The Triple Bottom Line Blog

Last summer, when my wife bought her first Prius, I wrote elsewhere about how the new car had affected her driving:

As you may know, the car's dashboard features a touch-sensitive screen that displays various kinds of information and can be used to control the sound system, the air conditioning, etc. Mary-Jo normally keeps the screen set to show fuel economy, and the effect is quite fascinating. The display shows the current mileage you are getting (ranging from less than ten miles per gallon to a maximum of a hundred), the mileage you've achieved in five-minute travel increments, and your average mileage over any period you want--the current trip, the last week, whatever.

As a result, driving becomes a kind of video game: How far can I get the current mileage bar to extend? How high can I get my mileage rating for this trip? Can I beat my score from my last trip? And Mary-Jo is clearly driving differently. Her foot on the gas is much lighter, she avoids fuel-draining accelerations and needless braking, and she uses cruise control on long straight stretches of highway.

These are significant changes for a woman who used to get antsy when stuck behind a slow vehicle. Now instead of changing lanes she smiles serenely as her speed drifts down toward 50 mph and her mileage bar stretches up above 50 mpg.

Turns out I wasn't the only person to notice this effect. According to a recent article in The Economist, some smart companies are trying to apply the idea to another big energy guzzler, the average home:

What if you did the same thing to houses? A variety of products can provide real-time information about electricity consumption. Working out how much energy a house is using is harder than with a car, because electricity meters are generally hidden away in cupboards or cellars, and many people find them hard to understand. So an easily understood real-time read-out, akin to a car's fuel-efficiency gauge, could make a big difference.

The Economist articles goes on to describe two gadgets, the Owl and the Wattson, designed to make such energy-usage measurements easy and routine.

Of course, both the automative and home examples simply illustrate the old management principle, "You get what you measure." Whenever you develop a metric for tracking some activity, that act of measurement tends to affect the volume of that activity. So if, for example, you start providing daily reports about the number of defective products coming off your assembly line, within a few days it's likely that the number of defects will start to fall, just because people are suddenly thinking about and noticing defects more than ever. There's no reason to think the same can't apply to energy use, waste production, and other environmentally-sensitive activities.

Two lessons related to sustainable business:

1. A big, usually unremarked obstacle to green behaviors is the lack of reliable, easy-to-obtain feedback about the impact of our activities. (In most homes, even the traditional electric and water meters are located in an out-of-the-way corner of the basement or a closet and are hard for the average person to read and interpret. This is silly, and represents a big wasted opportunity.) Conversely, there's enormous value to be realized in the development of products, like Owl and Wattson, that don't save energy or reduce pollution directly but that improve human environmental behavior indirectly simply by making it transparent.

2. On a corporate level, the powerful impact of simply knowing what you are doing is one reason the reporting movement promoted by GRI and others is actually more important than many people realize. When a company is "forced" to report on its environmental, labor, and social practices every year, it has an automatic impact, subtle or marked, on the way its employees tend to think and act. The impact would be even greater, of course, if sustainability reporting were quarterly or even monthly rather than annual, but having any metrics at all is valuable in its own right.

In one sense, of course, just knowing what you are doing isn't terribly meaningful. Standing on the scale every day doesn't, by itself, make you lose weight. But buying a scale and using it regularly--along with a full-length mirror!--is a pretty important first step in any weight-loss plan. It's all about metrics.

Labels: GRI, Measurement, Prius, Reporting and Transparency

If your company is among those that have begun monitoring and reporting information about your sustainability efforts, good and bad, for the benefit of your stakeholders and the general public, congratulations. And if you take the job seriously enough to have adapted the guidelines established by the Global Reporting Initiative (GRI), congratulations again. You're among the corporate vanguard that are leading the way on making sustainability a routine and important part of the business conversation.

Now it's time to take the next step: Talking just as honestly and realistically about the risks, threats, and problems you face on the sustainability front as you do about the opportunities you are embracing.

This article from the World Business Council for Sustainable Development highlights a recent study of 50 sample GRI reports from companies around the world. The study found that most companies shy away from addressing or even mentioning the downside of today's leading sustainability issues. For example:

The report finds that 90% of surveyed reports include climate change. However, only 20% of the studies reports mention any risks to their businesses from climate change. This lack of information on risks is in spite of evidence from a number of sources, including the UK government's Stern Report on the Economics of Climate Change, that say that climate change has serious ramifications for the world's economy,

Carbon emissions trading and credits, the report concludes, are the most focused on as new businesses opportunities created by climate change. Other opportunities from climate change vary widely from sector to sector, and include hybrid cars to energy efficient detergents.

The risk that was mentioned in the reports most often is the increase of energy costs, with about 20% of sustainability reports mentioning rising energy bills. Very few companies mentioned the risk of increased legal action, such as the risk of class-action lawsuits with regard to climate change.

It's understandable that corporations should want to emphasize the positive aspects of their sustainability efforts. Putting a happy face on the news, whatever it may be, is a common feature of corporate culture. (We know some companies where the word "problem" is practically forbidden; there are only "opportunities.") And particularly today, in the early days of the sustainability reporting movement, sustainability officers may be under pressure to accentuate the positive (i.e., the new businesses and new profits to be built around sustainability) rather than the negative, in order to justify the value of the sustainability concept.

Nonetheless, it's obvious that, in business as in life, there are practically no positives without corresponding negatives. And that certainly applies to sustainability. Take global warming as an example. Can you imagine a food company that isn't thinking about how climate change may affect their supply chain in the coming decades? A real estate developer that isn't looking at the effects of coastal flooding? A home supply company that isn't examining how water shortages and heat waves will impact house and garden designs? And that's not even to mention more obvious examples, from energy companies to utilities to transportation companies, all of which will be under enormous pressure to redesign their businesses as the cost of carbon emissions continues to climb.

Let's put it this way: None of us would want to invest in a company that is so short-sighted that it is not exploring the risks posed by global climate change. So why shouldn't companies discuss those risks--and the steps they are taking to cope with them--in their sustainability reports? To do so will only enhance their credibility.

Honest, realistic risk assessment may be the next big frontier in the world of sustainability reporting. You should be thinking about it now, as you begin planning for next year's report.

Labels: Greenwashing, GRI, Reporting and Transparency, WBCSD