Sustainability metrics can be a difficult thing to measure. In the past, people have used different methods for measuring sustainability by looking at things like carbon emissions, forest cover and water quality. There are some new ways of measuring sustainability since the creation of the Three Pillars of Sustainability in 1987 that look at economic vitality and environmental quality metrics in order to get a more holistic picture of what is going on.
Sustainability has become one of the most important concepts in our society today. It refers to how we use resources responsibly; how we produce goods without harming the environment; and how we grow food without depleting natural resources. The issue is not just about protecting planet earth but also about safeguarding future generations from poverty and hunger as well as global inequality and injustice (Nina). Sustainability is about more than just environmental concerns.
What performance metrics are used to evaluate sustainability?
In the past, many have responded to sustainability by creating environmental quality metrics that looked at things like carbon emissions, forest cover and water quality. These metrics were a good first step in understanding how sustainable a community or company was being but didn’t really give a complete picture of an area’s overall health and prosperity. This is where new metrics are being developed that examine economic vitality and environmental quality in order to get a more complete picture of what is going on.
The main reason for developing new sustainability metrics is because of the complexity in measuring sustainability. The government has moved away from looking at carbon emissions, forest cover and water quality to look at economic vitality and environmental quality metrics.
What are the key sustainability metrics?
These new metrics are already being used in cities around the world, including New York City and San Francisco, CA. These new ways of looking at sustainability will certainly help governments to make better decisions that benefit people today as well as future generations. The next step is to try to implement these measurements on a global scale so that there is more awareness about what is going on around the world in terms of sustainability.
For instance, as cities have become larger, they have needed to find ways of measuring their overall progress while also protecting the environment. One way this has been done is by looking at things like human rights, public health and environmental quality in order to get a more complete picture of the wellbeing of the people in that city. This is called “triple bottom line accounting” (Craven). Other cities are beginning to look at gross domestic product in conjunction with human development index in order to measure the prosperity of their citizens (Dikhanov).
The 4 benefits of using new metrics
There are many benefits of using new metrics for measuring sustainability.
- First, the economy and environment are both included in the measurement.
- Second, it can be an objective and reliable way to measure sustainability.
- Third, it measures the quality and not the quantity of natural resources.
- Fourth, it takes into consideration more of what sustainability is about than just carbon emissions or forest cover.
Also, these metrics are not limited to how the economy functions. They can also be used by governments, companies and even individuals to work towards greater sustainability.
The downsides of using new metrics
Unfortunately, the major downside is that it requires a lot of data to use new metrics properly. It can take years or even decades for some environmental quality metrics like the quality of soil and water to be recorded. Also, it can be difficult to assess how much weight should be given to different factors when using new metrics. This makes it hard to use in decision-making processes. But algorithms are constantly being developed to help synthesize the big data. But we will find ways to make it work, because we always do.
What are the pros and cons of using new metrics for measuring sustainability?
Pros: More comprehensive picture, encourages companies to make their own impact on sustainability/environment better known, more holistic approach with multiple data sources
Cons: Expensive and time-consuming, difficult to gather data, lack of consistency across cities
Pros: People can learn more about what is happening around them, companies can be encouraged to make their environmental impact better known, holistic approach with multiple data sources
Cons: More expensive and time-consuming than traditional methods, difficult to gather data, lack of consistency between different cities
What are the main types of sustainability metrics?
Sustainability metrics seek to measure the progress of organizations, companies, and even countries in their efforts towards environmental protection and good corporate citizenship. Many different types of sustainability metrics exist. Here are some examples…
8 Economic sustainability metrics
- Gross Domestic Product: measures the monetary value of a country’s economic output so it provides insight into how much things are worth.
- Economic growth: this tracks changes in GDP, which is helpful for understanding whether areas’ economies are growing or shrinking and using resources more efficiently.
- Debt-to-GDP ratio: compares a country’s total debt to its GDP so it can be used to determine how sustainable a country’s economy is.
- Population growth: because population growth affects the amount of resources available, this helps researchers understand whether resource consumption is increasing or decreasing.
- Consumer price index: measures changes in consumer prices over time which helps determine economic performance and inflation rates.
- Consumer confidence index: this measures consumer sentiment (which often affects behavior) so it can be used to predict economic performance.
- Unemployment rate: because employment is closely tied to economic growth, the unemployment rate provides insight into how well an economy is performing.
- Gross National Happiness Index: developed in 1972 by Bhutan, this tries to measure quality of life rather than economic status.
8 Environmental sustainability metrics
- Renewable energy generation percentage: measures the amount of renewable energy being generated so it can help determine how much impact an organization’s efforts are having on the environment.
- Carbon dioxide emissions per capita (carbon footprint): measures carbon dioxide emissions on a country-by-country basis; it’s a good indicator of the environmental impact of an individual.
- Water use intensity: measures water use by industry, which is helpful in determining where economic growth can take place without increasing water stress.
- Greenhouse gas emission intensity: measures carbon dioxide emission relative to GDP so it’s a good measure for comparing different countries.
- Emissions intensity of GDP: the ratio of greenhouse gas emissions to GDP is a good measure for comparing different countries because different countries have different economies.
- Material intensity per unit GDP (material productivity): measures the material used relative to GDP, which can be helpful in determining whether economic growth will lead to increased environmental impact.
- Sustainable yield: the sustainable yield of an individual species is how much they can remove from a population without causing harm. This helps researchers know how much they can take without harming the ecosystem health.
- Economic value of ecosystem services: this measures the economic value of various ecosystem services, which is important for understanding how much nature is worth in monetary terms.
7 social sustainability metrics
- Educational attainment: measures literacy, access to education, and degree of education. It’s a good way to understand how equitable an organization is and whether they’re improving educational opportunities for everyone.
- Enrollment in tertiary education: this is “college and graduate school” so it helps measure the availability of post secondary education.
- Gender parity index: compares women to men in each country, which can be helpful for understanding inequity issues.
- Health outcomes: the overall health of an individual is key for determining their well-being so it’s a good indicator for society.
- HIV AIDS prevalence rate: measures the percentage of adults age 15 to 49 living with HIV/AIDS infection so it’s a good indicator of poverty and healthcare.
- Maternal mortality rate: measures the number of women who die from pregnancy-related causes per 100,000 live births so it helps determine health care provisions for expectant mothers.
- Measures of equitable development: gauges social well-being in a way that’s fair to everyone.
Is sustainability a metric?
As corporations are asked to be more sustainable, they face the question of what meaningful metrics they can use to judge their own efforts. One option is for companies to measure how close certain practices are to sustainability best-practices, which may change over time as new information becomes available. Another is creating indicators that indicate overall progress towards a sustainable future, whether or not individual metrics are at best-practice levels.
Some companies are using a “dashboard” approach, using both types of metrics to track overall progress towards sustainability goals. A dashboard approach can also be useful for investors who may use different metrics depending on their focus. The key aspect of these approaches is that they allow businesses to create their own metrics, isolating the factors that are most important to them.
Thus, the more holistic approach allows for participants in various industries to define what “sustainability” means for themselves. This can be done by creating a metric with which they are comfortable and then combining it with other forms of measurement that help them manage the ways in which they interact with local and global communities.
You may also want to read What are the 3 Components of the Triple Bottom Line Approach?
How do you measure sustainability performance?
It’s a question that organizations are increasingly asking themselves as they work to improve environmental, social and economic impacts. And the answer is changing rapidly. Formulas for measuring these holistic impacts used to be top-secret. However, in 2015, several major companies released their metrics – giving insight into how these measurements take place. Some of them even made their spreadsheets public, revealing how they calculate everything from greenhouse gas emissions to recycling efficiency.
Instead of trying to create an entirely new measurement, many organizations are looking at existing methods used for reporting financial metrics. Some big competitors in this space include Oekom Research – which gives its clients a triple-bottom-line score based on their annual reports – and Trucost , which claims to have assessed the environmental impacts of over 2,500 companies.
“This is not just a numbers game,” says Rebecca Henderson, professor of business administration at Harvard Business School. “People are realizing that they need to think about all the dimensions in order to make an impact.”
However, this holistic approach to reporting has its drawbacks. Right now, companies often look at sustainability performance as a secondary metric – a way of improving their brand image or gaining customers through environmental awareness.
But that doesn’t mean it’s not working. “In the past few years, we have seen more and more multi-stakeholder initiatives using triple bottom line reporting to set, measure and share performance through standardized metrics,” says Henderson. “That is a good thing.”
Are sustainability metrics standardized?
The short answer is “yes”. Despite the lack of universal standards, many metrics exist. Some are so broadly used that they have come to be known as “the” sustainability metric. These include energy intensity, water use intensity, or greenhouse gas emissions per unit output or per employee. Other widely-used metrics include environmental impact of materials and life cycle impact assessment, which each measure the environmental footprint of a product.
However, sustainability metrics are often criticized for focusing on certain aspects of a product or system while ignoring others. For example, they’re most commonly used in manufacturing and industrial settings where one goal is to reduce use of resources per unit output. This can be contrasted with sustainability metrics in the built environment, where one goal is to reduce energy or water consumption per unit output.
The new generation of metrics are “holistic”. They go beyond measuring resource use per unit output by adding environmental impacts associated with materials use and manufacturing, land use, air quality effects, health outcomes, social equity concerns (e.g. labor and community impacts), and even aesthetics (e.g., by measuring “blueness” of water or sky).
These newer, holistic metrics share many commonalities with each other, including a focus on life cycle assessment (LCA) which covers all stages of a material or product from “cradle-to-grave” (raw materials extraction through final disposal or recycling).
The false assumption is that sustainability metrics are standardized. While many indicators offer a complete picture, some cover only certain aspects of the sustainable production. However, they share commonalities and aim to move past simple measurements to encompass a complex picture of a product’s lifecycle.
What is KPI in sustainability?
KPI stands for Key Performance Indicator. These are quantitative metrics that track the progress of an organization towards sustainability goals. Many different types exist, but they all seek to measure key aspects of company performance related to environmental and social responsibility. KPIs are typically used by corporations to monitor the status of their sustainable initiatives. The use of KPIs allows for an organization to identify successes and failures in environmental management without requiring a strict adherence to one specific sustainable business model. KPIs are meant to create effective company-wide sustainability because they cannot be achieved by any single department alone, but also require teamwork across the board.
By measuring multiple aspects of a holistic approach, organizations can identify areas where performance is strong and where it needs improvement. This allows for an integrated solution rather than a myopic focus on one specific aspect, such as only seeking to reduce carbon emissions or strictly working to conserve water resources. A common KPI would be supply chain management: assessing the environmental impact of the supply chain, including the distance products are transported and carbon emissions created by suppliers.
The last word on sustainability metrics
In this post we covered the new wave of holistic strategies for sustainability metrics that are being adopted by businesses, cities, states and countries. While there are commonalities between different types of holistic approaches, there is no one size fits all solution to the challenge. Rather, individualized strategies are needed to address different challenges facing environmental, social, and financial impacts all at once. While many metrics exist on their own, they are more effective when combined together to give a more complete picture of an entire lifecycle. These types of metrics broaden the scope of sustainable business models by focusing on sustainable development rather than limiting themselves to the “triple bottom line.”
Caveats and Disclaimers and sustainable development
We have covered many topics in this article and want to be clear that any reference to, or mention of measure progress, fossil fuels, ecological systems, climate change, natural capital, world resources institute, major factor contributing, social metrics, producing electric power, track progress, business success, integrated reporting, human health, stakeholder interests, energy information administration, water distribution lines, united nations, dynamic process, progress tracking, major factor, data collection, aspects of most companies impact in the context of this article is purely for informational purposes and not to be misconstrued with investment advice or personal opinion. Thank you for reading, we hope that you found this article useful in your quest to understand ESG.