This article is part of the “How to be a green changemaker?” series on the Zerwaste blog. In this post, we will try to prioritize what to measure when we monitor sustainability development goals progress and performance
Welcome back to the green changemaker Journey!
In our previous articles, we have seen the first steps to monitor sustainability efforts:
- By defining what you have to do legally (cf. article on regulations);
- By showing how to use the Value Stream Mapping to reduce waste in linear processes and optimize circular systems;
- By choosing the right KPIs (cf. sustainability KPIs).
To support us in the selection process, we are using a framework for Sustainability Indicators, the Database of Sustainability Indicators and Indices (DOSII).
This taxonomy is a searchable excel tool with an inventory of sustainability indicators at industrial scale and a drop down of KPIs based on defined criteria to:
- Identify candidate measures relevant to specific sustainability interests;
- Measure various aspects of sustainability;
- Cover a variety of topics (e.g., agriculture, poverty, education).
This tool will help to select the right KPIs’ category but the list could still be quite long. It is therefore really important to prioritize the sustainability targets linked to:
- The impacts of your operations, value chain or industry in general;
- The interests of your stakeholders; and
- The priorities in your own strategy.
The first step is to understand ESG issues and how they relate to your business through a complete internal self-assessment of the organization. For instance, if you want to reduce the number of materials used to produce something, your primary focus won’t be a KPI related to water consumption.
We will get back in a future article on how to build a sustainability strategy in details, but for now let’s summarize by saying that the company will report on strategic priorities. This report is an opportunity to analyze the risks of operations and the impact products or services could have.
Once you have identified your strategy, it is important to assess the risks to people and the environment and to identify the ones with the most severe negative impacts linked to the company’s operations. To get a comprehensive overview of sustainability and understand the impact of the changes, a sustainability hierarchy could be used. It consists of a four levels pyramid prioritizing actions that:
- Endanger the survival of humans;
- Significantly reduce life expectancy or other basic health indicators;
- May cause species extinction or that violate human rights;
- Reduce quality of life.
The objective is to identify opportunities to tackle these risks in ways that maximize positive outcomes for people and the environment, to reinforce the viability of the company in the long term and to minimize any negative (direct or indirect) impacts.
The focus here is on how the company can apply its skills and capabilities to develop products, services or investments and to make a critical difference by tackling risks.
How to Prioritize Your Sustainability Performance Goals
One way to identify the targets under which the company has the greatest capacity for impact and action is to distinguish Value Added (VA), Non Value Added (NVA) and Necessary but Non Value Added (NNVA) activities. Most of the time allocated budget and strategy will be different depending on the added-value of the activities. It doesn’t mean that it is not possible to act on both but you will have to approach them differently:
- More budget could be dedicated to VA activities, but you have less flexibility to skip this step. Therefore, your focus should either on using your skills and capabilities in new ways to improve the way of working or to rethink the way you use those skills, e.g. banks increasing the access of small-scale industrial in developing countries to financial services.
- NVA activities will usually drive less budget, but also less attention. There is therefore usually a huge room for improvement as not so much was done in the past. You can easily launch independent campaigns (e.g. campaigns on road accidents for people working for companies with a large distribution network), or even fully replacing the activity without impacting the core business.
Another way to decide what you want to monitor is the tools and resources your company has at hand to measure your impact. Indeed most companies won’t invest a lot of money in measurement tools as it is not considered a VA activity.
For instance, as a company in Belgium, the law requires you to sort your waste. In Wallonia, the decree of the 5th of March 2015 imposes to sort 15 different fractions, some of them starting at a specific threshold. In addition, you have to collaborate with enterprises collecting your waste. Thanks to the invoicing system in place, the data on the amount of annual waste is most probably available which clearly simplify the target definition process.
Finally, it is key to understand the expectations of your stakeholders through a materiality assessment, a formal exercise to find out how important specific ESG issues are to them. It can be used to guide strategy and communication by following seven basic steps:
- Identify Internal and External Stakeholders
- Conduct Initial Stakeholder Outreach
- Identify and Prioritize What You Want to Measure
- Design Your Materiality Survey
- Launch Your Survey and Start Collecting Insights
- Analyze the Insights
- Put Insights into Action
While everything might not be immediately possible for some companies, the exercise could highlight ideas to make this possible in the future.
Deploying and Monitoring Your Sustainability Strategy
Once you have prioritized your actions, you could include them in a program and structure them in a chronological fashion to maximize the program’s benefits. It can be done during a company meeting where you brainstorm on your top 5 most important sustainability objectives. Once you know what you want to incorporate into your strategy (this is a topic for another day), set a timeline to meet all those objectives.
Another way to reflect the values of a diverse set of program goals is to measure the number of occurrences and per-unit carbon dioxide reduction for each KPI or the net present value and the duration for the whole program.
In a nutshell, Sustainability KPIs which should be included in this program could be prioritized as follow:
- Select industrial (scale) KPIs from the DOSII list based on the following criteria:
- Pillars of your sustainability strategy;
- Theme (or ROE topic) encountered in your company.
- Prioritize the selected KPIs based on:
- Your level of maturity;
- Your internal skills & capabilities to measure and tackle identified issues;
- Your stakeholders’ expectations through a materiality assessment;
- Specific criteria for each KPI: importance of impact, number of occurrences, per-unit carbon dioxide reduction…
- Evaluate the program:
- Net present value
To evaluate the net present value, it is key to take into account the profitability of those initiatives but we will tackle this aspect in the next article.
See you next week to build the sustainable, circular, and waste-free world of tomorrow!