Leading companies are now targeting their supply chain carbon emissions. Change within operational control is considered basic, but ambition requires looking beyond these boundaries. Consumption-based accounting, an economic model to calculate supply chain carbon emissions, is one way to do this.
Every industry has some form of a supply chain, but these can vary in size and complexity. For example, the supply chain of the manufacturing industry is usually simple. Here ‘simple’ refers to how many ‘tiers’ and ‘pathways’ make up a supply chain. Whereas service industries are far more ‘complicated’ in terms of the number and variety of these ‘pathways’.
A ‘tier’ is a layer of a supplier. For example, Company A purchases catering through Company B, creating one supply chain ‘tier’. Company B buys ingredients for catering from Company C, creating another supply chain tier. However, Company B also buys drinks for from Company D. This does not add another tier, but another ‘pathway’ to the 2nd tier. The possible connections are endless and complex. This makes them very difficult to understand.
The different types of supply chain can host different opportunities if they are understood and managed well.
The environmental impact of extraction industries is clearer than any other industrial category. Despite fairly simple supply chain structures, there are limits to how well we can understand their GHG burdens. This is especially true when you consider the impacts of land use change, an area recently raised for development of a standard by GHG Protocol.
Consumption-based carbon accounting surpasses these limits. Understanding 100% of the carbon footprint gives companies a better chance to make real change.
Construction, fashion and food products industries have had historic supply chain controversies (horsemeat in ready meals, labour violations in construction sites, and animal fur on ‘faux fur’ clothing). Their supply chains also share similar GHG emissions patterns. This provides an opportunity to improve the public view of these industries, and a transparent view of the supply chain will play a key role in this.
Supply chains in manufacturing are critically important. Consumption-based carbon accounting gives insight into the industries companies rely on and the associated carbon emissions. Diversity and improved sustainability in supply chains can protect companies from supply chain risks.
The complexities of Distribution industries are added to by the greatly increased demand for transport compared to other industries. Burning fossil fuels in lorries, ships and planes is one of the most significant GHG emissions sources at every scale. Distribution sectors will have significant transport burdens across supply chain tiers. New connections between tiers will have heavier burdens too.
With such important environmental impacts, consumption-based carbon accounting can bring a clearer focus to carbon emissions reduction efforts in Distribution industries.
Some of the most complex supply chains are within service industries. Examples of these industries include financial, legal and educational services. It is impossible under current methods, within a reasonable time and cost constraints, to measure the entire supply chain carbon emissions of such companies. However, the supply chain can hold 95% of the burden of service companies. The easiest way to map supply chains is through financial spend.
Using consumption-based carbon accounting, the GHG emissions of all supply chain paths can be included in one model. This also increases transparency in the supply chain, environmentally and financially.
WHAT THIS MEANS
Though discussed individually, the critical complexity is that all industries are linked through supply chains. For example, the Distribution industries that supply the Manufacturers, or the Service industries that support Extraction. Understanding these relationships and how they relate to supply chain carbon emissions helps target reduction actions.
More detailed understanding of these relationships through the consumption-based accounting model can accurately identify hot spots of spend and carbon to help you effectively target your emission-reducing initiatives
Your Sustainability Shopping List
We are almost at the end January and there is already a growing list of activities and aspirations for the proactive Sustainability Manager in 2019. It’s now time to focus on the priorities of a Sustainability Manager.
If you are looking for inspiration, and want to freshen up the tired strategy from previous years, read on. Before reading Acclaro’s top 5 sustainability priorities, we should remind you that underpinning all of these areas is the need for good quality data to be captured and interpreted. Without which little can be achieved.
1. Developing a Social Value Approach
Globalisation offers many positives, but the drive for cheaper goods and services has affected not only, supply chains but also the communities that companies work within.
Social Value is currently measured on the value and impact of the corporate, rather than the benefit derived by the community. Some are scrambling to measure a monetary value. Assessing the benefits that supply chains can bring, or engaging with communities we operate within, is surely the first logical step.
We suggest, take a step back. The first stage is to understand what already takes place across the business coupled with assessing the needs of the community in which you operate, (or serve if you are a public-sector body). Capturing this information will help to develop a cohesive programme of engagement. This can be structurally managed across internal, supply chain and community programmes. There are many benefits to gain from a social value programme. This includes an increasing number of tenders requiring some form of disclosure of the value you create, so now is the time assess what your organisation can bring to society.
2. More accurate GHG Supply Chain Emissions
The reporting of greenhouse gases provides an ever-greater understanding of how our organisations impact climate change. However, when it comes to affecting change, it can be difficult to understand which areas of a business to target that will yield the most effective results. Carbon emissions from the supply chain is being increasingly scrutinised. Therefore, understanding these burdens and your ability to target them effectively is critical.
Using economic models based on annually updated economic data can map supply chains and associated emissions. The data from industrial Supply and Use tables is combined with emissions factors to create a model that maps national emissions linked with the spend of an organisation. This maps the entire organisations economy using matrix algebra to link environmental and economic data. Save yourself time and move away from the bottom up approach that sees us plot only a small proportion of supply chain emissions very inaccurately. There are other ways of doing it, and you can have a greater impact on climate targets by using correct data to being with.
3. Energy Audits and Reporting
Carbon emissions and energy consumption remain some of the biggest risks and contributors to climate change. The move towards nearly zero carbon buildings is accelerating with standards being developed as part of the wedges associated with science based targets.
The first stage should always be to minimise emissions and the energy being consumed through an effective understanding of how and why energy is used the way it is. Regulations are asking for public disclosure allowing for greater scrutiny and the need for verified and accurate information to be disclosed.
Significant quantities of information exist, but translating this into usable data and tangible outcomes from dynamic systems is the challenge – but can yield significant savings in excess of 15% energy reduction.
4. Environmental Risk Management
Whilst often initiated and implemented as part of management systems, the recent driver for climate and biodiversity related risk evaluation has come from the investor community. The premise is simple and equates to understanding the environment’s impact on you. These disclosures are targeted at mainstream investors and are intended to help them assess whether climate risk is appropriately priced in to their valuation of your company, enabling investors to make more informed decisions
Techniques and approaches for the scenario testing are still in development, but this year will see an increase in the understanding of the risks and early stages of validating the implications. Early movers will benefit from the opportunities available.
5. Building a Responsible Business Culture
Finally, this is the piece that joins the dots together. Business culture is changing and the expectations of new employees and our major consumers are dictating different terms – we now have a language of Purpose.
Responding to the societal pressures, the increased level of data, reporting pressures and investor requirements will necessitate a different response from organisations. And that culture needs to extend beyond the four walls of the sustainability team, into business and towards supplier management and sales programmes.
This is a long journey, that connects together forward risks, social benefits and environmental impacts, a develops a long-term strategy. Ultimately it will mainstream your role, but a concept we need to grapple with is, will it make it redundant? In time, perhaps some day-to-day operational parts. But there will always a need for strategic thinking and forward planning.
Acclaro Advisory wishes you a belated Happy New Year, and we hope to see you at many an event to discuss the direction you are taking for a sustainable future.
Good luck with putting your priorities as a Sustainability Manager into action.
What are you talking about?
So what is Consumption -Based GHG Reporting? ‘Consumption-based’ carbon accounting, as the name suggests, calculates carbon footprints based on your consumption of goods and services. It is based on input-output analysis, a robust method of modelling economies. It maps nationally published data on the flow of money, into, around and out of a country via industry sectors. Originally used to study economics, it can be adapted to environmental needs by assigning ‘environmental burdens’ such as kilograms of carbon emissions to each industry. This gives you a value for kilograms of carbon emitted per pound sterling (or any other currency) spent in any industry or on any product. This can be combined to describe whole companies.
And we don’t do this already?
The method used by the majority of people to calculate carbon emissions at the moment is called ‘process-based’ carbon accounting. It is essentially a shopping list of items and activities which get assigned a carbon factor, combined to find the total carbon footprint. This could describe your energy or waste processes, for example.
There are a number of problems with this method. The data provided is often incomplete leaving gaps and underestimating the footprint, by as much as 87% in some studies. This means your reporting is inaccurate and you cannot reduce your carbon footprint because you can’t see that it’s there. It is also a very time-consuming method with lots of individual calculations that make mistakes easy to make.
How is this new approach any better?
Where ‘process-based’ methods take a long time, varied data, and huge amounts of it, ‘consumption-based’ is much simpler. Once the model is constructed your data is fed into the model and – after some fancy matrix algebra – get your entire carbon footprint. Because it uses both client data and national data sets it always calculates 100% of your carbon footprint
There is also more you can do with an input-output carbon footprint. As well as the usual detail, the final figure can be picked apart to show hot-spots for carbon in your supply chains down through 5 tiers of spending. For complex companies this allows unrivaled access to your carbon burdens and how to mitigate them. It also expands your influence and capacity for change beyond your company, and to top it off tells a great do-good story.
Get in touch
The Acclaro approach is to take its clients on a journey that provides long term solutions and stream lines burden. We have experience of developing long lasting relationships that continues to save clients time and money whilst delivering results. If you are interested in setting up the consumption based model, or hearing how we work, get in contact and we can discuss whether this approach is right for you.
This blog forms part of a series of articles on consumption-based GHG reporting. Stay in touch for further guidance and information.
Joining the Sustainable Facilities Management Index (SFMI) a year ago has given me some unique insight which I hadn’t appreciated before. The Facilities Management (FM) holds great potential to influence the sustainability agenda. There are shining examples of sustainable FM and the SFMI celebrates these in our awards. However, there is a lot of work to be done for many others. Investors, clients, and internal business leaders can all drive the sustainability agenda in FM outsourcing, and now is the time to start.
Corporate Sustainability reporting in outsourced services
In my previous life in sustainability reporting, I admit, I had over-looked the FM sector (as many do). I found that the classic outsourcing corporation did not account for impact within the contracts they deliver. The focus would be on the scope 1 and 2 measurement approach. This boundary-wall approach meant that the measured impacts are minimal and based mainly on office locations. Alongside this, when a major business with outsourcing services responds to a corporate reporting initiative, they would neglect the FM side of this integrated business. Because it would be compared to the heavy industry component (for example) the construction arm. Therefore, the FM business will often fall through the cracks of corporate non-financial reporting, and non-financial risk identification. This historic approach means that many FM businesses have fallen behind other industries in their ability manage sustainability. Times are now changing, and demand for corporate responsibility is rising, so areas for influence are increasing.
So there’s a gap?
There is indeed a gap! An FM manages facilities on behalf of their clients. but are not taking responsibility for reporting on non-financial risk. On the flip-side the client may not be incorporating the FM provider into their sustainability strategy and processes. Meaning a gap in the ability to achieve sustainability targets and running buildings / operations in line with those targets. The gap impacts energy targets at a country and global level, and does not address climate change and energy security. Many do not incorporate the social challenges in the corporation either. For example, employee health and well-being may not be linked through the Facilities management team. Also, there are unrealised savings to be made in energy efficiency and other resource efficiency. The Facilities manager is a problem solver and a pragmatic one at that. They are perfectly positioned to fill these gaps, if they are unleashed and have the resource!
What’s been causing the gap? – A concern for investors and clients
I came into this sector during what can only seem like a dark age in FM. On a media headline level, it seems that in the last few years all hell is breaking loose in the outsourcing sector. Major outsourcing business have seen share drops (Interserve among a few) and profit warnings, and we have witnessed the collapse of Carillon which brought major clean-up costs to the public purse – one third of its revenue (£1.7bn) came from public FM contracts. Also to private suppliers who will never get paid (there were thousands of them). On top of this, there have also been scandals from the running of the UK’s HM prison’s through G4S, and another major security-based outsourcer has seen regular negative coverage. “So there is a lot of bad press in FM. – What’s your link”, I hear you ask?
I am not naive to think that poor environmental / social management is the cause of these issues. Ultimately, it boils down to the economics of outsourcing. The public and private sector clients decide to outsource services because they want to save money and concentrate on their own business. By outsourcing to a specialist provider, they aim to make efficiency savings under those who do this for a living, and who can incorporate economies of scale.
However, the overwhelming drive to make short-term savings causes a multitude of risk:
- excessive transfer of risk,
- low unsustainable profit margins, and
- a cost focused model that includes many contractual performance stipulations that are weighted in the clients favour which aim to refund money.
It’s a multi-pronged attack on the concept of a sustainable business model. Multiple players are driving this scenario:
1. the customer who wants the cheapest outsourcer at whatever cost. (The UK Government found itself guilty of this after the Carillon inquiry; and
2. The outsourcer whose business model is to undercut the opposition with the aim of rapid market expansion. (We’ve seen how the Carillon model ends up for stakeholders).
So what’s the correlation between profit warnings, the SFMI and E,S,G management?
The “race to the bottom line” is a cause of major systemic issues. Economic sustainability is realistically the bedrock that can drive environmental and social sustainability. What we are seeing at the SFMI is; once those companies fall into this “race to the bottom line” culture, they will start to peel back on their ability to manage sustainability:
- Reduced corporate Governance,
- Lack of internal environmental and social impact management, and
- lack of implementing social value and environmental services into client contracts.
What is left is a stripped back and potentially loss making service with higher risk. By not integrating sustainability into an FM model, it removes them from being part of the solution towards major issues such as climate change. This means a higher risk for investors and all other stakeholders being part of the unsustainable business model. I wouldn’t want to be the supplier of unsustainable business, would you?
Therefore, at the SFMI, we believe that ESG performance of the outsourcer can act as a proxy warning for poor business management.
This year we have seen a number of FM’s fall back in their sustainable FM performance. This simple chart shows 7 large FM providers have dropped from a silver performance level to a bronze (according to the SFMI annual assessment. We are seeing the beginning of a two tiered FM system. Sustainable value added companies (Platinum, gold and silver), and bare basics (Bronze and assessed).
How can the SFMI be used to flag this?
For 6 years the SFMI has been auditing and guiding FM providers so they improve their in-house corporate responsibility agendas, AND (very importantly) to implement sustainability management into their clients contracts. We score companies across a range of 23 topics of sustainability stretching from environmental, social and governance issues against a range of evidence presented. No evidence = no score. Our approach separates the marketing talk from the action.
Therefore, if we start to see FM providers drop in their sustainability performance from year to year, this should raise red flags for those clients and investors who are stakeholders of the company. A provider’s ESG performance can correlate towards the business model taken by an FM provider. By using an audit based approach rather than a self-reporting approach, we can separate the marketeers from the doers.
Who can get involved, and how?
The SFMI is an assessment for FM providers, however, there are plenty of stakeholders that gain from selecting a sustainable FM business as part of the SFMI.
Clients – Clients who haven’t made the link between their FM and their sustainability goals are missing a trick. Also, if you are selecting your FM contract on cost alone, then you are part of the problem. Using the SFMI is your way of integrating your sustainability goals with your facilities operations, and gaining more value in the long term. Get in touch to speak with us further.
Investors – Seeking to understand the risk in your portfolio is fundamental. The SFMI has been developing a historic database of scoring information that can aid investors in risk management. We do not count carbon, or quantities of water used – We score processes, initiatives and outcomes and how they are implemented in a company and its contracts. This is a unique approach.
FM business leaders – Differentiate your business from the race to the bottom culture. Show your stakeholders you offer value added sustainable FM, with an SFMI audit. By opening your company to a transparent audit against our tried and tested criteria of sustainability, you will gain the path forward. Be a pack leader, not a pack chaser.
A responsible business approach will give long term value to all stakeholders involved.
The National Audit Office report on packaging recycling, (published 23rd July 2018) highlights real concerns involving UK waste that is exported overseas for recycling: there is little visibility on what happens with it, and a suspicion that much of it ends up dumped in landfill.
Such exports increased six-fold between 2002 and 2017, as a result of insufficient domestic recycling capacity to meet demand. The majority was exported to China – but as of January 2018, Beijing has banned almost all plastic waste imports. That creates a new challenge: who should we send our waste to now, and can they prove they will recycle it?
The report also reveals that the government does not account for undetected fraud and error in its recycling records. Although official data indicates that 64% of packaging was recycled last year, the figures rely on estimates that are not sufficiently robust, despite the financial incentive for packaging producers to fail to report the volumes of material that enter the market, and for recyclers to overstate the quantities they handle.
The government will have the opportunity to address these concerns when it develops its new strategy for waste and resources, which it expects to do later this year. However consumers should be aware that sending harmful waste to be recycled isn’t always an effective way of eliminating it, and instead look for long-term solutions to cut back on their waste.
As the scandal of the UK’s plastic rubbish being dumped overseas deepens, businesses need to check if their data systems record reliable waste data, and if they store proof that waste contractors verify proper disposal. Smart businesses are saving costs and proving credibility by retaining the value of their materials with circular economy principles.
Acclaro Advisory can provide the expertise to help your organisation achieve this, so please get in touch if you would like to explore your options.
Iceland has announced that it will become the first major UK supermarket to end the use of palm oil in its own-brand products. Boldly, Iceland says it wants to ‘demonstrate to the food industry that it is possible to reduce the demand for palm oil while seeking solutions that do not destroy the world’s rainforest’. But this has been attacked by the Council of Palm Oil Producing Countries, who say that the alternatives have worse impacts. Many retailers have already committed to sustainable palm oil use, but what difference are they making – and will avoiding it altogether end up causing negative impacts elsewhere in the supply chain?
The problem with palm oil is that it is such a useful, and cheap, product. It is found in many food products as well as other retail goods such as cosmetic products. Having exploded in popularity with manufacturers since the 1980s, it is now used in everything from detergent to chocolate, and can be found in up to half of the items sold in UK supermarkets.
To meet this huge, and still growing, demand, an increasing amount of land is set aside for palm tree plantations – mostly in Indonesia and Malaysia. To make room, rainforest is cleared – often by simply being burnt. This releases the huge amounts of carbon stored by the forests into the atmosphere, contributing to global climate change (and leading to those countries becoming some of the world’s biggest greenhouse gas emitters). Losing these ecosystems also harms local biodiversity, leaving species such as orangutans critically endangered.
The Roundtable on Sustainable Palm Oil (RSPO) was founded to stop those impacts, while fostering good outcomes for the communities close to palm oil plantations. Its view is that palm oil is an essential and irreplaceable commodity. Growing sufficient crops of alternative vegetable oil sources to meet demand would have similarly negative impacts (and indeed palm oil has a higher yield than other options, so can deliver more per unit area of agricultural land). It advocates less environmentally harmful palm oil production through certification, requiring producers to prove they meet various criteria – including avoiding clearance of forests or fragile ecosystems.
Many well-known brands, including the major UK supermarkets, have signed up to the RSPO and committed to using 100% certified sustainable palm oil (CSPO) in their own brands. However, lots of the products we buy are manufactured by organisations that have not made these commitments, and WWF scorecards show that many organisations aren’t doing enough. Nestlé in particular has faced high profile criticism for missing targets and moving goalposts.
Palm oil can also be used as a biofuel, producing lower greenhouse gas emissions throughout its lifetime than traditional fuels. Blending it with diesel brings down the carbon intensity of the product; however, this ignores any emissions or environmental damage caused by clearing the land to enable production. Initiatives to promote palm oil as a biofuel in the past have been blamed for triggering some of the worst instances of forest-burning. Recognising this, the EU parliament this year agreed to phase out the use of palm oil as a transport fuel by 2021.
Finding replacements for palm oil is a huge task, but if a business can find alternatives that really are more sustainable, and are not sourced in similarly destructive circumstances, it could force its rivals and product manufacturers to adopt a similar approach. Together with moves to take it out of the transport fuel supply chain, there is the potential to substantially curb demand. However, palm oil’s versatility and status as a commodity means that only global momentum from many different sectors can stop its continued growth. Industry buyers need to demand proof of crop sustainability, growers must increase participation in certification schemes, and opportunities for continual improvement in resource efficiency should be explored.
Connections with both public and private clients would bridge the gap between addressing the lack of infrastructure, a long-term solution and short-term fixes.
Despite significant environmental progress in 2017, this year has started with a significant threat: the waste import ban in China. The ban, which came into effect on the first of January, restricts the imports into China of 24 kinds of recyclable and solid waste and thus has a wide variety of potential consequences. These restrictions have been put in place to protect the Chinese market for recycled plastic by allowing China to use its own recyclable waste.
For two decades the UK waste industry has relied on sending plastics abroad for recycling with up to 500,000 tonnes of plastic shipped to China each year, thus the impact of this ban on UK capacity for managing plastic recyclables, in particular, will be strong.
In the face of this new ban, plastics are already beginning to pile up. Despite this concern, the Environment Secretary Michael Gove has admitted he has “not given it sufficient thought”. With mounting waste and inadequate preparation there are certainly risks. But adaptation could lead to opportunities for organisations from both long-term infrastructure improvements across the UK, but also short-to-medium-term in waste management design.
Despite having warning of this ban from China since summer 2017, short-term solutions have not been considered by the UK government. A fundamental change in the behaviour from government, manufacturing companies and consumers will be necessary in order to assist in the reduction of plastic waste and to create a sustainable long-term solution for waste management. Mary Creagh MP, chair of the Environmental Audit Committee, has warned the ban could mean “a double whammy for council tax payers” if the price of exported waste falls and the cost of UK disposal rises. She has also called on the government to deliver investment to provide more reprocessing facilities “to reuse these valuable materials, create green jobs and prevent plastic and paper pollution.”
Organisations generating significant amounts of plastics, including shopping centres and manufacturing facilities have been able to generate a revenue stream from the segregation and selling of the materials to reprocessors. The ban has placed a stop on this practice and will impact upon the revenue being generated. Virgin plastics, those made from non-recycled plastic, fetch over £1000 per tonne, and items made from previously recycled plastic can still turn a profit at up to
£400 per tonne, so the potential financial loss is significant.
The appetite for action on this is clear, and any organisation acting on this puts themselves ahead of the field both commercially and in promoting their successes.
Building on existing momentum, ranging from the tagline for the 2017 BEIS Industrial Strategy “Building a Britain fit for the future” to the outcry after Blue Planet II aired footage of marine pollution – by which Michael Gove was “haunted”. The appetite for action on this is clear, and any organisation acting on this puts themselves ahead of the field both commercially and in promoting their successes.
Facilities management companies may look vulnerable to this issue; however, they are also uniquely positioned to find a circular economy solution. As a pivotal point between their clients – creators of waste – and final waste management points, FM has an opportunity to meaningfully inform the adaptation direction for this and lead on the best practice to build sustainable solutions. The industry possesses revealing data on nuances of waste management from a consumer perspective.
Connections with both public and private clients would bridge the gap between the government addressing the lack of infrastructure in this area, a long-term solution, and those finding the short-term fixes.
The 25 Year Environment Plan, published last week, committed to “zero avoidable plastic waste by 2042” by tackling the production and waste management phases of the plastics lifecycle. Some, including Green Party MP Caroline Lucas and EIA Executive Director Matthew Farrow, have pointed out that the plans are ambitious but vague, and for the moment this document is not legislation and so is largely unprotected. It will be up to the Government to prove it can walk as well as it talks. Inaction in the face of mounting plastic waste will bring innumerate potential risks – many of them we are likely not aware of yet.
Quantifying the unquantifiable in sustainability
Sustainability measurement is important because it enables us to understand the environmental burdens of our actions, set targets to reduce this and monitor our progress in these endeavours. We use a variety of measures: fuel consumption, diversity metrics, waste to landfill, etc. Yet there are markers of sustainability that are not so easily quantified, and for these our measurement, and the subsequent benefits, are significantly limited.
These ‘unquantifiables’ occur across the triple bottom line so impact our understanding of every sustainability theme. Examples include the measurement of collaborations – how do you quantify the benefit of knowledge sharing, cooperation and countless other impacts of collaborative working? Or diversity – the value of having a breadth of experience and perspective on a project?
Where we are now?
The current state of affairs is varied. Certain characteristics, particularly those more closely aligned with the strategic success and profitability of a company, are often clearly measured across sectors with depth of understanding to back up the numbers. However, those areas with less obvious links to traditional ideas of business success have often had less invested in their measurement. This is likely due to the perceptions of those involved: perceived unimportance and lack of understanding in how the metrics fit into the classic corporate landscape, or perceived difficulty of the task leading to deferment.
Benchmarking organisations such as the CDP, DJSI and FTSE4Good rely on quantifications of sustainability. Quite often there are internal processes, such as supplier surveys, which require evidence for ‘scoring’ purposes, but the processes by which a policy or conversation is converted into a ‘score’ on which an organisation is then judged is largely unclear. Neither the processes or evidence are shared with others in their industry or field, so there are silos of potentially good measurements and metrics however no way to access or learn from the best practice.
What are we trying?
Ernst & Young have developed a technique that quantifies sustainability across ESG themes called Sustainable Value Added. This model calculates the CSR benefits of a given action in the ESG and economic outlays of that action and the overall opportunity costs of all actions in the context of general economic landscape in a numerate method of adding gain and subtracting loss/harm. The direct link between sustainability and financials in this method holds potential from which FM sustainability measurement could draw to illustrate the business case of sustainability initiatives. This method would help develop a culture in which the financial benefits of SFM are quantitively represented therefore more recognised and acted on.
The problem with tying ESG ‘unquantifiables’ to their financial metrics is that the true benefits of them may not be as intrinsically linked to their financial benefits as this method assumes. For example, increasing the apprenticeship offering, or gearing it specifically towards disadvantaged groups, not only provides workforce but social mobility within that community. This social mobility, and the other benefits unmentioned, would be unmeasured in the EY method, yet is a key societal gain from the apprenticeship and an important metric for the sustainability offering of that company.
In order to fully understand our progress when improving sustainability, we must be confident in our measurement of it. There is a clear appetite for quantitative measurement of sustainability in corporations – especially when these metrics are tied to financials. Companies are already judged on their performance and quantified in their brand, so the knowledge must exist; but barriers also exist that create silos of this knowledge. Making quantifiable sense of qualitative data is inherently difficult, but knowledge sharing and a commitment to improvement can make a vast difference in improving our measurement capabilities.
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