The world of environmental, social and governance (ESG) performance analytics is exploding at a breakneck speed. What once was a niche field of socially responsible investing (SRI), is transforming into a vast marketplace of financial ESG-oriented indices, ratings firms, carbon reporting and mass-market editorials like Newsweek’s Green 100 ranking. Today the trend toward broader ESG and sustainability reporting is beginning to expand into auxiliary areas such as supplier questionnaires and product labeling.
With all this activity, it seems like everyone has an opinion about which metrics determine a company’s “greenness.” What remains unclear, however, is whether these types of ratings schemes can truly illustrate competitive eco-advantage in today’s complex global marketplace, or even reliably reflect strong EHS and sustainability management within a company.
When this movement took hold a decade ago, many corporate environmental leaders were excited that the external world was finally paying attention to the value their efforts contributed to the bottom line. Indeed, the establishment of the Dow Jones Sustainability Index, the growth of financial firms such as KLD and even the creation of the Carbon Disclosure Project were viewed as affirmations of their professional focus.
But recently, my conversations with corporate EHS leaders seem to reflect a frustration with the ever-growing number of requests. As environmental managers spend more and more time crunching data, they do so with little insight into who the requesting firm is, what their business interests are or how the mountains of data will eventually be used. What we do know is that some of this information is being used to make material judgments about a company’s long-term prospects. Yet does any of this data really indicate true progress?
I believe there is a need for a clear, thoughtful approach to ESG and Sustainability reporting that reflects the performance metrics that are both meaningful to a company and useful to its C-suite leadership, and relevant to external stakeholders.
To address this issue, NAEM has launched its ‘Green Metrics that Matter’ program, an audit of the field of ESG and Sustainability analytics. Our final report will identify the key players, the proprietary benefits of participating with them and the core metrics EHS leaders send to their C-suite. We believe this insight will help promote better decision-making by both corporate users and the broader ESG community.
As we continue our research, we would like to invite you to share your key metrics with us through our confidential online survey. We’d also love to hear your thoughts on this project. How are sustainability analytics changing how you manage? Are the questions you’re being asked the right ones for determining the extent of your environmental stewardship? Is this information truly helping the public better understand whether your products are sustainable? Or is it just an additional paperwork burden?