New Metrics

Changing the Way Non-Financial Performance Is Measured, and Thus Managed, in Pursuit of Future-Fit Businesses

Think of a company, any company. Got one? OK. Now ask yourself this: Is the company truly sustainable, in everything it does and sells? If not, then how must the company change before it is?

By Geoff Kendall | Published 10 years ago | About a 3 minute read

If you’re struggling to answer these questions, you’re not alone: It’s hard to assess real progress if the destination is unclear. And until now we’ve had no clear, credible and actionable definition of what being a truly sustainable company really means.

Unfortunately, the 100+ corporate sustainability ratings in existence don’t hold the answer, because they focus on today’s best practice rather than tomorrow’s required practice. To see why this is a problem, let’s take an example: This year the Dow Jones Sustainability Index (DJSI) awarded a score of 85% to Thai Oil. I have no reason to doubt that this particular oil company is doing more than its peers. But in the face of climate change the very nature of the oil sector’s current business model is unsustainable. In that context is such a celebration of relative performance warranted? Can we really expect Thai Oil’s CEO and investors to question the carbon-intensive nature of their business if that’s the kind of signal they’re getting?

Current non-financial metrics lull decision-makers into believing that doing better than last year — or better than ‘the next guy’ — is sufficient. But given the scale and complexity of the problems we as a species face, being less bad is just not good enough.

That’s why we need a new kind of metric. Rather than merely focusing on today’s best practice, we must measure the gap between where business is now and where it needs to be. We need a benchmark grounded in a scientific understanding of how the world works. One that identifies the minimum acceptable level of environmental and social performance every company must attain if society — and thus their business — is to prosper long term. One that defines the breakthrough point beyond which a company starts delivering positive value — that inspires business leaders and investors to push for truly innovative solutions.

That’s the purpose of the Future-Fit Business Benchmark. It offers a set of goals that collectively define what every company must do if we are to safeguard the possibility that humanity, and therefore, business, can flourish forever.

The first public draft of the Future-Fit Business Benchmark is now available for comment. It sets out 28 future-fit goals across 9 business areas. We’re now in the process of developing key performance indicators (KPIs) to enable any company — no matter its size or sector — to measure its progress against those goals. We’re publishing the benchmark under a Creative Commons license, and it will always be free to use. It’s very much a work in progress, and we’d love to hear your feedback on the goals and any thoughts you may have on the supporting KPIs.

In a series of articles over the coming months, we’ll be covering different aspects of the Future-Fit Business Benchmark, ranging from how it can be used by business leaders and investors, to the implications of specific future-fit goals within different industries.

Ultimately, our goal is to change the way non-financial business performance is measured — and thus managed — in pursuit of a flourishing future. We hope you’ll join us on the journey.