Businesses, by and large, are driven by metrics. The metrics a company chooses, often driven down to the level of individual performance appraisals and executives bonuses, will determine a company’s priorities and direction. So if a company wants to become more sustainable, what kinds of metrics should they be adopting?
That was the question being raised at the second annual New Metrics of Sustainable Business Conference at the University of Pennsylvania in Philadelphia.
The two-day event featured an impressive roster of 63 speakers including Gil Friend of Natural Logic, Dave Stangis of Campbell Soup, Bart Houlahan of B-Lab, Rob Bernard of Microsoft, as well as senior representatives from Walt Disney, SAP, HP, Ben & Jerry’s, Interface, Cisco, and many more.
The talks focused on finding ways for businesses to deliver value to all their stakeholders, rather than just profits for their stockholders. Individual sessions delved into ways to identify that value, and then how to communicate it, cultivate it, and ultimately measure it.
Companies need metrics to “know if what you’re doing is good enough,” said Friend.
As sustainability-minded companies broaden their worldview, they realize the vast interconnections between their actions and the lives of their stakeholders, they begin to recognize that areas they once deemed as non-financial, actually have significant, if indirect economic impact on their business. How, for example, can the presence of a product in the marketplace raise awareness among consumers and potentially change their buying habits?
Just as values cannot be measured solely in dollars and cents, neither can the long-term economic success of a company be measured that way. Personal values draw buyers to products, in some cases, just as strongly as a compelling economic value proposition. Some people buy products that are healthier or better for the environment even if they cost more.
SAP is embedding sustainability scorecards into their enterprise software to help decision makers make faster and better decisions, or as they like to say, “help the world run better.” Its 2012 sustainability report states, “We believe that serving our customers provides us with the greatest potential to create positive change.” Its software solutions focus on five key business areas: energy management, sustainable supply chain, operational risk management, sustainable workforce, and sustainability reporting and analytics.
One issue that received a lot of attention at the conference was the need to share information with both customers and suppliers about materials and practices being used.
SAP’s Tom Odenwald touted the company’s Product Stewardship Network, which suppliers can use to manage product compliance requests from their customers. This is similar to the non-profit Supplier Ethical Data Exchange (SEDEX), which currently has over 30,000 members. Bridgestone America has developed its own online Metrics Hub that includes over 500 individual metrics.
Other resources available for companies wanting to learn more include the Tool Box developed by the World Business Council on Sustainable Development (WBCSD). This document contains a rich set of information about raising awareness and capacity building, measuring and assessing, and managing projects.
This is not a question that businesses alone are addressing. The EPA also has a dedicated effort on this, drawing contributors from multiple regions and disciplines.
Matt Polsky and Claire Sommer have written a series of articles about the pitfalls of sustainability metrics on Greenbiz.com. Among the pitfalls they describe are: counting what is easy to count rather than what is important, mis-categorizing what you think you are measuring, and setting an easy goal because a bold one is deemed impractical or too hard to communicate.
The authors point out that while it is desirable for metrics to be as simple as possible, it is equally important to acknowledge the true complexity of the problem.
Using the UN’s War on Poverty and the Millennium Development Goals as an example, they point out the importance of taking the entire system into account, arguing that the goals as originally conceived, did not acknowledge the role of “broader issues, such as developing countries’ capacity for governance, state of infrastructure and structural causes of poverty.”
In a complex issue like global poverty, if we see things start to improve, how do we know whether it was due to any particular efforts or some completely unrelated extrinsic factor? And how do we know that we haven’t simply shifted the poverty outside of the area that is being monitored? The same questions can and should be asked when it comes to sustainability.