“Forward-looking corporations have figured out that a focus on environmental, social and governmental (ESG) factors is not just a bid to burnish their image, but rather it is a necessity in today’s market place. And if done well, it is a true competitive advantage.” (www.knowledge.wharton.upenn.edu)
“March Madness lasts only three weeks, but Metric Madness goes on all year long.
What is Metric Madness? It’s the notion you can run anything by the numbers, and it’s become the hottest concept in business today.
One scientist predicted that the great discoveries of the future will come from finding patterns in vast archives of data. “The next Jonas Salk will be a mathematician, not a doctor.” (Al Reis, Advertising Age, May 04, 2009)
“We’ve been collecting data for six or seven years, but it’s only become usable in the last two or three, with enough time and experience to validate conclusions based on the data.” (Manager of Customer Data at UPS)
Metrics and Standards Become the Rule
The paradox about Sustainable business is that there are too many standards and not enough metrics.There’s truth to that, though it’s misleading. For all of the hundreds of eco-labels and certifications, there remain huge gaps — product categories where there are few or no labels or certifications, from cars to clothing to cosmetics. Many of the existing standards and certifications are limited in scope, focusing on, say, energy consumption or greenhouse gas emissions, but not necessarily on any of several other impacts a given product may impose on the environment. (State of Green Business 2011, www.GreenBiz.com)
Companies Aim for ‘Zero’
The notion of factories without Dumpsters isn’t new. Xerox, for one, began an internal initiative in the early 1990s known as the Waste-Free Factory. It hasn’t yet achieved that goal, but it has driven the company to reach a 92 percent recycling rate for non-hazardous materials.
One issue is that there is no generally accepted definition of what “zero waste” means.
A number of organizations are stepping in to fill the gaps. Underwriters Laboratories Northbrook, IL (www.ul.com) is one example:
Its UL Environment division began issuing a range of standards in 2010 that takes into account their entire lifecycle, from raw material extraction to customer use to disposal. (UL Environment is also partnering with GreenBiz to create a company-levelsustainability standard, ULE 880, intended for manufacturing firms.) Green Seal expanded its scope with a new pilot standard that seeks to certify the sustainability of an entire company. The group’s new GS-C1 certification is aimed at consumer goods manufacturers.
Among the global organizations pushing sustainability reporting is the Organization for Economic Co-operation and Development, or OECD, a forum for industrialized nations.
During 2010, the OECD teamed with the Global Reporting Initiative to bring “increased coherenceand consistency” to sustainability reportingby big corporations. GRI’s SustainabilityReporting Framework is the world’s most widelyused sustainability reporting mechanism.
GRI, for its part, is one of several global organizationspushing to marry sustainability reporting with financial reporting. The idea is that sustainabilitymetrics be standardized and integratedinto the financial reports required of all publiclyheld companies and, presumably, those voluntarilyproduced by non-public companies. The notion of such an integrated annual reportis the ultimate goal for reporting advocates, asit would embody the triple bottom line of social,environmental, and economic performance.Such reports will be forthcoming within a fewyears from a handful of leadership companies,though it could take a decade or more beforeintegrated reporting becomes mainstream.
During 2010, the U.S. Federal Trade Commission issued a long-awaited update to its “Green Guidelines,” which guides companies on what they can and can’t say about products they are promoting as environmentally responsible. The guidelines were originally issued in the 1990s and hadn’t been updated for more than a decade.
The proposed changes weren’t exactly earth-shattering, adding guidance on such matters as biobased materials, products made with renewable energy, and those claiming carbon offsets. Like their predecessors, the guides represent a low bar, intended to eliminate outright misrepresentation and fabrications. And they don’t address some of the more potent claims a company can make about its product or packaging. Cradle to Cradle — a standard that certifies products whose ingredients can be recycled back into nature or industrial processes — is not mentioned. Biomimicry — products inspired by nature that use less energy and whose designs or materials mimic plants,bugs, sea life, and other critters — you won’t find guidance for that. Green chemistry — the next-gensubstitutes for some of the world’s most toxic chemicals? It’s nowhere to be found. There’s no guidance on the word “sustainable” or “sustainably.” Or “green.”
While simple labels are more easily understood they often leave out material parts of a product’s environmental performance wrote Pete Girad, The Timberland Company. The trouble with simple labels is that they often put a dichotomous framework, green or black, friendly or unfriendly, on what is usually a relative environmental improvement, more energy efficient, and fewer harmful chemicals, less water use. While everybody loves simple solutions, nobody likes to be misled. Unless we can show how a product has achieved zero impact then blanket claims of greenness may lead to more scorn than adoration.
So if we go through the trouble of detailing how we measure the environmental performance of products and many consumers rarely read those details, it’s just a waste of time and paper, right?
I’ll argue its not, because when I interact with sales and consumers the feedback is not that they need to understand the boundaries of our climate model or chemical tracking, which we provide, but rather they want to understand what we are designing against and most importantly that we have a credible program to track progress. Just like consistent financial reporting builds confidence in a company’s ability to deliver financial results, consistent and credible environmental reporting builds consumer confidence that a company has the ability to deliver on ‘green’ claims. (Pete Girard, the Timberland Company).
Despite … success stories, however, the science of understanding how such social and environmental programs drive consumer behavior remains an inexact one. “We don’t have the right metrics,” N’Diaye noted. “We haven’t done a good job of tying sustainability performance with business performance. We need to better understand the consumer and see how sustainability can drive the purchase decision. About 75% of people would say, ‘All things being equal, I would buy green’. How you translate that into an actual purchase decision … is something else.” (www.knowledge.wharton.upen.edu).
Metrics and Storytelling
Whatever the metrics they have to tell a story (ultimately) that addresses three cognitive barriers … that (may) have particular relevance to behaviors impacting the environment:
First, despite claiming that they want to leave the world in good condition for future generations, people intuitively discount the future to a greater degree than can rationally defended.
Second, positive illusions lead us to conclude that energy (and other climate, social and economic) problems do not exist or are not severe enough to merit action.
Third, we interpret events in a self-serving manner, a tendency that causes us to expect others to do more than we do to solve energy (and other climate, social and economic) problems. (Cognitive Barriers to Environmental Action: Problems and Solutions, Lisa L. Shu, Max H. Bazerman, Working Paper 11-046, Harvard University)
Empathize with your audience.
Emphasize authenticity and transparency (internally and externally).
It’s the approach, it’s the process, and it’s the mindset – a story teller.