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New Metrics
Five Reasons Every Business Should Care About the New Metrics of Sustainable Business

Every now and then, as I discuss various products Sustainable Brands has to offer to our growing community of brands and solution providers, I mention our New Metrics of Sustainable Business conference and I detect either a blank stare or a confused nod. When I pause to find out why, I typically get a response gravitating around these questions: “What exactly are these New Metrics you speak of? How do they affect my company, and why should I care?”

Simply put, New Metrics (#NewMetrics) is an umbrella term for the latest and most successful ways businesses are creating and capturing entirely new forms of value, or quantifying previously ignored economic, social and environmental impacts and opportunities.

Here are five big reasons you should care, along with some key recent examples:

  1. You are leaving cash on the table: For business leaders who pay attention, the question these days is not if innovating for sustainability can be profitable, but how to get there as soon as possible and in the most cost-efficient way. Whether you are trying to decide what your next sustainability bet should be, or how to calculate an ROI, you simply can’t proceed optimally without being able to paint a compelling picture of all relevant quantities. Without New Metrics quantifying several dozen previously ignored types of risk, for instance, Johnson & Johnson’s Medical Device & Diagnostics group would not know it was putting nearly $100 million at risk by not being a market leader in sustainability in its category. Similarly, SAP would not have been able to conduct an analysis showing that for each percentage point that its employee retention rate goes up, its operating profit increases by approximately €62 million (about $81 million).
  2. There is more brand value to gain than you think: At SB’13 a few weeks ago, speaker Bryan Welch wisely suggested that every company should hire a journalist to dig up its dirty laundry before the rest of the world gets to it. You may smile, but his bigger point stands and is especially true for multinationals: Very few companies, if any, are completely on top of their own story. Recent factory and worker shocks in China and Bangladesh, for example, clearly indicate the need for global technology and apparel companies to re-think how they measure reliability and robustness in the supply chain. On the flip side, Chipotle, Danone and Nestlé, to name a few, have strengthened stakeholder loyalty by creating shared value and communicating results clearly, while BT is shining by using advanced LCA techniques to track progress towards its Net Good goal of helping customers reduce carbon emissions by at least three times the end-to-end carbon impact of BT’s entire business.
  3. Your sustainability performance will be analyzed and ranked anyway: Even if you aren’t using New Metrics to have a deeper look at the full range of impacts your business is — or could be — having on the world, investors and other influential stakeholders surely are. If you are a public company, chances are you are being assessed and ranked by an exploding number of analysts, including the Newsweek Green Rankings powered by Trucost and Sustainalytics; Interbrand’s Best Global Green Brands in partnership with Deloitte; BrandLogic’s Sustainability Leadership Report in partnership with CRD Analytics; the Dow Jones Sustainability Indices; The World Economic Forum’s Global 100 by Corporate Knights; The HIP Investor 100 Portfolio and many others. The New Metrics they are using to pin down your performance can’t possibly be more accurate or up-to-date than your own … unless, that is, you choose not to track and disclose your own, thus letting them get ahead of you.
  4. Consumers will bypass your product if you don’t care: The latest consumer surveys and observed behavior, in the U.S. and around the world, abound with signs that preferences are shifting increasingly in favor of sustainability attributes for almost any category of product. New research by Cone Communications finds that 93% of global consumers would like more of the products, services and retailers they use to support social or environmental issues, while 85% can tolerate imperfect CSR performance as long as the company is communicating its efforts accurately. Furthermore, arguably the largest global consumer segment these days — The Aspirationals, as coined by a joint BBMG/GlobeScan/SustainAbility study — love to shop and do feel a sense of responsibility to make purchases that are demonstrably good for the environment and society at the same time.
  5. You could be influencing policy makers and politicians more effectively: Everyone understands that politicians and policy makers, particularly in America, prefer to talk and think in terms of jobs, economic growth and national security, rather than reduction of CO2, the value of natural capital or distributed energy systems. At the same time, not many in the business world — at least not according to what is available publicly — seem to be doing a good job of translating sustainability benefits into jobs, economic growth and national security. There is no shortage of modeling approaches, as demonstrated by Caesars Entertainment’s Monetized Social Benefits of Societal Contributions, or Newmont’s finding that stakeholder sentiment can be worth twice as much as the gold they mine.

So, the big question is: Are YOU as advanced in your understanding and application of New Metrics as leading practitioners mentioned in the examples above?

If not, you're not alone. Even the thought leaders who are pushing the envelope in one metric arena are looking forward to learning from their peers who are pressing the ball forward in another. New Metrics are indeed new and being upgraded and polished constantly nowadays.


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