate to our material risks and opportunities. There are many sustainability raters and rankers who provide frameworks and questionnaires, designed to probe if and how firms create sustainable value. We focus on a core group of these external frameworks. These reviews should be considered as a source of insight in order to compare your strategy with key performance indicators and targets. The most important indices that we consider are the Dow Jones Sustainability Index (DJSI) and the Global Reporting Initiative (GRI). It is also important to pay attention to questionnaires and standards that are relevant to your [entity display=”business” type=”channel” active=”false” key=”business” natural_id=”channel_1″]business[/entity]. The CDP investor climate change response is also relevant.
Once we had developed a draft set of targets for 2020, we reviewed them against the relevant external frameworks and expectations in order to confirm that they addressed relevant external issues. For example, we show how achieving our targets can contribute to the UN SDGs. For example, SDG 8 is for “Decent Work and Economic Growth.” One of their targets is: “Encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.” [entity display=”Praxair” type=”organization” subtype=”company” active=”false” key=”praxair” ticker=”PX” exchange=”NYSE” natural_id=”fred/company/3451″]Praxair[/entity] has a target to cumulatively spend $1.5 billion with minority- and women-owned and small [entity display=”business” type=”channel” active=”false” key=”business” natural_id=”channel_1″]business[/entity] enterprises by 2020. [tweet_quote display=”Targets can help drive business and add sustainable value through positive economic, environmental and social impacts.”]Our targets can help drive business and add sustainable value through positive economic, environmental and social impacts.[/tweet_quote]
Engaging with key socially responsible investors (SRIs) during the drafting process is also important. Last year, we were pleased to present our draft SD 2020 targets to various investor representatives from several U.S. and European institutional investment firms. These meetings were crucial, they challenged our assumptions and improved our confidence that the targets would meet external expectations.
Skroupa: How can a company leverage their accountability efforts?
Krut: Our 2020 targets show stakeholders how we plan to create enduring sustainable value. As a Business-to-Business (B2B) company, much of what we produce can and does enable positive net benefits. For example, we have a target to avoid twice the GHG emissions that we emit from all of our operations; and another to benefit 1.5 million people through our community engagement – that’s 12 beneficiaries per employee.
Of course, the most important audience, and the engine for all these targets, is our employees. Our SD 2020 targets give direction to our 26,500 employees in more than 50 countries – that’s a lot of leverage right there. They show our employees how their actions contribute measurable business value and help to achieve our mission and deliver on our strategy. And this has top leadership support, the targets are endorsed by [entity display=”Praxair” type=”organization” subtype=”company” active=”false” key=”praxair” ticker=”PX” exchange=”NYSE” natural_id=”fred/company/3451″]Praxair[/entity]’s Board of Directors’ Technology, Safety and Sustainability Committee.