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New Metrics
Social Value, Meaningful Brands, Human Capital Valuation Set New Metrics Day One Abuzz

As the definition of value continues to evolve, the demand for business to demonstrate its ability to create value of various forms for all stakeholders — and not just profit for shareholders — is increasing, and the question of how this value is identified, measured and communicated becomes paramount. The New Metrics of Sustainable Business Conference has convened some of sustainability’s top minds to examine leading-edge work that is expanding the way business creates, quantifies and manages the value it delivers through the metrics it adopts. The first day saw plenty of inspiring and challenging content, additive follow-up discussion and generally upbeat, can-do attitudes from speakers and attendees alike. Below are some highlights from the morning plenary program.

The day started with brief opening remarks by SB CEO KoAnn Skrzyniarz and Gil Friend, Founder/CEO of Natural Logic, sharing high-level observations on the state of the art in New Metrics development and application, along with examples of recent wins and existing roadblocks. Friend, the morning’s MC, was quick to highlight worrisome results from the latest UN Global Compact/Accenture global CEO survey: 78% of CEOs see sustainability see a root for growth and innovation, but only 45% see it as a priority for business, a scant 33% think their actions are sufficient, and only 38% believe they can accurately quantify the value of their sustainability. Our goal, Friend stated calmly, is clear: to re-invent the economy of an entire planet in one generation, with a clear line of sight showing the impacts of all actions of all companies.

Is the meaning of CSR shifting?

The morning's first speaker, Jason Saul, Founder/CEO of Mission Measurement, shed light on the concept of the 'social value proposition,' the kinds of value it can deliver and how to measure them. In the process, he underlined the distinction between socially conscious and mainstream consumers who respond to 'social value drivers.’ Saul argued that the business logic of CSR/sustainability is fundamentally changing, as CSR is now asking for help to drive the bottom line and businesses are increasingly realizing the value of focusing on the social benefits desired by their core consumers. He asserted that companies have been erring too much on the side of extrinsic business value; intrinsic benefits affect actual consumption, while extrinsic ones don’t.

Jessica Grillo, Chief Livelihoods Analyst of Evaluation & Research for Rainforest Alliance (RA), shared the NGO’s views on the next stages in the evolution of social impact metrics in the context of product certification. She stressed a key line of analysis relating to figuring out larger-picture spillover effects of certification schemes, beyond the immediate impacts on farmers and other workers. Whereas in the past social metrics were limited to measuring compliance, these days RA is examining which broader economic changes in a given region or country might be attributed to its business model.

Reveal, reframe, redesign to upgrade from a functional brand to a meaningful one!

Amy du Pon, Global Head of Data Insights at Havas Media Group, raised the curtain on characteristics brands should lead on to rank among Havas’ most 'meaningful brands.' She described aspects of social and environmental innovation getting the fastest traction and how a brand can innovate towards higher levels of 'meaningfulness' within its industry. Havas Media’s research points to multiple advantages for brands that are able to realize the widest dimensions of both personal and collective well-being for their customers — not only did they outperform the stock market by 120% between 2008 and 2012, but they also command stronger than usual consumer advocacy, purchase intent and overall loyalty. The bottom line, du Pon concluded, is that today’s most successful brands are anchored through the core product, deeply embedded into the company DNA, and feature social enterprise and/or participatory models with respect to their customers.

Lindsay Stoda, Senior Business Analyst for Interface, Inc., followed up on a New Metrics ’12 talk by her colleague Erin Meezan, giving us an update on a pioneering project in human capital valuation that is turning from an abstract modeling exercise into a series of tools allowing corporate HR to make more informed, data-backed decisions and budget allocations. By putting dollar values on human potential quantities previously invisible on corporate financial statements — reflecting the benefits or costs of things such as education, tenure, absenteeism and knowledge decay, to name a few — Interface is now in a position to make data-backed smartly informed decisions around, say, interventions on employee turnover, training and engagement.

Sustainability no longer guilty until proven innocent?

Other highlights of New Metrics day one included a next-frontier ROI modeling exercise by Johnson & Johnson and Deloitte, quantifying a new set of financial benefits and costs related to sustainability — including, notably, intangible benefits such as being seen as a product category leader by customers. J&J’s Joe Wolk stressed that as a finance professional he now evaluates sustainability-related risk estimates (such as the ones produced by this model) just as he would evaluate a traditional marketing or supply chain assessment. This is encouraging news that opens the door to more alignment between companies’ sustainability and finance interests. It’s certainly refreshing to see that sustainability risk assessment is no longer guilty until proven innocent to a VP of Finance at one of the world’s largest corporations.

Find a comprehensive set of slides, audio and video from all sessions in our Learning Library starting October 1st, 2013.