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New Metrics
Redefining Value:
The New Metrics of Sustainable Business - The SB Community Weighs In, Part One

We believe that nothing can drive faster organizational response to a changing business environment – or facilitate realignment between corporate functions or within value networks – than a shift in the metrics used to track success. In 2011 Sustainable Brands launched a series of conversations on this topic, both online and via the New Metrics of Sustainable Business Conference, convened again in 2012, and again next week, September 24-25, 2013, in Philadelphia. The goal has been to bring together thought leaders from business, non-profits and academia to realize three objectives: understand the rapid progress toward developing and implementing New Metrics globally; advance the state of the art through focused discussions based on case studies; and nurture the emergence of new mental models to deliver and benefit from new forms of value.

About a month ago, we published a white paper entitled Redefining Value: The New Metrics of Sustainable Business, providing a recap of key themes and takeaways from New Metrics '12, in the form of reflections on recent lessons and survey of forthcoming opportunities. Our goal with this first paper was to help frame the conversation as we see it and to set the stage for future work more than to be a comprehensive review or a thorough collection of relevant case studies. New Metrics leaders in our community are convening this week at New Metrics '13 for up-to-the-minute updates and more leading-edge conversations — a jump-off point on the path to our next New Metrics paper, as well as upcoming hands-on work within our corporate member group and the broader Sustainable Brands community.

While we are working on capturing all the market-leading content New Metrics '13 brings, we thought we'd share a few highlights from the multitude of responses we received after publishing the white paper.

John Ambuya, Greyfos Consulting in Nairobi, Kenya:

I found the white paper quite interesting and a sign that you undertake serious discussions on the next-generation metrics for living — sustainability.

However, the most interesting part to me was that section on the 5 Principles of New Metrics, particularly the story in which SAP's CEO carpools with colleagues irrespective of their position. That just knocks down so many boundaries. A next practice for embedding sustainability!

I'd like to caution that most of what is shared is from North America and Europe. The voice of Latin America, Asia and Africa is quiet, while they are the new bastions for growth. This growth needs to be sustainable, too.

Estelle Martinson, Fleet Credit Review Manager, Standard Bank in Johannesburg, South Africa:

I did find the paper valuable and practical. I was especially interested in the calculation of the value of 'human capital,' since I'm working on an ROI model for learning and development.

Patricia Gallardo, Director of Corporate Social Responsibility and Sustainability, Shangri-La International Hotel Management, Ltd in Hong Kong:

I found the paper very timely. Definitely informative, and in a way reassuring, but also rather open-ended for the following reasons:

  • Many are on the journey of sustainability; few have nailed the marriage of the art and science of New Metrics.

As a sustainability practitioner, it's good to know which companies exactly are pushing to chase the dollar value — not just around the obvious environmental indicators like carbon, water and energy use, but also around the 'unquantifiable stuff' like social development, diversity, etc. This paper helps pave the way for the journey towards new metrics along a few different paths that companies can take.

  • It may have been good to conclude the report with more than the truism that we are racing against the clock. I was partly expecting a toolbox of sorts, where beyond the fantastic case studies cited we can look at equations for valuing nature, or find the thought process behind P&G's SCSS and how it could lead other companies to 'copy' and develop their own. It would also be great to learn about precise methodologies that have worked with others such as PwC's "Indirect Method" of creating long-term shareholder value through measuring the impact of sustainability initiatives against specific performance measures for each objective, allowing trade-off models to render a total impact in dollar terms.
  • It would have been good to see how businesses and their stock prices are linked to perception and accounting for CSR and sustainable operations. If there is — and we know of course that there is — a link, no matter how strong or weak, between stock price and doing good business, is a good way of writing out one important New Metrics equation.
  • It would also be useful to see more industry examples — not just stories from leading Fortune 500 firms, but also others from fields such as tourism, travel and hospitality services. Asian examples would have been nice to see and learn from, as well.

Stephanie Daniels, Senior Program Manager, Sustainable Food Lab in Hartland, Vermont, USA:

I have read the white paper and found it quite valuable.

Our work around metrics at the Sustainable Food Lab is focused on two aspects with our members and partners:

  • development of tools that are accessible for farmers and help business make better decisions
  • learning processes for companies to understand data form their supply chains and act effectively on it

Examples of our work include the development of the farm-level GHG calculator, the Cool Farm Tool, and our work to evaluate livelihoods in smallholder value chains and deepen the impact of companies' procurement policies.

We often help companies and NGOs define the theory behind their desired change and then provide assistance in choosing the right metrics that measure that theory and its desired outcomes. Pre-competitive learning is a core concept of how we tackle this — getting companies together to understand various ways of making progress on the metrics issue and learning from each other's successes and hiccups.

Taryn Mead, Marie Curie Research Fellow in Biomimicry for Business Management Innovation at the University of Exeter School of Business in The United Kingdom:

To be perfectly honest, I found the paper to be missing some of the bigger ideas of where corporate sustainability metrics need to be going. In my view, the most important next step is tying corporate sustainability metrics to the ecological realities of the planet, rather than just focusing on being less bad without any standard for what regenerative participation in the biosphere looks like. For instance, it is commonly agreed that we need to keep the atmospheric CO2 at 350 parts per million to keep the temperature in balance, and yet I haven't heard any corporate agenda specifically addressing this number in relation to their own performance. Simply reducing carbon is a valuable step, but it doesn't have any measure of accountability to planetary boundaries. I think the next major step for the corporate sustainability agenda is to tie a firm's performance to carbon, nitrogen and phosphorous cycles, biodiversity measures and land use changes that are driven by the firm's activities, both for the company themselves and throughout their supply chain.

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