Jonathan Lopes, 2016

Practicing sustainability means an organization is employing tactics to minimize its potential harm to local and global environments. Businesses are transitioning into “green” habits more frequently as behaving this way finds deeper roots in popular culture. Of course, a business claiming it acts sustainably has little to no value in its claim unless there is a standard set of ways to measure the impact of its sustainability efforts. The use of quantitative methodologies to assess these efforts is broadly known as impact measurement. Governments and research companies analyzing this impact are using techniques that require data from a multitude of business facets, ties with socioeconomic environmental standards, and the oversight of long time periods. The lengthy criteria to conduct impact measurement are necessary and not always simple. Like New Year’s resolutions, businesses must work hard to maintain sustainable operations or else face failure. Now we can see how the importance of measuring sustainable impact radiates into practice.

Why do businesses want to pursue routes that favor the environment? Well, quite frankly for the same reasons they conduct most business—to appeal to the consumers’ best interests. Collaboration with the environment is a result of public opinion in favor of corporate transparency, as opposed to information that typically isn’t “public,” to say the least. Larger companies that have already won their customers know that they must supplement their product or service with something that draws customers’ loyalty. Eco-friendliness is the next step for long-standing businesses to entice the public that newer companies, too, can utilize to flourish.

Internally, employees find it rewarding to know that their company works for a bigger cause that also pushes the business itself into the conversation on environmentally sustainable practices. Oh, and not to mention, there are tax-incentives for businesses that partake in eco-responsible activities.1 Furthermore, it’s important to recognize that businesses are made up of people. Therefore, there is an instinctive interest in sustainability that is common for a business to emanate as a collective consciousness. Natural ecosystems provide fundamental support to the well-being of human civilization. According to the Ecological Society of America, some of nature’s services “include the purification of air and water, detoxification and decomposition of wastes, regulation of climate, regeneration of soil fertility, and production and maintenance of biodiversity, from which key ingredients of our agricultural, pharmaceutical, and industrial enterprises are derived.”2 Supporting these services is intrinsically imperative to human welfare. With growing interest for fair and environmental practices, it has become necessary to use tools gauging corporate impact and to set standards by which companies should operate based on these results.

Once a business decides to incorporate sustainable plans for the future, how do we measure their impact? Companies, such as Nike, are huge proponents of a clean, ecological future. Nike has come a long way since it was the center of scandal in the 1990’s.3 Reports of abusive practices, such as low wages and poor labor conditions for foreign factory workers were some of the turmoil it faced. In fact, Nike has a website dedicated to its “journey of sustainable innovation,” where it considers its labor, environmental, and community impacts across its value chain.4 Its Q&A page allows consumers to inquire about Nike’s sustainability efforts—a way of reaching out and providing feedback to a concerned populace. Other well-known, corporate giants also provide this type of information. Google Green is a site devoted to minimizing the impact of Google’s services, with plenty of infographics illustrating just about everything the company is doing to better its carbon footprint.5 Some of the top ranking companies in sustainable efforts for 2015—according to Toronto-based media company, Corporate Knights (the company responsible for the Global 100 list released annually at the World Economic Forum)—are quite well-known, such as Biogen Idec, BMW, L’Oreal, and Adidas AG.6 Vice president of research at Corporate Knights, Doug Morrow, defines sustainability as “doing more with less; squeezing more output out of every capital input, including financial, human and natural capital…it is possible to do this and outperform the benchmark on financial returns”.7 Using data from Bloomberg and from direct contact with 350 of the highest-performing, publicly traded companies in the world, Corporate Knights was able to create its Global 100 list.

Corporate Knights uses essential data drawn from key areas of business to fill its algorithmic version of the Triple Bottom Line (TBL) framework—a UN accounting standard, consisting of three Ps: profit, people, and planet. TBL encourages businesses to “measure” the three Ps, in terms of traditional profit and loss accounting, socially responsible operations, and environmental responsibility (each of these three benchmarks is a “bottom line” the company must meet). A 2009 article from The Economist implicates an underlying belief that “when companies measure their social and environmental impact, [only then] will we have socially and environmentally responsible organizations.”8 It’s easier to measure profit and people—in terms of cash—but the lines become much thinner when it comes to measuring the true impact of a global supply chain on the environment.

Energy consumption, water productivity, sustainability disclosure practices, waste productivity, fossil fuel usage, changes in land use, and many more factors go into quantifying environmental impact. Much of this data is collected in detailed paperwork at state and national levels, where it can then be used by companies like Corporate Knights to place a sticker on just how sustainable these organizations really are. “There are challenges to putting the TBL into practice. These challenges include measuring each of the three categories, finding applicable data and calculating a project or policy's contribution to sustainability. These challenges aside, the TBL framework allows organizations to evaluate the ramifications of their decisions from a truly long-run perspective.”9 Impact measurement may prove to be a formidable opponent for some businesses now, but hopefully soon they will recognize the importance of protecting our planet through sustainable operations. If this is too much to ask, then I fear we will face a Herculean challenge in centuries to come—something much more frightening than anything we have ever faced.

1. Spector, Dina. "10 More Reasons Companies Should Care About Sustainability." Business Insider. Business Insider, Inc, 01 Mar. 2012. Web. 02 Mar. 2015.
2. Issues in Ecology. 2nd ed. Washington D.C.: Ecological Society of America, 1997. Spring 1997. Ecological Society of America. Web.
3. Nisen, Max. "How Nike Solved Its Sweatshop Problem." Business Insider. Business Insider, Inc, 09 May 2013. Web. 3 Mar. 2015.
4. "Sustainable Business Report." NIKE, Inc. N.p., n.d. Web. 03 Mar. 2015.  
5. "Google Green." Google Green. Google, n.d. Web. 02 Mar. 2015.
6. Dill, Kathryn. "The World's Most Sustainable Companies 2015." Forbes. Forbes Magazine, 21 Jan. 2015. Web. 03 Mar. 2015.
7. Smith, Jacquelyn. "The World's Most Sustainable Companies Of 2014."Forbes. Forbes Magazine, 22 Jan. 2014. Web. 03 Mar. 2015.
8. "Triple Bottom Line." The Economist. The Economist Newspaper, 17 Nov. 2009. Web. 03 Mar. 2015.
9. Slaper, Timothy F., and Tanya J. Hall. "The Triple Bottom Line: What Is It and How Does It Work?" The Triple Bottom Line: What Is It and How Does It Work? Indiana Business Review, n.d. Web. 3 Mar. 2015.