New Metrics
How to Make a Material Impact on Your Company's Sustainability

Sustainability Rising

It will come as no surprise to this community that sustainability has moved well beyond social and environmental responsibility circles to become a C-suite priority.

The numbers give voice to the trend:

• In 2013, 72 percent of companies in the S&P 500 published a separate sustainability report, up dramatically from just 52 percent in 2012.
• A 2014 PwC survey found that 74 percent of CEOs believe measuring, analyzing, and reporting on environmental, social, and governance (ESG) data and sustainability efforts were key contributors to long-term success.
• The 2016 Corporate Knights Global 100 list found that 87 of the 100 most sustainable corporations provided a monetary bonus to executives who achieved sustainability targets.

Moreover, the data shows that companies putting a business focus on material sustainability/ESG factors significantly outperform the market. And with 77 percent of investors accessing ESG data before making investment decisions, as reported in a 2014 Bloomberg survey, it’s clear the financial community has caught on to this connection.

So, does your company have all of the ingredients you need to build a sustainable sustainability strategy?

Build Focus Within Your Sustainability Strategy

You can’t do everything, so first things first: Start with understanding what’s material (i.e. a core input or factor in the long-term success of your business).

The Sustainability Accounting Standards Board (SASB)’s Materiality Map is a useful tool to determine the material factors for a specific industry. Once material issues are determined, SASB guides you through next steps by offering standards for companies to use that are designed to fit within your business’ 10-K or 20-F filings. Covering 10 markets and more than 80 specific industries, SASB is designed for scale and global standardization.

And although SASB traditionally focuses on publicly traded companies, it’s still useful to privately held, nonprofit, or government entities, too. Organizations that report sustainability and environmental data using SASB standards gain a competitive advantage over their peers through increased investment, improved corporate reputation, greater employee loyalty, and the reduced operational costs associated with higher energy efficiency (not to mention operational efficiency, too) and less waste.

Besides SASB, other reporting standards can provide similar insight into materiality and sustainability reporting. Whether ENERGY STAR, GRESB, CDP, GRI, or another standard that makes sense for your industry, identifying, tracking, and reporting on the factors that most impact your business leads to better financial health and more positive relationships with investors, employees, customers, and regulators.

Set High-Impact Goals

Now that you understand what’s material to your business, focus your goals and key performance indicators on those most important elements to ensure your program has the maximum impact. Energy and waste reduction are key goals for most organizations since they are very likely to be material, but be thoughtful in how you set goals: A 20 percent reduction by 2020 sounds like a great marketing tagline, but is that really the right goal for your business?

On the heels of the global Paris Climate Conference in which 192 countries agreed to work together to keep global warming to less than two degrees Celsius, many leading companies are adopting science-based goals — they calculate what percentage of the world’s emissions they touch, and how much they would have to reduce in order to keep climate change at less than two degrees.

If that sounds a little too sophisticated for your company, you can start with data-driven goals with aggressive stretch targets. With the right metrics in place, you can build a strategy that integrates sustainability into the fabric of your organization, and develop a reporting strategy that ensures investors, potential employees, customers, and other key stakeholders understand and leverage data to make informed decisions about your business.

This is about continuous improvement and transparency and making meaningful progress against a more limited set of high-impact goals, not starting from day one with an unwieldy program.

Prepare For Successful Implementation

Sustainability objectives are most effectively met when supported by a comprehensive, strategic plan that includes people, process, and technology:

People

In most organizations, responsibility for becoming more sustainable in energy use is spread across a dozen different functions — operations, facility management, finance, even human resources — and as with most other operational disciplines, if everyone owns it, no one owns it. So first, assemble a team that will drive your strategy — and assign accountability — and then give them the tools to do their jobs. Because you’re typically dealing with multiple parts of a business, often in multiple geographies, appreciate the fact that each person comes to the equation with different skill sets, so the right tools will also give you visibility into how they’re doing.

You can achieve visibility in a number of ways; many organizations today ask different functions to report key performance indicators manually and roll that up to the team that has accountability, but that can waste valuable time and resources. More advanced organizations deploy software-based tools that provide a single source of truth for all parties and dramatically streamline time spent reporting, allowing for more time to focus on action.

Second, engage your employees. Energy is one of the few business inputs into which all employees can have a meaningful impact; even more importantly, engaging employees around your goals is critical to overall success. Give them a way to follow what the organization is doing, understand your goals, and learn how they can contribute. A few companies have built gamification solutions to help employees contribute in high-impact, high-visibility ways, but really, any effort to drive communication will have a positive impact.

Process

To make sustainability and energy management part of the fabric of your organization, it’s likely going to mean changes to the way things are done. You need the right policies in place, and you need the visibility to enforce those policies. Most large enterprises have extensive travel policies, expense management policies, safety and operational policies — yet few have documented and enforced best practices around sustainability and energy, even though energy is a major operational expense.

Consultants such as PwC and most technology companies have professional services teams that can help you build a roadmap for transforming your business, ensuring you take an enterprise-wide approach, involve the right stakeholders, and build policies and plans that are designed to stick. These experts understand how to set a direction for your organization that will ensure your new strategy is not just effectively implemented, but embraced. Consider enlisting one as part of your plan.

Technology

Ten years ago, sustainability management software was little more than glorified spreadsheets with some dashboards that few people could understand. But these tools provided little information for business managers to make real decisions about how to better manage costs and make a material impact on the business. With the emergence of dozens of new sustainability disclosure laws, the materiality of sustainability (especially energy), and the increasing demands from investors and other stakeholders for transparency into sustainability, new software solutions have emerged as a category of must-have technology for businesses that are committed to managing sustainability with the same discipline they manage other material portions of their business.

Since energy is one of the obvious material sustainability factors, energy intelligence software, or EIS, gives organizations the visibility to reduce risk and consumption, and control costs. With EIS, organizations are finding new ways to purchase clean power and meet renewables targets, and understand where onsite renewables will have the greatest impact. It also aggregates data to track performance against specific goals, and centralizes project management.

Given that “transparency is an economic engine,” finding the right technology solution is imperative to the reporting aspect of your sustainability strategy, too. Energy intelligence software streamlines reporting so internal and external stakeholders alike get the visibility they need, and allows your team to spend more time driving change versus just pulling data or meeting ad hoc requests for information.

Promote Progress and Celebrate Success

Once you’ve built and started executing against a solid sustainability strategy, it’s important to celebrate as you achieve milestones big and small. Promoting achievement of energy and carbon goals builds your brand and can help attract and retain employees — and it can also serve as a sign of superior management to investors and regulatory bodies.

Staying focused on the most material factors to your business, and on aligning the key elements that will make for a smooth implementation of your plan, is key for success.