Many companies have been publicly reporting on sustainability metrics for more than 20 years, and others are just getting started. As the practice is maturing and becoming more commonplace, stakeholders are beginning to ask, “Are these metrics really measuring sustainability?”
For example, most companies do report on their greenhouse gas (GHG) emissions and water use, but what they’re not doing is putting these metrics in context. In other words, does a company’s goals and performance meet the need to decrease emissions by 80–100% by 2050* in order to stave off the worst impacts of climate change? And how does its water use measure up to availability in water-scarce, water-stressed and water-sufficient areas?
Putting these types of goals and data into broader context provides a much clearer sense of progress and strategy, especially for readers without in-depth knowledge of an industry and its competitive landscape.
First, let’s look at GHG emissions. The recently leaked Intergovernmental Panel on Climate Change (IPCC) report on the looming impact of climate change is frightening. Conservative estimates point to the need to reduce our emissions aggressively if we are to have any hope of avoiding the worst-case scenarios. Companies can no longer simply disclose their absolute (or normalized) emissions without creating long-term targets for reductions.
There are medium-term milestones to work toward (20% by 2020, 50% by 2030, and 80–100% by 2050, using 2005 as the baseline), and companies need to be disclosing their performance against these benchmarks. Some companies, such as Mars, already have targets in place to reduce their fossil-fuel energy use and GHG emissions by 100% below 2007 levels by 2040. And Autodesk has developed an open-source methodology for calculating science-based goals and milestones that they offer for other companies to use freely.
Here's an example of what this might look like:
Another material issue in need of more context is water use. Many companies are disclosing their absolute water use and water-quality goals, and are listing the percentage of water they get from municipal systems versus groundwater. The Global Reporting Initiative (GRI) even asks companies to report on the sources of water affected by their withdrawals (EN8 in G3.1, EN9 in G4), and companies such as AEP provide this information. Although GRI's Sustainability Context principle asks for how this water use might be impacted by water availability in a given geographical area — the Guidelines don't tell companies how to come up with this metric, so none do.
Consider this: Because a drop of water in Phoenix is a lot more valuable (and scarce!) than a drop of water in Seattle, reports need to reflect these regional differences where companies have a significant presence, so that shareholders and stakeholders can understand the water risks that accompany these assets. One way would be to present water use data in facilities located in water-scarce, water-stressed and water-sufficient regions, that includes comparison data on the total water used and returned, as well as the efficiency of production. CDP does a good job of requesting this information from companies in water-intensive sectors, but reporters need to be disclosing this information in their annual sustainability reports as well.
While GHG emissions and water use are the two metrics that are just starting to be seen in context, there are many others that would benefit from the same, including performance toward zero waste-to-landfill, policies around livable wages, and the ratio of pay between men and women.
When it comes to measuring true sustainability, putting data in context is the leading edge of CSR reporting.
* As identified by the Intergovernmental Panel on Climate Change (IPCC)