WHY SKY PASSES THE ALL-IMPORTANT “TOILET TEST”

  • by Jim Wood, CEO, Green Mondays
  • May 25, 2013
  • 0 comments

The Holy Grail in sustainability is the union of “doing good” and “doing well”, the point where the most ardent capitalist and the most socially-minded find common ground. If you’re making money and making the world a better place, you simply have no opposition. It’s no surprise that a growing number of business leaders, from Virgin’s Richard Branson to Patagonia’s Yves Chouinard, are positioning themselves in that space.

 

We think Sky CEO Jeremy Darroch might be an up-and-coming champion of that cause, and we are delighted that he will be on the Green Mondays stage on the 8th April. The Sky brand has, perhaps unfairly, been impacted by its association with News Corp – which still owns 39% of the company – over the past 18 months. But when you dig deeper into Annual Reports and CEO statements, there is a vocal commitment to social purpose.

 

There is no doubt that Sky is doing well at “doing well”. With their share price at an all time high. 22 years after the company was founded, Sky is the 31st largest market cap in the FTSE100, and is now bigger than companies such as Sainsbury’s, Kingfisher and M&S.

 

But what about the other side of the holy union? How is Sky performing on “doing good”?

 

On what can only be a subjective basis, let’s look at Sky’s performance in key areas of carbon and tax payment, and material areas that Sky has identified, sports and rainforest preservation. We add the comparative positions for M&S for the first two, on the basis that M&S was rated as the overall leading company in our October 2012 Crowdsourced Green Mondays report, and Jeremy Darroch is a non-executive on the M&S Board.

 

• Sky reduced its gross CO2 emissions by 26% in the three years to 2012, whilst revenues grew by 19%. The corresponding figures for M&S over the same period were a reduction of gross CO2 emissions of 19%, whilst the business grew by 9%. Sky has been carbon neutral since 2006, the first media company globally to achieve neutrality. That’s an unambiguous tick.

 

• Sky points out that in 2010/2011, it paid 1.4% of all the taxes paid by 100 largest FTSE companies, implying it pays more than its fair share. But to compare apples with apples it's maybe more appropriate to look at corporation tax paid, a tax that a number of companies have been accused of regarding as discretionary. Sky paid taxes of 23.8% in 2012, versus an average tax payment rate of 24.5% across the FTSE100 and M&S’s 25.6% in 2011/12. Probably fair to give Sky a “slightly below average” on tax.

 

• Sky sees sport as an effective way of improving young people’s lives, by engaging young people in education and boosting their confidence. Through their partnership with British Cycling they claim to have got over a million people regularly cycling in four years, and the Sky Sports Living for Sports programme is now in one third of secondary schools, with over 70,000 young people having taken part. Some will argue this is just good marketing, others will see this as evidence of the Holy Grail. Most will agree that these are sizeable numbers.

 

• The Sky Rainforest Rescue, a partnership with the WWF and the State Government of Acre in Brazil, claims to be protecting a billion trees in the Amazon rainforest from deforestation. Over £4million (including £2million raised from Sky viewers) has been invested over the years, and it is hard not to be impressed by Sky’s long standing commitment to an environmental cause that is a long way from its customer base.

 

Long term thinking

Sky associates sustainability with long term thinking, and a belief that customers are increasingly choosing to reward companies that share their values and make a positive contribution to society. One example of this is the creation of a multi-million capex innovation fund to support green initiatives with paybacks that do not meet the normal criteria.

 

Jeremy Darroch talks about the importance of having a business case for all sustainability initiatives in order for them to maintain momentum, echoing points made by Ian Cheshire (CEO, Kingfisher) in our March Forum. And it seems it is long-term business planning that helps to find a business case where others might not.

 

What does the Head Office toilet tell us?

 

Warren Buffet has famously said that he uses Head Office toilets to help guide his investment decisions. And there’s an argument that says “the facilities” are a good litmus test of the degree to which sustainability is embedded in organisation. If the folk in head office don’t object to, or aren’t irritated by, environmentally inefficient facilities it may point to a sustainability strategy that is skin deep.

 

Sitting on the wall in Sky’s Head Office toilets is a Dyson Airblade, which is 80% more energy efficient than conventional hand dryers but can cost around five times more than its competitors. An organisation that is driven by short term financial principles will struggle to find the business case for an Airblade, whilst an organisation with longer term business horizons and a commitment to carbon reduction will favour it. Add to that motion sensor lighting and taps, and toilets supplied from roof-mounted rainwater tanks, and Sky passes my toilet test with flying colours.

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