If you are a regular or even semi-regular reader of Sustainable Brands, you are likely familiar with our New Metrics (#NewMetrics) events and publications. In case you are new to this topic, the frame around it is fairly straightforward: New Metrics is an umbrella term for the most successful ways businesses are creating and capturing entirely new forms of value, or quantifying previously ignored economic, social and environmental impacts and opportunities.
It’s become a tradition for me to publish blog posts outlining arguments as to why every business should care about and investigate the evolving New Metrics landscape. Although the adoption rate of even the most proven New Metrics is still slim in the grand scheme of dominant mainstream business management practices, the arguments are becoming increasingly more convincing and easier to support with abundant evidence. Here are five exciting developments demonstrating how any company can benefit by deepening its engagement with New Metrics:
- The once-questionable positive ROI of sustainability has been proven not just feasible, but also rather common, reliable and multi-dimensional. An exciting new review of over 300 leading research studies concludes that well-run corporate sustainability programs bring multiple types of benefits, including increased sales, growing market value, higher employee productivity, and reduced risk exposure, among others. A recent report from the Morgan Stanley Institute for Sustainable Investing found that investing in sustainability usually meets and often exceeds the performance of comparable traditional investments, both on an absolute and risk-adjusted basis, across asset classes and over time.
Specific company case studies demonstrating such benefits are pouring in from many directions: Unilever announced that its ‘sustainable living brands’ accounted for half the company’s growth in 2014 and grew at twice the rate of the rest of the business; Target’s Made to Matter collection has seen a 25 percent spike in sales since the launch of the program and is projected to bring in $1 billion in 2015; HP is actively using sustainable product attributes as a sales differentiator and winning hundreds of millions of dollars’ worth of business based on that; JetBlue has partnered with The Ocean Foundation to try to show the economic value of clean beaches by directly tying the importance of nature to the airline's main economic measure — revenue per available seat mile (RASM); SAP has found that its operating profit improvesbetween €35 million ($38 million) and €45 million ($49 million) when its Employee Engagement Index rises one percentage point … and the list goes on and on.![]()
Hear more from Unilever, JetBlue,
BlackRock, Bloomberg,
Bank of America
Merrill Lynch
and many more
at New Metrics '15! - Product-level metrics and resulting tools are getting increasingly sophisticated and ever more helpful to companies’ R&D and innovation processes. From The Sustainability Consortium’s vast amount of product-level life cycle analysis across a number of industries, to custom company tools embedded in the product innovation process — this area of New Metrics is poised for explosive growth. Two particular cases have captivated me this year. One is BASF’s Sustainable Solution Steering framework, which is essentially a process used to systematically review and evaluate the sustainability aspects of 50,000 product applications in the company’s portfolio. The analysis took a couple of years to complete, involved 1,500 experts, and resulted in more than a thousand — yes, a thousand — specific plans for changing or phasing out products in the name of overall value-chain sustainability performance. The other is Johnson & Johnson’s evolving Global Aquatic Ingredient Assessment (GAIA) tool, created to quantify the environmental impacts of formulated products after use and specifically focusing on aquatic ecosystem impacts. Needless to say, there are many other compelling examples.
- We are seeing a sharp rise in new sustainability-driven financial services, instruments and tools, powered by mainstream and niche players alike.Bloomberg reported that just last week the U.S. municipal market saw its largest green bond deal ever: a $944 million bond sale by the Central Puget Sound Regional Transit Authority in Seattle. This comes as part of a bigger trend – U.S. municipalities have sold a total $3.42 billion of green bonds since the first deal was issued in 2013, according to World Bank and Bloomberg data. And that is by far not the end of the story, as Citigroup, Barclays, and Bank of America Merrill Lynch, among others, have also made news with sizeable green bond commitments.
Another fascinating development is the emergence of new 401(k) plans put together so that employees can be confident that their retirement accounts are on a good trajectory while acting as impact investors at the same time.
On the tools front, the world’s largest asset manager, BlackRock teamed up with nonprofit Ceres to write and publish the most comprehensive set of guidance tips I have seen to date on engaging with companies and policymakers on sustainability issues, aimed at helping investors navigate important aspects of engagement cultures and styles in the U.S. - While still a bit fragmented, the field of Multiple Capital Accounting is advancing impressively toward becoming a norm. In her new book, Six Capitals or Can Accountants Save the Planet? (2015), Australian scholar Jane Gleeson-White heralds the arrival of multiple capital accounting as “only the second revolution in accounting since double-entry bookkeeping began” and “of seismic proportions” — a conceptual breakthrough that finally makes Triple Bottom Line reporting possible. Leading measurement and reporting standards, too, such as the IIRC standard for integrated reporting, the SASB standard for sustainability accounting, and the GISR standard for rating the sustainability performance of public companies, are explicitly grounded in the same idea: that the Triple Bottom Line performance of organizations can and should be interpreted in terms of what their impacts on multiple capitals are.
One remarkable recent application of multiple capital accounting comes from paints and coatings company AkzoNobel, which recently announced that it is taking integrated reporting to four dimensions. The company’s so-called 4D method considers the whole value chain and is set up to measure both positive and negative environmental, human, social and financial impacts. Other advanced practitioners include New Chapter (owned by Procter & Gamble) and Cabot Creamery Cooperative, both of which are applying the MultiCapital Scorecard. - New macro forces on the horizon will further enable and reward far-reaching corporate sustainability strategies and ambitious goal-setting. First introduced as a proposal at Rio+20 in June 2012, the new UN Sustainable Development Goals (SDGs) will be launched this fall to replace the Millennium Development Goals once they expire at the end of the year. Both governments and businesses are already trying to decipher how they could leverage the goals to create new forms of shared value, and what the goals would mean for their value chains. A similar situation is also occurring around the COP21 Paris Climate Conference coming up in late November and early December.
Is your sustainability program advanced enough to take advantage of the range of opportunities referenced above? If not, you're not alone. New Metrics are indeed, well, new and being upgraded constantly, as business executives and their sustainability teams figure out how to put them to ever-more-productive use. That is why I encourage you to join us at our New Metrics ‘15 conference, October 6-8 in Cambridge, MA. All topics mentioned above and many more will be covered in depth and you will meet some of the most recognized thought leaders in the space, along with dozens of brands already leveraging New Metrics to help lead the way to a sustainable economy.