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?
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.
-
Sampling
-
Questionnaires
-
Existing databases and tools
-
Existing literature
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.
Conclusions
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.
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Published Nov 11, 2019 7am EST / 4am PST / 12pm GMT / 1pm CET