Sustainability: Let’s Get Rid of the Myths & Bring on the Metrics

If myths surrounding sustainability are getting in the way – face up to them and counter them, says  Dr Kenneth Amaeshi is the director of the Sustainable Business Initiative. And Steven Cohen Executive Director, Columbia University’s Earth Institute says we must have reliable sustainability indicators. Without measurements, it will be next to impossible to tell if any management actions are making the situation better or worse. As such, it is of utmost importance for a set of indicators of sustainability, or sustainability metric, to be created to measure and report the efforts of companies, cities or nations. Read more

Steven Cohen Executive Director, Columbia University’s Earth Institute

We Need to Accelerate the Development of Sustainability Metrics

Steven Cohen in Huffington Post (14 October 2013):

If we are to make the transition to a renewable resource based economy, we need to do a better job of measuring the sustainability of our organizations, cities and nations. In an excellent article published in 2002 entitled “Using Sustainability Metrics to Guide Decision Making,” Jeanette Schwarz, Beth Beloff and Earl Beaver proposed a framework for developing measures of sustainability within organizations. In that piece, the authors identified what they called the “five basic indicators of sustainability”:

Material intensity

Energy intensity

Water consumption

Toxic emissions

Pollutant emissions

Their very accessible article provides details that define and further explain these measures. Since that time a wide variety of organizations have begun to develop and implement an even wider variety of sustainability measures. The retailing giant Walmart requires its vendors to measure and report their performance on sustainability indicators before Walmart will purchase their products. Many companies are measuring and reporting their sustainability performance in annual reports to their shareholders. These are all important steps in bringing sustainability into routine management decision-making. As Peter Drucker once famously observed, “if you can’t measure it you can’t manage it.” Without measurement, you can’t tell if your management actions are making the situation better or worse.

While the development of these organizational level indicators is critical and must be continued, it is time to begin the process of settling on organizational sustainability indicators that everyone can use. We need a generally accepted set of definitions and indicators for measuring sustainability. We also need independent auditors to verify that these numbers are real. Numbers without verification are ultimately useless.

Just as we have generally accepted accounting practices and clear definitions of financial indicators, we need to extend that process into these more tangible and physical measures of organizational performance: sustainability metrics.

These measures should ultimately be part of overall private sector organizational performance measures, as important as market share, return on equity and profit and loss. In the public and nonprofit sectors, the organization’s overall performance measures would be different, but of equal importance: Sustainability metrics would be reported along with data on crime reduction, graduation rates, medical treatment outcomes, emergency response time and other indicators of public sector performance.

They should also be added to or included within normal organizational process and output measures such as labor productivity/efficiency, value of goods and services delivered, employment, labor turnover and so on. Ultimately these physical dimensions of sustainability must be defined as a key, but routinized element, of organizational management.

In the near future, any organization that is not run to maximize sustainability performance would be considered a poorly managed organization, comparable to a private firm that could not turn a profit or a police department with a rising crime rate. Before long, all effective managers will need to be sustainability managers.

In order to contribute to the process of sustainability metric development, I recently initiated a new research program on Sustainability Policy and Management at Columbia University’s Earth Institute. This research program has initiated a long-term project on sustainability metrics. Our metrics research recently began with an effort to take inventory. We have started to develop a database on all the sustainability metrics we can find. We will attempt to describe these indicators and understand them. Next we hope to analyze the indicators for commonalities in order to identify the world’s most utilized sustainability indicators. This analysis would then form the basis for a conversation about generally accepted sustainability metrics.

Another part of this discussion will focus on the development of local, state and national sustainability indicators. One example of a national sustainability metric was the Labor Department’s effort to measure and report on green jobs. This very important project was suspended last spring due to the budget sequestration in a very short-sighted and even petulant decision by the Obama Administration to respond to the budget cuts. This effort should be restored immediately, and other aggregate measures of sustainability at the macro level need to be developed and implemented.

Measurement may sound like an arcane, technical and unimportant subject, but it is actually critical to action. Its importance to management decision making in a data driven environment cannot be understated. Anything pursued in a serious way in a modern organization is measured. The absence of measurement encourages the most talented people in the organization to gravitate away from unmeasured and therefore unimportant activity.

A sign of the growing importance of sustainability management is the impressive number of efforts to develop and utilize sustainability metrics. Some of this is related to the huge influence of Walmart on its supply chain. By definition, Walmart is in the business of retailing the consumer items having the broadest appeal in the American (and increasingly global) marketplace. By requiring sustainability metrics from their suppliers, those producing goods sold by Walmart must require their suppliers to provide metrics as well. This is having a massive impact on the movement to incorporate sustainability into routine organizational management. However, it is not clear that the measures under development are appropriate, reliable or valid. Moreover, the collection and reporting of these metrics is voluntary, self-completed, inadequately audited and there is no penalty for deceptive, incomplete or incompetent reporting.

The effort to develop an effective system of sustainability metrics is still in its infancy. Academics, business leaders and government officials must work together to develop and refine acceptable indicators. A standardized system of data collection, verification and audit needs to be put into place. In addition to organizational level indicators, we need to do some hard thinking about developing some multiple indicator scales that might chart local, state and national progress toward a sustainable economy. An easy-to-understand measure like the Gross Domestic Product (GDP) or the unemployment rate would help guide public policies encouraging sustainability management.

One possible approach would be to do a better job of including environmental benefits and costs in the GDP measure itself. A revival of the Labor Department’s effort to track green jobs should also be a high priority.

While the American national government seems too busy self-destructing to take on a new and constructive task, it would be quite helpful if a national effort were undertaken to develop and build consensus around a set of sustainability metrics. One of the problems of the current drive to develop sustainability metrics is the absence of an authoritative and potentially objective moderator of the discussion. Corporations and environmental interest groups are key stakeholders in any metrics discussion, but they each have their own axe to grind and cannot be allowed to have the final word. Government has a key role to play.

The good news is that we are ready to have these discussions and develop a way to measure organizational sustainability efforts along with our nation’s progress in making the transition to a sustainable economy. It will take a number of years to complete this work, but the sooner we get started the sooner we will be able to make the transition to a renewable resource based, sustainable economy.

Source: www.huffingtonpost.com

The seven myths of sustainability from The Guardian

Kenneth Amaeshi  in Guardian Sustainable Business Blog (14 October 2013):

Common myths have grown up around sustainability, and if left unchecked they will stand in the way of real progress, writes Kenneth Amaeshi

Of the business leaders surveyed in the UN Global Compact CEO Study on Sustainability, 76% said they “…believe that embedding sustainability into core business will drive revenue growth and new opportunities”, albeit with “…a sense of frustrated ambition”. The study also found that many business leaders felt “they have taken their companies as far as they can” and many “are growing skeptical that addressing global sustainability challenges will ever become critical to their business success”.

As realistic as these findings may be, they tend to reinforce some of the myths that have grown up around the sustainable business agenda. From experience in the field, there are a set of common myths often taken for granted.

1. Sustainability is going the extra mile for society

Every business creates negative and positive impacts. Some of these impacts can be social, environmental and or economic. Commitment to sustainability is the quest to reduce negative impacts and enhance positive impacts – also known as the internalisation of externalities. This is at the very heart of economic justice and should not be seen as doing something extra. It should be the normal course of doing business, otherwise, what is counted as profits could be, in some circumstances, the life opportunities lost by a child miner in Congo or the low wages of an under-paid worker in Bangladesh.

2. Strategy precedes or directs sustainability

We often hear companies claiming to embed sustainability in their strategies. While such claims do suggest sustainability is more than an add-on, they also inadvertently perpetuate the view that sustainability is different to strategy. Unfortunately this myth undermines the view that sustainability is a necessity (and not necessarily a strategic choice). It’s a mindset, which should inform strategy. Sustainability should lead strategy, and not the other way round.

3. Sustainability is profitability

Treating commitment to sustainability as a strategic choice invariably exaggerates the myth that sustainability should be profitable. If sustainability is seen as a firm’s commitment to minimise its negative impacts and enhance its positive impacts, it is obvious that commitment to sustainability should not automatically lead to profitability. However, commitment to sustainability will require imagination, creativity, and innovation to be profitable. In reality, the quest for sustainability is an extra constraint on organisations, which could either make or mar organisations.

4. Every company can be sustainable

There is a view that every legal business can be sustainable. This myth is perpetrated by the view that any business that does some good and does well financially is sustainable. A good example is the oil and gas firms, as well as the tobacco and gambling firms. As much as they are legal, their products and services can be inherently unsustainable (ie their negative impacts on society could be more than their positive impacts). In that regard, no matter how much they try to embed sustainability in their strategies, they can never be sustainable as long as their products and services remain the same. For such industries, sustainability will require a radical shift and innovation – e.g. the tobacco firms’ move into e-cigarettes or oil and gas firms investing in renewable sources of energy.

5. Commitment to sustainability is context dependent

It is often said that sustainability practices vary between industries and countries. It is true that some contexts are more suitable to sustainability practices than others. For example, some argue that the strong institutions (eg markets, governments, civil society, laws) in the OECD countries make it easier to practise sustainability than in many developing countries which often have very weak, institutions. This makes it tempting for businesses to tailor their “sustainability strategies” to different geographies. But sustainability should not be context dependent. The quest to reduce negative impacts and enhance positive impacts should be constant irrespective of contexts. Gas flaring in the Niger-Delta, for instance, is no less a negative impact than it would have been in Alaska or the North Sea.

6. Sustainability is a destination

It is easy to fall into the trap of thinking that commitment to sustainability is a static point – something reviewed once in a while depending on trends or the organisation’s frame of mind at a point in time. In reality, commitment to sustainability should be a way of life. It is a dynamic journey. It means paying attention to societal trends and expectations. An example is biofuels. As much as they are thought to be better than fossil fuels, they become unsustainable once they start to crowd-out food production and threaten the eco-system. Investing in biofuels and not paying attention to the societal dynamics around them is to treat sustainability as a destination and not as a journey.

7. Sustainability is a fad

Some people compare sustainability with such concepts as total quality management and see it as a transient practice. As much as the proliferations of terms – eg corporate social responsibility, creating shared value , bottom of the pyramid – are not terribly helpful, they all have one thing in common, which is the reduction of negative impacts and enhancement of positive impacts. To treat this as a fad is a myth. As long as the quest for economic justice is at the heart of the contemporary capitalist system, sustainability will ever remain relevant. The form may change, but the substance will persist.

If unchecked, these myths will continue to stand in the way of mainstreaming commitment to sustainability. Learning to deal with them is the beginning of sustainability wisdom.

Dr Kenneth Amaeshi is the director of the Sustainable Business Initiative, and an associate professor (Reader) in strategy and international business, at the University of Edinburgh and a visiting fellow at Cranfield School of Management and Lagos Business School.

Source: www.theguardian.com