Could measurement hold the key for sustainability entering the mainstream?

John Alker, Director of Policy and Places at UKGBC takes a look at a new report on the green and social KPIs all businesses should consider
Sustainability measurement entering the mainstream

With the 25 Year Environment Plan coming hot on the heels of the Clean Growth Plan and the Industrial Strategy white paper, it’s starting to look like the government has had something of an epiphany on green growth and sustainability over the last few months. It’s striking that government has very deliberately positioned these strategies as a joined up package – and quite right too.

In this context, it’s timely that a new report should focus on the link between a business’ environmental and social record, and the creation of objective financial value and wider business performance.

Coming from UKGBC the focus was on built environment businesses, but the principles apply across all sectors. Many businesses are only just starting 
to investigate this link, but it is vital to do so in order to demonstrate to employees, shareholders, and customers why it makes commercial sense to be striving to improve environmental and social impact.

The key, unsurprisingly, is robust measurement. At the moment, not enough businesses are routinely or consistently tracking sustainability-related performance indicators that impact on what we call ‘value drivers’. Some of the most important drivers include things like cost saving, talent attraction and retention, customer attraction and satisfaction, and brand and reputation. Our report makes recommendations on some of the key performance indicators (KPIs) to track under these headings.

One of the biggest challenges that many BusinessGreen readers will face on a daily basis is how to get sustainability out into the wider, mainstream business. Too often it feels like they’re ploughing a lonely furrow.

But here too is the opportunity, because integrating sustainability into the core business requires finance teams to evaluate the costs and benefits of investments in sustainability; corporate affairs teams to provide relevant information to investors and other stakeholders; business development teams to identify the level of importance placed by clients and customers on sustainability; marketing teams to measure the importance of sustainability in brand narrative; and HR teams to identify the level of importance placed by staff on sustainability.

The process of doing this will be made much easier by an enlightened and committed C-Suite. Evidence from our members suggests that often it is actually the board that is driving a focus on sustainability measurement and disclosure, which is encouraging, but we need to move much more quickly.

Arguably, nothing will get a board’s attention quite as much as government intervening to impact a business’ license to operate. The relatively recent transposing of the Non-Financial Reporting Directive requires large companies within the EU to report on a range of environmental and social issues and should help drive this forward. While the government’s 25 Year Environment Plan promises a big role for natural capital accounting.

As ever, sustainability is a journey, but the direction of travel is clear. We know instinctively that doing business well means doing business sustainably. But let’s get on and prove it.

This article was originally published on Business Green on January 22, 2018.

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