New Metrics
The Implications of an Emerging Corporate Conscience for Business Metrics:
Part 15

In 14 earlier parts of this series, Claire Sommer and I developed 26 pitfalls in the sustainable business metrics field, based on the experiences of many mostly non-business fields (Find them here.)

In a recent and separate three-part series (see here), I presented the accumulating case for the existence of a corporate conscience amongst mainstream companies, a graying of the line between how at least some companies are coming to view their self-interest and the state of the society and planet of which they are a part. Returning to our “Pitfalls” Series, we look at some implications for metrics.

Pitfall 27: Don’t forget there really is something different about sustainability. While this is always true, it’s particularly relevant to the "emerging-conscience" company, including the acceptance of the challenge to its fundamental role to include sustainability problem-solving. That realization usually comes before the process of figuring out how to measure performance.

Perhaps a company that is really developing a conscience, whether it is willing to reveal it or not, should be considering the use of metrics that reflect this direction. This would be beyond any possibly first-time, buzz-creating plunge into morality, and would show that that initial action was not an aberration. Further, such a company, realizing the widespread skepticism with which it will be hit, could show certain metrics that speak specifically to critics’ likely issues to try to show its conscience is real, even if still developing — regardless of its current performance on the selected metrics.

What might be some suitably bold metrics, or areas that could be converted to metrics, to show the first? There are three types: challenging ROI, taking environmental thinking deeper, and beginning to seriously take on the social side of sustainability, particularly a few of the difficult issues.

Challenging ROI and Who Gets the Benefits

Andrew Winston, at a forum at Fairleigh Dickinson University to discuss his book, The Big Pivot, actually said: “ROI is broken. Phew, there, I’ve said it,” and called for ROI to be “reinvented.”

The author could vouch that no one rioted, no groans were heard from the Business School upstairs, and any hovering ghosts from lectures past withheld their “boo”s.

As one possible replacement, Jonathan Cloud endorses Michael Porter’s and Mark Kramer’s idea of shared value, or the “creation (by business) of economic value in a way that also creates value for society by addressing its needs and challenges.” Cloud quoted them: “Business must reconnect company success with social progress.” Further, “It’s not on the margin of what companies do but at the center.”

As a step toward that, Sustainable Brands’ Dimitar Vlahov states: “… one might argue companies in most, if not all, industries should be able to create profitable extensions to their core activities in line with the principles of social enterprise,” such as shared value.

As shared value is so central to a conscience, whether it’s a formal internal mandate or not, it’s hard to see how a metric of a company’s performance on it is not necessary.

Taking Environmental Thinking Much Deeper

William McDonough and Michael Braungart criticize the somewhat common triple bottom line concept, at least in its practice, as “it often appears to center only on economic considerations, with social or ecological benefits considered as an afterthought…”

Instead they propose a "triple top line" orientation, involving a questioning while still in the product design stage about new ways to create value in all three elements of the sustainability triad. These questions, and even the premises behind them, might seem strange, as they reflect both this higher environmental weight and a unique perspective to “widen the scope of input … to embrace a broader range of ecological and social contexts and a longer time framework as well.”

Specific questions could include: “How do I create habitat? What kind of soap does the river want?” “What will work in the future?" "What kind of world do we intend?" “How can our products and services help to create and sustain it, so that future generations are enriched by what we make, not tyrannized by hazards and waste?”

In another break from standard practice, we mentioned context-based metrics in Part 6. This links the known and approximate ecological and social limits of the planet and society to companies’ goals. It challenges the usually unnoticed and artificial boundary between the company and the planet of which it is an undeniable part. Mark McElroy, the concept developer, makes a strong case that “context” should be part of companies’ sustainability reporting, going so far as to question the appropriateness of metrics reporting that doesn’t include it.

Relatedly, as we also discussed in Part 6, some companies have begun to identify and put a value on their use of ecosystem system services, like the misleadingly “free” cleaning of water by bacteria, showing the beginning of a consciousness that their economic welfare depends on the health of the underlying ecology.

Finally, to develop the appealing concept of a “circular economy,” the Ellen MacArthur Foundation and Granta Design are developing "Circularity Indicators," “…to measure [company] progress in making the transition from linear to circular models,” and “…the extent to which the material flows of a product or company are restorative.”

The Neglected Social Dimension of Sustainability

While the sustainable business world hasn’t completely avoided the “social” part of the triad, as the Global Reporting Initiative offers many choices for companies to consider, this area rarely gets much attention at sustainable business metrics forums. Renee Morin of PRé — which has led a group of companies in the Roundtable for Product Social Metrics to develop a Handbook for Product Social Impact Assessment — raises the stakes: “We all know that without addressing the social aspects of sustainability, our three-legged stool isn’t going to stand up very well, and getting a handle on social impacts is paramount to a company’s long-term success.”

Pitfall 28: A company with an “emerging conscience” should not feel bound by existing metrics, but should choose additional ones that show this orientation.

Note that there may turn out to be some similarities between a few of the above metrics and the work of the Sustainability Accounting Standards Board (SASB), which is also developing new metrics. However, the latter’s purpose and perspective are very different — its goal is to “manage non-financial risks and opportunities.” Its metrics help create “long-term value,” in part through standardization leading to comparability between companies. The dominant perspective, while taking consideration of stakeholders, is still that of the company’s.

Whereas, the intent here is to be exploratory and help companies in their re-thinking of their fundamental role as active sustainability problem-solvers.

SASB’s focus on “Materiality” reinforces both the overlap and different perspective and purpose. Joel Makower puts it this way: “…this is not necessarily about reducing a company’s ‘carbon footprint’… It’s about doing business in a world in which climate change impacts become all too real” — whereas an “emerging conscience company” probably should be seriously planning, if not already doing, major reductions in its carbon emissions, as well as catalyzing others to do the same.

In the next part, we will explore how the emerging conscience company could use metrics to speak to some of the concerns of skeptics.

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