October 20

How do you measure, improve, and communicate your company’s sustainability performance?

A business creates value by measuring, improving, and sharing its sustainability performance.  Besides the reduced environmental harm and increased social contributions of running a sustainable company, a January 2020 report showed that "Between 2013 and 2020, companies with consistently high ESG performance tended to score 2.6x higher on total shareholder return than medium ESG performers."1

Businesses that report sustainability

  • have consistently enhanced their brand value, 
  • boast better shareholder returns, and 
  • enjoy transparent relationships with stakeholders.  

Step 1:  Identify the sustainability metrics for your industry.  

Choosing the right sustainability metrics depends on the industry or sector the company conducts business within. The GRI and SASB standards provide a framework to select and report sustainability metrics in a structured and transparent way. 

Sustainability metrics consider the business's environmental, social, and economic aspects.  

Environmental metrics include, but are not limited to,

  1. Resource usage metrics, including energy, materials, water, and land.
  2. Emissions, effluents, and waste metrics, including their atmospheric impact, aquatic impact, and impact on the land.  
  3. Other environmental impacts include compliance, the lifecycle of products, impacts on protected areas, materials sourcing, non-renewable resources, and other possible environmental metrics.   

Social metrics include, but are not limited to,

  1. Human capital metrics, 
  2. Human rights metrics,
  3. Society metrics,
  4. Product responsibility metrics related to consumer health, safety, and satisfaction.

Economic metrics include, but are not limited to,

  1. Profit, Value, and Tax,
  2. Investments,
  3. Other possible economic metrics include competitive behavior and risk management.

Step 2: Collect data to measure your company's existing sustainability performance. 

"What is not measured cannot be managed."  

When collecting data on your company's existing performance, it is crucial to consider the entire life cycle of the goods and services provided; this includes metrics of

The upstream activities of your goods and services, such as  

  • Raw Material Extraction,
  • Raw Material Processing,
  • Material Production,
  • Finished Product Assembly.

Your company's activities at its facilities, including its 

  • Offices, 
  • Retail spaces, 
  • Company vehicles, 
  • Employee commutes, 
  • Business travel.

And the downstream activities associated with your goods and services, including

  • Transportation and distribution,
  • Consumer Use,
  • End of Lifecycle treatment and disposal of sold products.  

While this may seem daunting, you can start with your company's largest supplier and determine your share of responsibility in each stage.

A systematic analysis of the environmental, social, and economic metrics will give you an accurate view of the existing risks and opportunities and help you set goals around your quantitative findings.    

Step 3: Set a clear destination of what success looks like and set goals grounded in quantitative findings.

The sustainability journey has no finish line; however, developing time-bound goals guides success. Your company's Sustainability Report or Corporate Social Responsibility (CSR) Report publishes these goals and makes them available to employees, customers, shareholders, investors, suppliers, and competitors; therefore, it is crucial to make these goals achievable.  

While using SMART goals (Specific, Measurable, Attainable, Relevant, and Time-bound) is recommended, the goals must also be scientific and align with the company's core business values. Multiple frameworks outline how businesses should set scientific goals to serve the climate crisis best.

The presiding framework is the United Nations Sustainable Development Goals (SGD) which outline 17 Goals that define the action that all countries must take to improve health and education, reduce inequality, spur economic growth, tackle climate change and preserve oceans and forests. The UN Global Compact provides a platform for businesses to engage with stakeholders from Government, the UN, civil society, and communities to support the SGD. Another framework is the Science Based Target Initiative (SBTi), which "drives ambitious climate action in the private sector by enabling organizations to set science-based emissions reduction targets."

The correct framework again depends on the industry or sector of the company and the company's mission, ambition, and capabilities.  

Some examples of high-level sustainability goals from well know brands:

"Avoid one billion metric tons (a gigaton) of greenhouse gases from the global value chain by 2030."Walmart.
"Our goals are ambitious – we aim to achieve net zero emissions by 2050 and make all our packaging reusable or recyclable by 2025, and we're investing more than $3 billion globally over the next few years to accelerate our work." - Nestlé.
"Achieve 100% renewable electricity globally by 2030, with an interim target of 75% by 2025." - Ball.

Step 4: Embed a straightforward measurement, analytics, accountability, and communication strategy into the company's DNA.

After investing in in-depth sustainability analysis and setting sustainability goals, it would be a disregard to use "sustainability" as a buzzword versus a business strategy. Thus, it will be necessary to develop an internal framework that clearly defines, and holds accountable, the business sustainability goals with concrete actions.  There are various ways a company can do this; the CSR report and ESG assessment provide a foundation for companies to uphold, improve, and report their sustainability goals.    

  1. Corporate Social Responsibility (CSR) 

A CSR is a business model for companies that define their internal processes and culture and helps them report their sustainability efforts to themselves, stakeholder, and the public. A CSR is about building accountability and encompasses the activities the company undertakes to achieve a more significant global impact and reach its sustainability goals.  

  1. Environmental Social Governance (ESG) 

An ESG assessment measures sustainability and is popular with investors.  Financial performance is the critical purpose of an ESG valuation.  It focuses on quantifying the existing accountability of a company's sustainability performance and has become a set of criteria for sustainability assessments.  

The corporate nature of the company, the industry within which it conducts business, and its mission, ambition, and capabilities determine the reporting framework of its overall accountability strategy. 

The above provides a general structure for developing a cost-effective, people-centered, and industry-specific sustainability strategy.  

The sustainability journey has no finish line, but by taking one step at a time, your company will have the momentum needed to adapt and thrive in this world challenged by environmental and social change. 

Let us help you innovate, transform and lead...

Is your company looking to reduce environmental harm, increase social contributions, enhance its brand value, and enjoy transparent relationships with stakeholders through sustainability performance reporting? Get in touch with Milepost to develop your sustainability reporting strategy.