August 2014 CR Magazine | Paul Herman, Yelena Danziger & Judi Brown
Engaging Employees via Sustainable 401(k) Investing (Page 40)
Rating sustainability of individual retirement plans
Every time you drink one liter of Coca-Cola, you consume 2.12 liters of water—if you account for Coke’s production process. That ratio is more water-efficient than a beer, but it’s still more than double what you may expect. To ensure its long-term sustainability, global beverage leader Coca-Cola has committed to improving its water efficiency and, by 2010, replenishing 100 percent of the water used in its retail products. At year-end 2012, Coca-Cola has reduced water intensity 21 percent since 2004.
How could Coca-Cola more deeply focus all of its 130,600 employees towards an even faster reduction in water usage? By showing its 68,000 participants in Coke’s 401(k) plan the water-efficiency ratios in their own investment portfolios. Coca-Cola’s 401(k) is used by about 91 percent of its 75,000 US staff. Thus, communicating and educating all 401(k) participants on their personal 401(k) portfolio’s water-efficiency could be a very effective engagement approach for realizing its sustainability goals.
One of the first 401(k) plans to rate the sustainability of its participants’ holdings is a 190-person CPA firm, Kahn Litwin Renza (KLR), one of the largest accounting and business-consulting firm in New England and one of the top 100 nationally. Mike Tousignant, one of KLR’s senior partners, saw rating the 401(k) for its sustainability as a learning tool about potential risks and opportunities in financial value that are typically classified as intangibles on the balance sheet. For example, employee “assets” (or human-capital) are not even classified as a balance- sheet asset, but as an expense on the income statement. Yet a company could not run without this important asset, as many CEOs claim.
Read the full article HERE.