Measuring Your Sustainable Business Practices

Organizations must have a method for measuring the sustainability of its business practices.  Companies are used to measuring financial results; however, it is only recently that focus has turned toward the development of tools for non-financial measurement of sustainability.  Larger organizations with sufficient resources are able to apply the sophisticated and comprehensive Global Reporting Initiative (“GRI”) Standards for sustainability reporting developed by GRI; however, startups may find this to be too much trouble and instead may create their own systems that include the following common areas for measurement:
 Environmental Results

• Energy use
• Materials use
• Energy efficiency results
• Carbon emissions
• Emissions and waste (e.g. carbon emissions, water discharged, waste by type and disposal methods)
• Water use
• Product improvements to minimize environmental impact
• Results of initiatives to mitigate negative environmental impacts 

Economic Results

• Standard entry level wage compared to minimum wage
• Spending on locally based suppliers
• Financial implications for the organization’s activities due to climate change

Social Results (including ethical and cultural)

• Employee time donated to voluntary causes
• Donations and in-kind support to community groups
• Breaches of ethical behavior
• Breaches of regulatory and/or legal compliance
• Customer labeling
• Customer health and safety
• Stakeholder trust
• Staff perception of the organization as a good citizen (i.e., an organization that behaves ethically and acts in an environmentally and socially responsible manner)
• Specific engagement with indigenous peoples about matters of cultural significance to them
• Results of initiatives to mitigate negative social impacts
• Partnerships within the organization’s supply chain that are designed to improve industry environmental and/or social outcomes

It is important for organizations to carefully assess their operations in order to identify activities that have potential sustainability impacts.  Obviously, courier drivers produce carbon emissions from their vehicles and cheap, poorly designed products are like to increase natural resource waste due to their short life cycle; however, these are rarely the only sustainability impacts for an organization.  Other prompts for identifying key impacts that can and should be the targets for the organization’s sustainability initiatives include the following:

• Significance to key stakeholders, including representative of future generations such as children of employees living in the community in which the company operates
• Technical information, including environmental reviews and social impact reports
• Review of current and potential sustainable development issues and trends that are of importance or potential importance to civil society, both from a risk and opportunity perspective (e.g., changing attitudes toward climate change that have created both new costs, including taxes and expenses associated with regulatory requirements, and opportunities to commercialize new product solutions)
• Review of international good practice and consideration of issues that are being addressed by industry leaders in sustainable development and the organization’s peers
• Impacts and issues that are identified in standards such as the Global Reporting Initiative, SA8000 and the UN Global Compact

Source: “Sustainable Entrepreneurship: A Guide for Sustainable Entrepreneurs”, based on Sustainable Business: A Handbook for Starting a Business (New Zealand Trade and Enterprise).

This article is part of the Sustainable Entrepreneurship Project’s extensive materials on Entrepreneurship and Sustainability and Entrepreneurship and an excerpt from Sustainable Entrepreneurship by Alan S. Gutterman, which is available for purchase at various online booksellers.  Readers may also enjoy the author’s book on Entrepreneurship.