LEXINGTON, KY - Lexmark recently released its first Corporate Social Responsibility (CSR) report, a 68-page document that evaluates the company's economic, environmental and social performance for 2008. In an opening letter to the report, Paul Curlander, Chairman and CEO, notes that shareholders and customers want to know that a company is respecting the environment and its employees in its conduct and practices. He states that Lexmark is committed to continuing improvements with ongoing evaluation and reporting of its performance. Work is already underway on its 2009 report that will expand to provide more information. Transparency has become a valuable asset.
CSR and sustainability have become critical bottom-line issues for businesses around the globe. "If you can't answer and provide proof on questions related to corporate social responsibility, you don't get to bid on the project," said John Gagel, Manager of Sustainable Practices for Lexmark, which is a global leader in development, manufacture and supply of printers. He was speaking of concerns that buyers now commonly bring to the table. "It really has a material impact on whether you have the ability to get additional incremental business and in some cases keep existing business."
The Lexmark report was the culmination of years of gathering data and watching developments under the Global Reporting Initiative (GRI), Gagel said. GRI was founded in 1997 and began formulating its Sustainability Reporting Guidelines, criteria by which businesses can measure their performance in terms of social responsibility and sustainability. GRI, headquartered in the Netherlands, describes itself as "a large multi-stake holder network of thousands of expertsÖ" Its guidelines are developed through collaborative work by its worldwide network. GRI published its latest version, known as G3 Guidelines, in 2006. Lexmark used G3 for its report. An outside consulting firm helped Lexmark in the process of its self-evaluation and a third party checked the report to confirm its adherence to G3. The next step for future Lexmark reporting will be to obtain a GRI "assurance", which, at additional cost, provides a more in depth confirmation of the reporting. Gagel said that it's typical for companies to go that extra step after the first or second report.
The inspiration for the CSR reporting movement can be found in an often-cited definition of sustainability from a 1987 UN commission report: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." This recognition by world leaders of our civilization's impacts on the environment and consequent degradation and depletion of natural resources has come to engage business leaders globally. Add to that the pressing concerns of climate change.
Lexmark had a survey done during March and April, which queried over 10,000 people in 21 countries. The results showed that consumers are increasingly concerned about environmental impacts of their home office equipment. Eighty-five percent of the respondents would choose the most environmentally beneficial printing option if offered a simple "one click" solution; eighty-four percent would be more likely to buy a product if the manufacturer is engaged in recycling programs; and seventy-five percent felt guilty about printing unnecessary pages. The report also found that a greater proportion of respondents mistakenly thought that the ink and toner were the greatest threat from printers to the environment. But Lexmark's research indicates that the paper fed through printers actually is the largest contributor to the carbon footprint of a printer. The Lexmark report is in synch with these environmental concerns.
"Our goal is to have zero waste to landfill from all our operations," said Gagel. "We're not there yet, but everything that we get back on the cartridge side, worldwide, has zero waste to landfill." He said that in 2008 over eight thousand metric tons of materials were collected and recycled through the laser cartridge collection program. "We either remanufacture them or de-manufacture them and recycle it all with zero waste to landfill." Lexmark is also collecting hardware product around the world for recycling - a program that will expand in years ahead.
The report itself, available online, covers a wide range of concerns, including community engagement, corporate ethics, diversity, human rights and labor standards, environmental concerns, health and safety, and supplier requirements. It documents Lexmark's environmental initiatives and goals and its many projects and management practices that enrich the communities that are home to Lexmark's global operations. At the end of the report is a list of the 80 G3 Guideline "indicators" or matters that were addressed in the report, and where that information is located in the report. It's a detailed undertaking.
"I would have to give my European counterparts kudos for bringing Lexmark up to speed on a lot of these things," said Gagel. "Lexmark, as in Lexington Lexmark," he added. "They (European Lexmark) have been living in this world for a while." He said that over the past two years there have been big changes in how buyer companies in the U.S. will formulate their requests for proposals or quotations. Gagel says that requests used to be simple, requiring no more than a couple pages with boxes to be checked regarding CSR or sustainability practices. "Now what we're seeing most of the time are very detailed questionnaires," said Gagel, "perhaps 30 or 40 pages long, asking for specific goals and targets that you've established within your business concerning CSR or sustainability."
Lexmark also bolsters it CSR work through affiliations. This year it signed and joined the UN Global Compact, committing to the Compact's 10 principles under the headings of Human Rights, Labour Standards, Environment, and Anti-Corruption. Gagel said that as a member of the Carbon Disclosure Project, Lexmark has been publicly reporting its greenhouse emissions for several years. "Now the Carbon Disclosure Project has a supply chain questionnaire that is in its infancy," said Gagel. "We're participating with that. That's where you're really going to see the big push with all companies over the next few years." Another Lexmark affiliation is with the Electronic Industry Citizenship Coalition, which aims to improve environmental and worker conditions through its Code of Conduct. "What that requires you to do is to push the Code down to your suppliers, starting with the first tier," Gagel said.
Inquiries are reaching deeper. Lexmark is being asked to provide assurance that its suppliers are also aligned with best practices in sustainability and CSR. "Right now we're in the stage where there's a lot of focus on first tier suppliers," Gagel said. "We're moving toward the second and third tier - putting them in a position to put out these reports."
Get ready, you corporations out there. If you haven't seen it yet, CSR reporting may be coming your way. Gagel said that it's not something accomplished overnight. He recommends that as a first step a company get a copy of GRI indicators to see the type of data that is being asked for. The biggest hurdle for many companies, or departments within a company, he said, is the idea of being transparent with the external sharing of data. "Then you have to go through the process of explaining to them, or perhaps showing them, the need for increased transparency nowadays."