Next-Gen Impact Measurement Tools a Needed Boost for Companies to Achieve BHAGs

“Sustainability” is so last year. This week at New Metrics ’19, we explored the growing range of tools and tricks needed to keep up with demand for next-level goals such as plastic-neutrality, 100% circularity and properly quantified social and product impacts.

By Leila Goldmark and Richa Agarwal | Published 4 years ago | About a 12 minute read

Image: Roman Kraft/Unsplash

How are companies chipping away at the next generation of big, hairy, audacious goals (BHAGs)? Read on ...

A comprehensive look at IKEA’s new holistic impact measurement system

By Richa Agarwal

Ingka Group (IKEA)'s Peter Jones | Image credit: SB/Twitter

With the approach of the “4P” program — which focuses on people, planet, profit, and perception — IKEA is moving towards meeting its sustainable goals for 2030. During his Tuesday morning keynote, Peter Jones, Head of Sustainability Analytics and Impacts at Ingka Group, which owns most IKEA stores, gave an overview of the program that the company is spearheading, regarding the impact and their journey to becoming a sustainable brand by 2030.

IKEA has been imagining a future for value creation and as Peter pointed out, the first task is to measure what the company is promising. Jones pointed out that some impacts are easier to measure than others, but the company has defined 9 KPIs under its People and Planet Positive initiative that are centered around three areas:

health and sustainable living
circular and climate positive
fair and equal.

Speaking the language of business in the environmental, social and governance (ESG) realm can help accelerate the process of implementing changes in the business space, along with the language of impact for performance and value. Jones said that it was okay for companies to not have very concrete plans or all the answers at the start, but it was important to get going and start amassing small wins, while doing a comprehensive analysis on the side to get bigger wins in the future.

In a subsequent session on Wednesday morning, Jones was joined by his colleagues — Annamaria Melegh, Global Sustainability Analytics Leader Social & Behavior at Ingka Group; and Jorge Castro, Sustainable Impact Leader — for a candid discussion. One of the questions from the audience was about the increase in sales IKEA had when it began its sustainability campaigns. Melegh mentioned that one of the main components of IKEA products is always the design, so that is what the brand led with; but also that Ingka Group aims to highlight the strong sustainability stories related to a large proportion of IKEA’s product range and services to customers — whether in terms of material, quality, source or being made/delivered by social entrepreneurs. Selling based on sustainability depends on what is important for consumers; for some, the bar is just on whether the product is non-toxic or sourced fairly. Giving more information on sustainability to their customers has helped sales on those products globally by approximately 15-20 percent.

Another audience question was around how IKEA is setting about implementing its People Planet Positive goals, and if it is exploring offsets. Jones said IKEA is not investing in offsets but is working on other ways to reduce greenhouse gas emissions from its entire value chain — calculating its Scope 3 emissions, as Castro pointed out — with a goal to be climate positive by 2030.

Castro asserted IKEA has worked on sustainability for years — it is now just part of the mainstream discussion; he said the company began by mapping what they could to see what fit well with the company’s core values. IKEA continues to pilot different initiatives with a focus on customers, companies and communities; enabling them to measure impacts qualitatively and quantitatively. He believes that sustainability is a journey and not a destination.

Defining, setting and achieving plastic-neutrality targets

By Richa Agarwal

Although a wonder material, the enduring nature of plastic has become one of the biggest environmental concerns crippling our planet. In this engaging panel, leading industry experts shared insights on how they are defining and/or dealing with plastic neutrality for their companies and industries. The panelists represented different stakeholders in plastic innovation, and how it varies for companies in terms of product, manufacturing, packaging and use amongst employees. The panel, moderated by Salterbaxter’s Philip Clawson, had several key highlights:

Innovative software consultancy

As pointed out by James Sullivan, Head of Global Sustainability Innovation at SAP, the software giant is helping other businesses recognize the value in plastic neutrality, while providing them resources required for action. Last year, it launched the Plastics Cloud to push the 2030 Agenda for Sustainable Development through materials and better data collection and management. Sullivan said SAP is involved in plastic waste because it believes that resource productivity is at the heart of the connected intelligent enterprise — a critical part of a zero-waste world. So, with a goal of creating value on many fronts for and with their customer companies, SAP set out to find answers for this humongous problem. The company has done research on understanding consumer behavior with respect of plastic consumption and has worked on design thinking with their customers.

Sustainability strategy firm

While highlighting the gaps businesses are facing in terms of taking the total action for plastics, Valutus founder Daniel Aronson pointed out that there is a problem in how we define and compare different types of plastics, as they have a different effect. He said it is important to quantify not just by weight but by the impact of the type of plastic, so that we have a clear picture of what data we have and what is missing. Aronson and his team developed an enormous data table help companies quantify plastic's true impact. He said that with our conflicting approaches to plastic usage, the fact that we look at how much but not how bad makes it hard to get from where we are to where we need to go. He stressed the need for standardization in this regard.

Product-based company

John Pflueger, Principal Environmental Strategist at Dell, described how Dell replaced its 2020 sustainability targets with a 2030 strategy, which has more extensive metrics — including a moonshot goal of going completely circular. He said that Dell has been looking into the problem of plastics for almost a decade; and in 2013, committed to use 50 million pounds of recycled plastics in its products by 2020 — a target that was doubled to 100 million in 2017. They are piloting session to close the loop for their take-back systems. The company is exploring alternative materials, including ocean plastics, in its bid to achieve circularity.

Flueger mentioned that Dell is committed to one-to-one material recovery by 2030, amplifying its current take-back program 10-12 times. He said its goal for all of its packaging to be made entirely of renewable and all recyclable materials is proving one of the most difficult tasks.

Pioneering plastic offsets

Svanika Balasubramanian, co-founder of RePurpose, introduced her startup — which is creating the world’s first offset mechanism for plastics, and offering companies solutions and certification for plastic neutrality. While her team was looking for solutions, they found many people across Southeast Asia are working on solutions around informal recycling — for example, through waste pickers. RePurpose started with the idea that while companies are taking actions for the future and transiting to a circular economy, they could offset their plastic impacts by investing in companies and initiatives that are working on solutions on the ground to support and strengthen them. As customers are demanding solutions today, RePurpose is working with businesses that have defined their plastic-neutrality goals by creating a pool of money in the form of a “plastic-neutral fund,” which is being used to fund solutions and innovation, and is feeding back data to companies, hence closing some loops.

Certified TBL Orgs: The world’s first triple-bottom line certification credential

By Leila Goldmark

Mark McElroy | Image credit: SB/Twitter

On Tuesday afternoon, Mark McElroy, CEO of SustainAccounting LLC; and Jane Hwang, President & CEO of Social Accountability International (SAI), used their keynote to announce their partnership and launch the world’s first triple-bottom-line (TBL) certification credential. While prior guidance has encouraged context-based sustainability reporting for a number of years, there has been no specific accounting guidance or standard to achieve this goal. The new TBL certification credential will fill the existing gap, offering a context-based accounting tool to assist rigorous and actionable sustainability performance measurement and reporting.

What is the TBL accounting framework?

The term “triple-bottom line accounting” was coined by John Elkington in the 1990s as a way to interpret the performance of corporations in more than just economic or financial terms. While this concept was not new, Elkington capitalized on it by looking at the carrying capacity of all types of capital — natural, economic, and social capital.

Why now? The history of context-based sustainability reporting

The expansion to context-based TBL (CTBL) thinking began in 2002, when the Sustainability Context Principle was introduced in GRI’s G2 Standard. This principle has persisted over the years and survived many revisions of the GRI reporting standard; it remains a central core sustainability accounting principle today. But, no guidance on how to actually do context-based TBL accounting was ever developed.

McElroy quotes Allen White, one of the founders of GRI, to explain:

*In the course of wide-ranging stakeholder consultations, it became clear that true sustainability reporting at the enterprise level must be contextualized within boundaries that define the ecological, social, and economic system limits, both upper and lower, ceilings and floors. I argue that absent context even if all enterprises continuously improve performance, the collectivity may violate boundaries that define a thriving regenerative world. Sustainability measurement without context simply is not sustainability reporting at all. *

McElroy highlighted two additional events in the TBL timeline: the invention of the concept of double-bottom line bookkeeping by Luca Pacioli in 1494; and the passage of the US Securities Act of 1933, which requires financial disclosure. Thus, for financial reporting, people created standards for measuring performance, and then went on to develop standards for how to report results. In the sustainability field, people have done things backwards, developing standards for sustainability reporting, but never back-filing how to actually measure and address the accounting.

What will CTBL do?

Establishing a CTBL certification will fill the existing sustainability context gap. As envisioned, the TBL accounting requirements will fall into two categories — organizational and operational. It will:

make sustainability context in GRI reports possible by providing the missing standard;
Incentivize and reward TBL accounting with a highly visible credential; and
make sustainable performance possible, since measurement must come first.

Hwang explained that TBL accounting ultimately has to be something that is not externally imposed; it must be fundamental to how every business operates. The goal will be to “build on these objective, normative principles of TBL accounting; and then to enhance and build consensus through multi-stakeholder consultations and engagement.”

SAI currently is developing the standard, the training and certification tools; and is seeking input and partnership from the sustainability community.

How standardized social outcomes demonstrate corporate impact

By Leila Goldmark

Jason Saul and Arlene Isaacs-Lowe | Image credit: Beaumonde Originals/Sustainable Brands

Wrapping up the final day of New Metrics, Sustainability Communicator & Media Architect Nick Aster facilitated a conversation between Jason Saul, CEO of Mission Measurement and founder of the Impact Genome Project®; and Arlene Isaacs-Lowe, Global Head of CSR at Moody’s. Saul walked us through the research and development of The Impact Genome® — a platform that standardizes the way social programs measure, evaluate and report outcomes; and Isaacs-Lowe explained how this valuable tool is being used by companies to inform and target their sustainability and philanthropy program initiatives.

The problem: Previous efforts standardizes metrics, not outcomes

“Effectively measuring social impact is challenging, because no standards exist — no one can compare apples to apples,“ Saul said. He explained that previous attempts to quantify social impact fell short because:

They tried to standardize at the wrong level — forcing standardization at the level of the metric, not the level of outcome. For example, if we’re trying to reduce poverty, measuring the number of people trained or getting a subsidy does not tell us if people actually become financial stable due to those efforts.
There is no standard-setting body in this field to say what outcomes should be measured.
There are no benchmarks, making it hard to incentivize measurement when we don’t know the cost per unit of outcome. We don’t know “good” means.

The solution: The Impact Genome measures outcomes, sets benchmarks

Saul explained how The Impact Genome provides the missing metrics, stating that, “through the Impact Genome, we’ve developed evidence-based standards and now have benchmarks for common outcomes across the most critical social impact areas. Organizations find value in the common language of the standard outcomes, benchmarks to understand their cost per outcome; data to build grantee capacity, demonstrate ROI and drive ultimately more impact.”

The Impact Genome® is a publicly funded global effort that’s backed by foundations and governments around the world. Researchers analyzed 11,000 programs, identifying 77,000 outcomes. Looking for common patterns, 132 prominent outcomes were grouped into 12 categories, or social “genomes” — Education, Economic Development, Public Health, Youth Development, International Development, Human Services, Criminal Justice, Sustainability and Environment, Science and Technology, Arts, Culture and Identity, and System Change.

Notably, while many social metrics measure direct services, the System Change genome provides benchmarks and metrics for longer-term capacity building, leadership and policy change, as well.

Isaacs-Lowe explained that companies and foundations finally have a practical research tool to help them understand their potential return on social investments and guide their investment strategies. With many programs now reporting, it is possible to research the average investment amount and the cost per unit of outcome for over 100 outcomes.

In response to audience concerns that this cost-benefit approach could pressure programs to focus on more efficient, “low-cost” initiatives in their attempts to win funding, she stressed that Moody’s looks to The Impact Genome benchmarks as a minimum floor for investment, not as a strategic guide for what outcomes it chooses to work on. For example, a company choosing to work on reducing homelessness can look to those benchmarks, then add what may be needed to address more difficult cases (e.g. homeless populations in rural areas, or those with additional mental health concerns).

The Impact Genome is a revolutionary tool that can be used by governments, NGOs, and public and private sector organizations. It is freely available for all to access and explore.

Leila Goldmark

Leila Goldmark is a sustainable business entrepreneur; founder & President of Green Rainbow Revolution (GRR) — an e-commerce retail business that specializes in sourcing modern, eco-friendly, ethically produced arts and school supplies, educational toys, and lifestyle goods for kids of all ages.

Richa Agarwal

Richa Agarwal is pursing graduate studies in environmental sustainability at the University of Pennsylvania. Prior to Penn, Richa worked with an environmental think tank in India, on topics of waste management and circular economy for India and Tanzania. She is interested in topics of global supply chain for post consumer used goods, finding partnerships between private organizations and NGOs/think tanks, and going zero waste.

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