by Judy Sandford
Senior Strategist, Sustainability Communications
For the second year, the New Metrics of Sustainable Business Conference sought to demonstrate how businesses can create value for all of their stakeholders, rather than just profits for their shareholders. More specifically, sessions explored how to identify this value, measure it and communicate it. Business impacts on the environment and society, formerly considered “non-financial,” are now being evaluated for their economic value.
As Gil Friend of Natural Logic explained in his opening remarks regarding sustainability efforts, “You have to ask yourself why what you’re doing is important” and also, “How do you know if what you’re doing is good enough?”
Jason Saul of Mission Measurement addressed how businesses can start to measure social value and related consumer behavior. Consumers most readily respond to beneficial intrinsic factors of products. For example, they are drawn to milk that does not contain growth hormones because it is healthier for them. Consumers also respond to the extrinsic value of products, such as when they purchase lunch from Pret A Manger because it donates all of its unsold fresh food to the hungry at the end of each day. Saul sees the need for both beneficial intrinsic and extrinsic value of products and services.
Even NGOs need to accurately quantify the benefits of their aid. Jessica Grillo of Rainforest Alliance explained how rainforest certification projects are measured not only for product output, but also for how communities are educated about best growing practices, program compliance, and social and economic improvements resulting from certification. To judge the efficacy of a certification program, the results of those who received assistance are compared with the results of those who did not over a three-year period.
Thomas Odenwald of SAP shared how that organization is helping clients to embed sustainability across their value chains and make faster business decisions. This speed helps clients go beyond compliance to better manage energy consumption, chemical use and costs. SAP is also developing shareable scorecards that will allow multiple buyers to evaluate a supplier’s sustainability, thereby streamlining the procurement process.
Lindsay Stoda of Interface, the world’s largest commercial carpet-tile manufacturer, is trying to measure the value of the company’s human capital with the help of the Route2 Sustainability methodology. Although many companies tout their employees as being “their most important asset,” the value of employees is typically not included in a balance sheet beyond employee salaries and benefits. Stoda has started to quantify the return on investment of employee education and tenure, safety and wellness, and general engagement among other factors. Her candor regarding the challenges of demonstrating the financial impact of these factors was refreshing.
Vice president of finance at Johnson & Johnson Joseph Wolk is working with Deloitte to model the ROI of projects before funding decisions are made, using sustainability risk as a key factor. Potentially costly risks might include a new chemical landing on an “Ingredients of Concern” list or a weather event that shuts down a manufacturing plant.
Even if you’re not in a position to make risk management or sustainability decisions, you can work to embed metrics in your area to drive sustainability. Campbell Soup’s Dave Stangis was recently tasked to do just that. He has made corporate responsibility a factor in recruiting and hiring decisions, as well as in performance evaluations and compensation incentives. He has also helped to institute the use of metrics in packaging development, manufacturing improvements and rankings of suppliers.
As you develop sustainability metrics, remember to ask yourself “Why is what I’m doing important?” and also, “How do I know if it is good enough?”