New Metrics

How Organizations Are Transforming Business Models, Capitalism, Metrics, Systems

On Monday, New Metrics ’16 opened on a hopeful note, despite the unrest following a volatile election season in the United States.

By Nassy Avramidis | Published 8 years ago | About a 5 minute read

On Monday, New Metrics ’16 opened on a hopeful note, despite the unrest following a volatile election season in the United States. Dimitar Vlahov, Sustainable Brands’ Director of Content Development, crafted a program featuring thought leaders, brands and case studies that he sees as the “antidote” to business as usual – just a few that are utilizing new metrics to understand system conditions and the science behind all impacts, find true costs and benefits of all products, manage assets and processes better with up-to-date valuation techniques, distribute shared value with all stakeholders in mind, lead by example, and change the rules of the game.

First up, Andy Hoffman, author of Finding Purpose and professor at University of Michigan, shared that we’re now entering a fundamentally different game as we enter the Anthropocene, and system change and market transformation are needed. Capitalism - a system of constant flux as it is, a set of human institutions that is malleable and can change - needs to be transformed. No one can wipe the slate clean and develop a new set of institutions, and because of this, we have to start where we are. Our current state of flux is an opportunity for change. He mentioned four necessary steps:

Business has to be the source of solution – he has hope because he sees in young people a tremendous desire to take this on. They want to use their careers to steer business toward a better place.

With this information on our hands, sustainability leader Bob Willard took the stage to provide practical steps on how to tackle it. His newest book is a guidebook called The Sustainability Advantage Ultbook, or the ultimate guidebook you’ll need to implement sustainability even under the current system. Willard provides category-specific business cases in the workbook, each one of which is associated with one of the five categories of sustainability initiatives he outlines. It is tuned to be sensitive to the direct and indirect impacts that are related to them. As Willard says, indirect benefits are usually bigger and more valuable than direct benefits, which is why we need to connect the dots and give complete justification for doing benefits that are indirect. He left us one final piece of advice, fitting for the metrics-focused audience: We need to engage with people that have the data - in other words, the finance people in our organization - so that they can implement these initiatives with us.

This brought us to our next speaker, CSRHub’s Cynthia Figge. As she pointed out, the first generation of sustainability metrics has been driven mostly by custom self-reported data, combined with hundreds of surveys and thousands of different ratings systems and regulations. It’s a bit of a mess. Figge walked us through a new wave of ESG disclosure trends that promises to meet the needs of all stakeholders, and to help companies toward a disclosure landscape that will be less confusing, more consistent and more empowering. She shared six efforts to translate second-generation concepts into practical systems by SASB, World Federation of Exchanges, the European Commission, GRI GSSB, the emergence of science-based targets, and the Task Force on Climate Disclosures (TCFD). We’re moving into the next generation of more rigorously defined metrics being defined by government and NGOs, and using these second-generation concepts we can greatly expand the number of companies that are reporting since most large companies will be affected by these standards.

The evening concluded with a talk from Donnie Maclurcan, co-author of How on Earth – Flourishing Through a New Breed of Not-For-Profit Organization. Maclurcan touted the benefits of a not-for-profit business model - a for-profit business that channels profits back into the business to invest into long-term future initiatives, such as social good - as opposed to an extractive business model, where the profit goes out as capital gains, limiting the ability of a company to buy more assets. This ultimately leads to a rise in debt, which contributes to societal wealth inequality. The not-for-profit business model addresses this because capital is reinvested, preventing raising its debt ratio.

A not-for-profit business market economy has the potential to create wealth generation that is incredibly dispersed, and allows for market economy to function because you can increase liquidity; an increase in social wellbeing, because productivity and innovation gains finally get pushed through for widespread benefits; and ecological regeneration, when we finally get to an economy of “enough.”

Maclurcan concluded with a bold claim: The arc of business competitiveness bends toward not-for-profit forms. He challenged us to think about this in a realistic way, because it could point to the future of how business will work for our society in a positive way.