No longer is sustainability synonymous with reducing GHGs — dozens of social, environmental and economic indicators must now be considered. The question remains: What is the best method for quantifying and reporting sustainability impacts?
In the midst of an increasing trend toward setting and meeting aggressive sustainability targets, organizations are scrambling to navigate the complex challenge of quantifying their impacts, and meeting customer and investor demands.
No longer is sustainability synonymous with reducing greenhouse gas emissions (GHGs). Dozens of social, environmental and economic indicators are now considered staples under the massive sustainability umbrella, ranging from issues such as water consumption to child labor.
It is now an expectation for organizations to take responsibility for at least several social, environmental and economic indicators; showcase their mitigation strategies and reduction efforts, and report on their progress — their customers and investors demand it.
The question remains: What is the best method for quantifying and reporting sustainability impacts?
The What, Why and How of Product-Level Impact Measurement and Carbon Labeling
Join us at SB'23 San Diego as Allbirds, Logitech, Oatly and the Cradle to Cradle Product Innovation Institute share insights on their journeys toward product-level impact measurement and reporting — including the methodologies and processes they have put behind their carbon labels to ensure high quality, accuracy and verifiability.
With so many sustainability concerns to consider, this is not an easy question to answer. However, to ensure meaningful and quantifiable sustainability impacts are effectively measured and reported, the following framework and subsequent descriptions can serve as a useful guide:
Relevant: Do these metrics quantify a specific sustainability concern?
When deciding on which sustainability metrics to prioritize, it is important to align with relevant global and local sustainability issues, while also aligning with your business priorities.
One way to ensure relevancy is to align with other well-established global and local initiatives.
The UN Sustainable Development Goals (SDGs) are particularly useful in developing globally relevant corporate sustainability objectives. The product of the largest UN consultation program in its history, the SDGs provide 17 diversified and comprehensive, target- and time-driven goals that offer a solid foundation for companies of all types and sizes to adopt and adapt.
In addition to ensuring that metrics align with global sustainability goals, it is also important to focus on pressing issues in local communities. For example, if a company is largely based in a water-stressed region, initiatives should focus on reducing water consumption and increasing the health of local water systems. Prioritizing water initiatives demonstrates that the company is an ally to the communities in which they operate.
Similarly, organizations should focus on sustainability priorities that align with their mission and business. For example, using a similar scenario as above, companies in the beverage industry should consider an explicit focus on water-conservation initiatives because a large part of their business centers on sourcing water.
Defensible: Would a third party agree with the metric’s methodology and logic?
When defining a sustainability metric or goal, it is important that the rationale be defensible. Developing metrics that are tied to a defensible and repeatable methodology is difficult. There are many questions associated with this step; and the answers are often elusive without making significant assumptions in knowledge gaps, harnessing field-specific expertise, undergoing rigorous data-mining, or conducting in-depth analyses. The key is to be transparent about what is included in each metric and to seek advice on which methodology makes sense, given an organization’s unique landscape.
There is a wide array of existing frameworks, standards and certifications that companies can leverage to determine which methodologies and frameworks are most appropriate for the sustainability indicators they choose to measure, and that are specific to their respective industries. These resources are most often developed by a board of subject-matter experts and should be referenced prior to creating a new methodology altogether.
Although sustainability indicators differ greatly, the following four pathways (or a combination) may be useful in thinking about how to calculate impacts.
Existing databases and tools
Meaningful: Will these metrics guide future company and customer decisions?
Once relevant sustainability issues have been identified and defensible metrics have been established, it is important that the information be used to drive meaningful action. While sustainability goal-setting has traditionally relied on bottom-up calculations and/or financial feasibility, target-setting is increasingly done using scientific data. This is critical to ensuring that targets are meaningful.
In terms of GHG reductions, the desired end result is to prevent temperatures from rising more than 1.5 degrees Celsius by 2050. Although this fact is relatively well-known, many companies’ emissions reduction targets are not nearly good enough.
In an effort to close this gap, organizations such as the Science Based Targets initiative (SBTi) help companies make more informed carbon-reduction decisions for their specific sector. To date, 683 companies have committed to the initiative (up from 117 in 2018); and 285 have been approved by the SBTi’s validation process. More and more companies are further embracing their role in (and the need for) taking aggressive climate action, and are going beyond science-based targets by committing to climate-neutral or carbon-positive goals.
Clear: Are these metrics effectively communicated and with a timeline?
Numbers, more than words, make sustainability impacts clear and tangible for investors and consumers. Too often, rather than providing measurable metrics for sustainability impacts, companies rely on snapshots and anecdotes to communicate their impact. Although these stories are compelling and have a place in sharing an organization’s sustainability priorities, they should not be presented in isolation.
There are several goal-setting frameworks available, but one of the most commonly referenced is SMART (specific, measurable, action-oriented, realistic and time-bound) goals. By using the SMART framework to develop goals, stakeholders can clearly see who will benefit, in which locations and specific subjects, and by when. It is then expected for the company to report its progress on reaching those numbers. Contextualizing sustainability metrics is especially important for goals that are not easily understood by a broader audience.
Ultimately, quantifying sustainability impacts — and setting and meeting scientific goals and targets — is a difficult, but crucial task. The framework outlined here can be a useful guide for companies as they begin or expand upon their sustainability journey.
Regardless of where companies are in this journey, it is important to remember the broader purpose of measuring and setting sustainability goals. Customers, investors and regulating bodies are demanding data-driven metrics for a reason, and it is the company’s responsibility to respond to those demands with aggressive and scientific, time-bound goals.
For specific examples and additional insights, download the full white paper.