New Metrics

#NewMetrics '15:
Willard, Gowdy Present the Holy Grail of Managing Non-Financial Performance

“As a business community we are making progress, but not enough, and not fast enough.

By Sarah Andersen | Published 9 years ago | About a 4 minute read

“As a business community we are making progress, but not enough, and not fast enough. Perhaps this stake in the sand will increase urgency around this.” — Bob Willard, on the Future-Fit Business Benchmark

The New Metrics ‘15 workshop sessions kicked off on Tuesday morning with a deep dive by Bob Willard, author of The Sustainability Advantage and co-creator of the Future-Fit Business Benchmark; and Jeff Gowdy, professor at Vanderbilt University and creator of the PivotGoals database, into their respective tools for science-based goal-setting for companies.

Gowdy lead the discussion with an introduction to the theory and development of the PivotGoals tool — a database of the environmental, social, and governance (ESG) targets set by the Fortune Global 500 companies, aiming to track their current level of ambition in goal-setting. This unique model for benchmarking CSR/sustainability goals was built through the culling of Global Fortune 500 (GF500) company websites, CSR reports, annual and integrated reports, and other public information available around their explicitly stated ESG goal-setting. This information is then loaded into the PivotGoals database and can be used for industry benchmarking through keyword, name, goal type, focus area, industry, intensity, aspirational, or achieved.

So what is the current landscape of the GF500? Based on the PivotGoals analysis, 168 of the top 200 companies have at least one environmental, social, or governance goal: 69 percent of these goals are specific and time-bound, and they are predominately based on operations. The top overall goals for companies in the environmental category are around climate (over 70 percent), energy (65 percent), waste (47 percent) and water (45 percent), however there is a notable and concerning lack of packaging and biodiversity goals. Less than 50 of the GF500 have stated social or governance goals, most likely due to the challenges related to measurement. Nestlé and Unilever are currently leading the pack with both goal-setting and coverage of ESG targets, both covering 23 of the 29 goal categories.

Significantly, no company has set goals across all ESG categories. Two reasons stand out — potential lack of external publication of goals, and lack of materiality to specific goals. The goal of this system is to help drive greater accessibility and transparency for stakeholders and investors. Searches in historical goal-setting and achievement can ultimately be used as a ‘watch-dog’ to call companies out on their progress, and disclosing details on why goals were or were not met.

But how are companies to know what goals they should be setting? How will they know if they have ‘arrived’? The Future-Fit Business Benchmark offers a set of goals that collectively define what every company must do to safeguard the possibility that humanity can flourish forever. The open-source framework outlines 28 social and environmental goals across business areas that apply to all companies, regardless of industry or size. Willard introduced the second public draft of the Future-Fit Business Benchmark — based on best-available science, it defines the necessary set of goals and associated KPIs for any company that wants to be fit for the future.

“If you meet these 20 goals, you are done,” Willard asserted. “We’ve worked hard for (the goals) not to be overlapping but to give a vision for a sustainable business.”

This Future-Fit model is a self-assessment tool to compare company goals verses science-based goals — a way to recognize a sustainable company if we see one. This assessment articulates things that are not new to companies, and every goal is echoed by other standard reporting metrics. These standards can also be mapped to other ESG metrics standards available (GRI, for example).

“Businesses need to be careful about the impact they are having on society and the environment — without them, we don’t exist. Treating the environment and society as stakeholders — they are material issues to business, as without them, we would not function,” Willard said.

Companies are mutually accountable for the impacts of the upstream supply chain and end-of-life disposal, but this is a reality that most companies are not yet embracing or addressing.

As Gowdy and Willard asserted, as people who care about this we need to be much more effective in engaging with our executives — the current course and speed shows little evidence that we are getting better. If monetization is what will get their attention, then that is what we need to get better at. The ultimate goal? Future-Fit Benchmarks should be the new normal in 10 years.