You are aware of the business arguments for establishing a sustainability or “green” program and are seriously considering or have begun such a program. It is therefore important to plan the proper metrics of your program in order to demonstrate success so that all stakeholders understand the benefits and achievements of your program, be able to compare your program to others, and avoid any accusation of “greenwashing.” You need to meet standards that certify your success. This article discusses the proper approach to successful metrics and several rating systems.
The first concern is your immediate goals. It is important to focus on one or two matters so you can show early progress. Given its high cost, energy and therefore greenhouse gas (GHG) emission reductions are a popular starting point. Water conservation is critical in certain industries and locations and is also a good metric. Waste reduction or recycling is another. In any case, focus on developing an initial baseline that estimates accurately the parameter in question. One should normalize data using production parameters (for example, tons GHGs per square foot of space or per unit of product or per revenue) for more meaningful comparisons.
Whatever changes you implement for your program, be sure to correlate these to changes in the metric in question. So if you performed projects that have improved your energy efficiency, be sure to quantify the energy parameter changed (Kwh of electricity or gallons of fuel) and convert that using the proper published emission factor to tons of GHG emissions reduced. Of course, it’s also helpful to correlate this to money savings. Remember that most stakeholders often care more about the summary metrics of GHG emissions reduced rather than the details of your energy efficiency strategies. But be careful to have the full details handy for 3rd party auditors or other reviewers.
As your sustainability program grows and successes achieved, develop reports to show how successful your efforts have been and will be in the future. You should develop written and online sustainability reports to show progress, often in pie charts or graphs.
As your program matures, you may be asked or want to provide data to an ever growing number of sustainability indices to publicize your achievements. There is a huge number of such sustainability rating systems. According to SustainAbility, there are over 100 rating systems, 80% of which started in the last decade. Some are part of mainstream organizations (i.e., Walmart’s Sustainability Index; Newsweek’s “Green Rankings”); others are its own specific entity (i.e., Carbon Disclosure Project [CDP]; Climate Counts’s “Company Scorecard”). Some systems are specific to one area (i.e., carbon), while others address a number of sustainability areas. Sustainability ratings are being used by a growing number of investors, consumers, the press, etc. to rate companies.
Typically, these rating systems request specific information from target companies. For example, CDP sends an annual questionnaire to all S&P 500 firms. Other rating systems only review publicly-available documents about a company. Some do both. With a company potentially receiving dozens of such requests of different complexities each year, it is easy to not respond. But some indices rate non-respondent companies. How does a company choose which to submit data to and which not?
It is important to research any rating system that may rate your company and you wish to provide information for. Here are 3 major criteria. First, does it have high credibility? Is it well read and respected? As discussed above, many well known organizations with large readerships provide sustainability ratings, such as Newsweek and Bloomberg. This guarantees name recognition and readership. Others, though less known, have strong sponsorship to ensure respect (i.e., CDP). Research into how many people read these indices and how often they are cited in reports can address this first criterion.
A second criterion is credibility. Are the ratings believable? Are they based on publicly-available documents which may lack true context or accuracy? Or are ratings not posted for a company that does not supply data? For example, in the CDP, companies that do not return their questionnaire are not rated, but pointed out as non-responders. Related to this is the thoroughness of the data sources. Is proper data reviewed before being evaluated? A credible rating system is thorough in its data evaluation.
A third criterion is transparency. Does the rating system publish in detail its evaluation methodology? This is critical to know how different companies are evaluated in terms of sustainability achievements and policy. A rating system without an overt methodology may change from year to year. Also, a transparent methodology saves you time in gathering and submitting data in a knowledgeable and professional manner.
Marc Karell is the owner of Climate Change & Environmental Services. Get more useful information in our blog: www.CCESworld.com/blog.