How Do We Measure the Impact?

The Right Ruler

One of the first sustainability obstacles faced in the business world, is how do we measure it? Even after management has decided that the natural environment, which includes people (ie. the community), is an issue to their enterprise, many might find dealing with qualitative concerns more problematic and vague. The obvious question being, “How do we measure positive impact in a community?” As is often stated, you manage what you measure. So how do we do it? Fear not, there are metrics!!

Assessing the Corporate Health

JESSICA CAPSHAW, SARA RAMIREZ, PATRICK DEMPSEY, SANDRA OH, ELLEN POMPEO, KEVIN MCKIDD, JAMES PICKENS JR.

Indeed you can measure the health of a community (childhood mortality rates, cancer cases, workplace accidents, etc.), you can measure literacy levels, nutrition levels, the number of student enrollments, the possibilities are endless. Looking internally at a corporation, there are a number of indicators as well, be it energy consumption, waste produced, or space and inventory consumed. Each component can also be a source of innovation and competitive advantage. So perhaps the issue is that there are too many possibilities, and it can be overwhelming. In that case, let’s look to what some institutions out there are doing and see what the existing framework looks like.

Some Institutional Providers

Sustainability Index

For instance, the first one that comes to mind is the Dow Jones Sustainability Index, which attempts to quantify the environmental, social, and governance (ESG) parameters within an organization. These may include (but are not limited to) water and energy consumption, CO2 emissions, human value capital, and environmental liabilities. Another solid metrics provider is Sustainalystics, this one compiles several different incidences together. It also incorporates a firms’ financial health of course, and the combined assessment has been able to yield excellent returns (21.8% at the end of the first year). Indeed, the idea that being sustainable simply costs more and will degrade business strength and agility is an incorrect myth. The empirical data says otherwise. To be sure, if companies simply throw money at an attempt to project a green image (green washing) without actually embodying the principals, this can and does prove detrimental. However, companies that set clear missions and guidelines that include concern for more than merely the financial bottom line have been able to recoup the costs and increase the benefits.

The Triple Bottom Line

The Triple Bottom Line

Some of the more obvious goodies include enhanced resource efficiency and reduced operating costs, improved environmental performance, ensured legal compliance, reputation gains, an upgraded learning organization, newly developed sources of innovation, and of course genuine sustainable growth. Plus all the countless indirect contributions that a sustainable mandate can provide. Did I mention employee motivation? Regardless of your own personal motivation for reading this blog, I hope that I can at the very least offer you the notion that understanding and implementing the need for measuring and applying sustainability can not only present competitive advantage in the business world, but it is also a growing (and critical) trend to the rest of the world. Thankfully more and more firms are adopting the practice of accounting for the Triple Bottom Line (TBL: Financial, Social, and Environmental), or simply the 3 Ps: People, Planet, Profit. As difficult as this may seem at the outset, it is highly doable, and in fact undoubtedly vital to the sustainability of a corporation and the planet at large.

 

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