Sustainability Management System: The

Triple Bottom Line

What is the Triple Bottom Line?
Incorporating sustainability into your corporate strategy can raise a lot of questions:

 How do you measure sustainability?

 How do you make sustainability work for your business?

 How do you define sustainability for your corporation?

The Triple Bottom Line is one of the main systems being used by businesses to assess the profits
they are making through their corporate sustainability solutions. The Triple Bottom Line method
asks you to see beyond the traditional bottom line of business to the profits that your business
makes socially, environmentally, and economically. Measuring your business using the Triple
Bottom Line is one of the best markers of how sustainable your business is, and how profitable it
really is.

Social Sustainability
The Social bottom line measures your business’ profits in human capital, including your position
within your local society. Your social bottom line is increased by having fair and beneficial labour
practices and through corporate community involvement, and can also be measured in the impact
of your business activities on the local economy. For example, some questions you can ask yourself
when measuring Corporate Social Responsibility are:

 Is your business a job-growth driver in your city? Do you or your employees give back to the
community?

 Are the people you hire statistically better situated within the community in terms of
economic stability and community health?

 Does your business support local initiatives and grow the overall sustainability of your
community/region?

 Do you implement fair hiring standards? What are your employee demographics?

After all, if your business is not nurturing positive relationships with your community, your client
base and employee pool shrinks accordingly. The social bottom line questions the belief that the
less a business pays its work force the longer it can afford to operate. Instead, the social bottom line
measures the long-term sustainability of business human capital, with the understanding that a
business that is also a desirable workplace will always be able to operate into the future,
since there will be a work force striving to be part of the business. Essentially, corporate
interests and labour interests are seen as interdependent.

Like most subjective public relations efforts or intangible benefits, your social bottom line can be
difficult to measure. However the Global Reporting Initiative (GRI) has developed guidelines to
enable businesses to report and measure their social impact.

Environmental Sustainability
The Triple Bottom Line approach to sustainability takes the view that the smaller impact your
business has on the environment and the fewer natural resources you consume, the longer and
more successful your business will be.

Controlling your Environmental bottom line means managing, monitoring, and reporting your
consumption and waste and emissions. This is typically the work of your EHS department, though
most sustainable business models also make waste reduction and green policies corporate-wide
values across all levels of management. A sustainability committee is often required to communicate
your sustainability solution and sustainability goals across all departments.

Measuring and reporting your environmental bottom line is certainly possible, though depending on
the size of your business, it can be a time-consuming and difficult process. However, EHS or
corporate sustainability software can make the process much quicker and cost effective.
Again, the Global Reporting Initiative offers a few helpful metrics for measuring and reporting
your environmental triple bottom line. These include (but are not limited to):

1. Renewable energy use and energy consumption (direct and indirect)

2. Amount of material that is recycled

3. Amount of water withdrawn from local water sources

4. Total NOx, SOx, and GHG emissions

Economic Sustainability
In the Triple Bottom Line approach, economic sustainability is not simply your traditional corporate
capital. Your economic capital under the Triple Bottom Line model should be measured in terms of
how much of an impact your business has on its economic environment.

The business that strengthens the economy it is part of is one that will continue to succeed in the
future, since it contributes to the overall economic health of its support networks and community.
Of course, a business needs to be aware of its traditional profits as well, and the Triple Bottom Line
accounts for this.

 Does your business help local suppliers stay in business and innovate? Or do your activities
put the local economy at risk?

 Do you pay employees enough to stimulate economic growth and spending? Or does your
compensation policy shrink local economy?

 Do you choose materials that are economically a good investment? Or do you buy cheaper
products that create issues in other areas? For example, do you buy chemical products that
are low emission, or cheaper high-VOC products that put your environmental compliance at
risk?

Why to Use the Triple Bottom Line

Method
By using the Triple Bottom Line method, your business can expand how it understands its position
in the current economy and its ability to survive in the future. Corporate sustainability measures
your ability to be in business indefinitely, based on your impact on the environment, your
relationship to your community, and contribution to your economy. In reality, all three factors play a
major role in determining if your business can stay in business and generate a profit - no single
bottom line can sustain a business alone.
  Your business needs a healthy workforce with diverse skills, different perspectives, and the
workforce must be content enough to deliver growth.

 Your business can only operate in an economic situation that sees your supply chain and
local businesses thrive. If your city or region becomes a dead zone economically, your own
business won't have access to people or resources in the long term.

 Your business needs good stewardship of natural resources to ensure they are available 5 -
10 years down the road and beyond.

Unlike the traditional method, the Triple Bottom Line allows you to see your business as a social and
environmental entity and measure it along these parameters.

You can learn much more about corporate sustainability by downloading ERA Environmental
Consulting, Inc.’s free PDF eBook “The How’s and Why’s of Sustainability”, including case studies,
steps to help you implement a sustainability program, and information to help you get the executive
buy-in you need.
Table 1: Eight Social Capital Factors and example indicative question Eight Social Capital Factors
Indicative Question Participation in Local Community Do you help out a local group as a volunteer?
Proactivity in a Social Context Do you go outside your local community to visit your family? Tolerance of
Diversity Do you think that multiculturalism makes life in your area better? Value of Life Do you feel
valued by society? Feelings of Trust & Safety Do you agree that most people can be trusted?
Neighbourhood Connections Have you visited a neighbour in the past week? Family & Friends Can you
get help from friends when you need it? Work Connections Are your workmates also your friends?
Top 10 Performance Indicators
for Sustainable Companies
My initial intent here was to do some research and identify just a few
top performance indicators that signify how "green" an operation is -
four or five at the most. With some previous experience in supply
chain sustainability, I thought I could easily ...
Jim Tompkins
APR 04, 2012

My initial intent here was to do some research and identify just a few top
performance indicators that signify how "green" an operation is - four or
five at the most.

With some previous experience in supply chain sustainability, I thought I

could easily create this short list. What I didn't realize was that my
research would lead to a couple of websites where everything
environmental would be located and performance indicators would be
abundant.

I found many, many resources that have lots of detailed information and
a wide range of performance indicators.

One of the key points I learned is that measuring environmental

performance requires a look at all different areas of an organization -
materials, energy, water, emissions, effluents and waste, products and
services and many other topics.

So I decided to identify a Top 10 list of environmental performance

indicators.

This was a long way from where my original vision started, but I hope it
provides you with some metric areas to think about when reviewing
sustainability in your company.
My top 10 sustainability indicators are:

1.Percentage of materials used that are recycled input

materials

2.Direct energy consumption by primary energy sources per

unit of output

3.Energy saved due to conservation and efficiency

improvements

4.Percentage of water recycled and reused

5.Total direct and indirect greenhouse gas emissions by weight

6.Emissions of ozone-depleting substances by weight

7.Nitric oxide (NO), sulfuric oxide (SO), and other significant

air emissions by type and weight

8.Total water discharged by quality and destination

9.Total weight of waste by type and disposal method

10.Percentage of products sold and their packaging materials

that are reclaimed by category

If your organization can honestly say that you are measuring

performance in each of the areas identified in the Top 10, then you are
well ahead of the pack.

I'll also bet you have a thing or two that you could add to this list. If you
do, please leave a comment, and we can make this a running list on how
to be greener in your operations.

Jim
Tompkins Inc.
 A Better Scorecard for Your Company’s
Sustainability Efforts
by
 Martin Thomas
and
 Mark W. McElroy
December 10, 2015

HBR STAFF
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HBR STAFF

What does Ben & Jerry’s have to do with the Paris climate conference? No, the company
isn’t providing free ice cream to attendees (at least not that we know of). The connection is
actually much deeper and more meaningful. Ben & Jerry’s represents a crucial thread of progress
that has global implications for business in a world responding to the increasing effects of climate
change. To understand this, however, we need to go back a few years.

When Ben Cohen and Jerry Greenfield sold their business to Unilever in 2000, they wanted to
ensure that the company’s social and environmental activism would continue to be supported. To
that end, they proposed to the new owners that they agree to continue funding their Social Mission
program.

Unilever agreed, but required of Ben & Jerry’s management that they work out a way of measuring
their social mission performance by creating “Social Metrics.” Such metrics would have to answer
the all-important question: How much social and environmental impact constitutes sustainable
performance and how should they measure it? In other words: How much is enough?

Few have dared to seriously ask this question as it calls for explicit recognition of the need to
measure sustainability performance in literal terms and in company-specific contexts. Despite the
obvious and increasing urgency of climate change, only a handful of companies do this. Corporate
reporting standards still treat such disclosures as discretionary and most companies, therefore, do
not provide them.

But Ben & Jerry’s is now moving toward implementation of a performance accounting system
(known as multicapitalism) that measures economic, social, and environmental impacts in an
integrated way – a solution its Social Mission team considers the best process for this purpose they
have ever seen.

Accounting for Multiple Capitals

The question of how much is enough is increasingly being framed in terms of impacts on “vital
capitals”: natural capital for the environment; and human, social, and other capitals for social and
economic impacts. This is not a rejection of capitalism as we have known it, but rather points to an
expansion of it – interpreting performance in terms of impacts on all vital capitals and not just one
of them (economic).

One could argue that multiple capital accounting is on the verge of becoming mainstream. Last
month, for example, the United Nations Environment Program (UNEP) issued a report entitled,
“Raising the Bar – Advancing Environmental Disclosure in Sustainability Reporting,” in which it
recommended the following:

 “All companies should apply a context-based approach to sustainability reporting”

 “Reporting standards/guidance bodies such as GRI, IIRC, SASB, CDP, etc. should
integrate Sustainability Context more explicitly into their frameworks, for example by
applying the concept of carrying capacities to multiple capitals-based frameworks.”

Translation: The terms “context-based” and “Sustainability Context” are accepted terminology for
measurement and reporting that compare corporate impacts to social, economic, and environmental
thresholds. Greenhouse gas emissions, for example, that exceed science-based thresholds for
mitigating climate change can be seen as unsustainable. Corporate sustainability reports rarely
express performance in these terms, and yet that is exactly what is needed if reporting is to be
meaningful. Context-based measurement and target-setting for climate change mitigation is an
approach now also endorsed by the World Wildlife Fund, the World Resources Institute, CDP, and
the UN Global Compact in their joint Science Based Targets program.
Thus, the Ben & Jerry’s-Paris connection. Any attempt to reach consensus on how best to reverse
climate change at the COP21 conference in Paris must take such corporate measures into account.
As the dominant human institution of Earth, the impacts of business on the environment must be
front and center.

We Need a MultiCapital Scorecard

But merely recognizing that we need to measure impact across multiple capitals is not sufficient.
Even UNEP and the various measurement and reporting standards that have embraced the idea are
principles-based only, and do not specify how it should be done, much less what metrics to use.

What’s needed is a structured, context- and capital-based methodology that organizations can use
to measure, manage, and report their performance: a scorecard that would be a truly Triple-
Bottom-Line measurement and reporting system as well as an open-source innovation, a public
good that could be placed into the commons and adapted.

Such a scorecard would need to assess performance relative to organization-specific circumstances

and not just in general terms. Performance in context-based, multiple capital accounting is always
about comparing the impacts of organizations to contextually relevant capital-based thresholds. So
impacts on economic capital, for example, need to be compared to reasonable returns; impacts on
natural capital (the environment) compared to ecological limits, etc.

We recognized the urgent need across industries and sectors for such a MultiCapital Scorecard
(MCS) and our work and research has been directed toward developing this tool for companies,
including Ben & Jerry’s. We saw the following features as crucial:

 Integrated Measurement and Reporting. The MCS makes truly integrated (financial,
social and environmental) reporting possible by applying a consistent set of criteria to
impacts on all capitals. Together with full stakeholder engagement, this delivers a fully
operationalized Triple Bottom Line method.
 Organization-Specific. No two organizations are alike and so relevant areas of impact
must be defined and specified on a bottom-up, organization-specific basis. This search
brings context into the very heart of the process. Context may be local or global, but it is
always crucial to meaningful standard-setting.
 Sustainability Logic. The MCS applies the logic of sustainability to all aspects of
performance, including economic impacts. This means that thresholds and targets for
impacts on vital capitals are specified (with stakeholder engagement), and performance is
then measured against them.
 Progression Scoring. Where sustainability norms have not been met, the MCS reports
performance towards or away from them.
 Weighting and Prioritization. The MCS process allows organizations to attach different
weights and priorities to different areas of impact.
 Consolidation. The MCS supports consolidated reporting for organizations with multiple
divisions in very different contexts.

Here’s a sample report:

In this hypothetical example, we see that the only area of impact for which Company ABC
performed sustainably in 2016 was water supplies (or water use), which shows a maximum
possible score of 100% in column “C/D”. All other impacts are unsustainable and the scores in
column “A” either indicate their progression towards (positive number) or away from (negative
number) achievement of sustainability in each case. The climate system score of 33% signifies
improving performance but still below the trajectory target (a reduction level) for the year. If
performance were to meet the trajectory target, it would score 66%. ABC could only be awarded
100% if its greenhouse gas (GHG) emissions were zero. This illustrates how the MultiCapital
Scorecard shows progression towards becoming sustainable and not just sustainability performance
in absolute terms.

Such a report enables organizational leaders to understand performance across all dimensions of
the Triple Bottom Line and to take corrective action. It makes no pretense at presenting perfect
information, but it does organize the best data possible in a coherent framework.

Implementing the MultiCapital Scorecard follows a three-step process:

1. Scoping and Materiality. Organizations first need to define boundaries and determine what
the entity-specific material financial and non-financial Areas of Impact (AOIs) should be.
2. AOI Development. The next step is researching and developing sustainability norms,
interim goals, measurement models and data collection protocols for each of the material
AOIs.
3. Scorecard Implementation. Finally, you need to actually populate the MCS to measure,
manage, and report performance vis a vis the AOIs.

Pilot Projects

This MultiCapital Scorecard has shown success with three U.S. pilots: Ben & Jerry’s; New
Chapter, Inc., a subsidiary of Procter & Gamble; and Agri-Mark, Inc. (aka, Cabot Creamery
Cooperative), a large dairy food producer in New England. While all have been methodologically
successful, these experiences have raised two important issues: First, the data required to fully
populate robust Scorecards is not always readily available. New data sources are often needed to
answer new questions, but we have found that the MCS is a useful tool in clarifying the questions
and sharpening the data search. Second, most organizations are not organized in the ways needed
to launch Triple Bottom Line initiatives. Functional silos and other organizational barriers often
block or slow progress toward integrated reporting. The MultiCapital Scorecard increases
communications that allow teams to work across silos.

In all cases, the decision by company leadership to seriously ask the question “How much is
needed to be sustainable?” starts a profound learning process that lays the foundation for a new
way of thinking about and measuring performance – one with sustainability at its core.
Multiple capital accounting, including the use of a MultiCapital Scorecard, represents a crucial
evolution in performance measurement and reporting that must be broadly adopted around the
globe if the aspirations of COP21 are to become reality.
Sustainability Metrics - Manufacturers'

Fight For Standardization

There’s a debate taking place at this very moment among some of the world’s largest and most
influential manufacturers about the most effective way to measure and track corporate
sustainability programs.

Many major corporations know that corporate social responsibility (CSR) and sustainability
management are essential to long-lasting profits, but it’s not always clear which management
methodology is the best. And when it comes to figuring out the best practices for tracking and
reporting sustainability projects, there’s even more debate.

Most manufacturing supply chains are still in experimentation mode when it comes to sustainability
tracking programs. What this all means is that industry powerhouses agree that sustainability is
important, but there’s a lack of standards that give them, and the businesses they work alongside, a
clear and simple picture of where to go.

And here’s why you should care, no matter what business you are in: when major OEMs make
changes to their purchasing policies or operating procedures, there is a ripple effect throughout
entire supply chains. If one of your clients decides to start following one set of sustainability
standards, the pressure to demonstrate compliance with those standards gets pushed down onto
you, and your own supply chain. This gets even more complicated when you have two clients
following different sustainability standards, and you have the burden of complying with both.

Fundamentally, the more disparity in sustainability reporting standards that exist within an industry,
the more difficult business becomes for each tier of the supply chain. That’s why industries that see
the most benefit from sustainability programs are those that collaborate and agree on a specific
protocol - and share their data for communal benchmarking.

The goal of this article is to highlight the most common sustainability standards used by major OEMs
in the manufacturing industry, and give you the context and background about why these standards
are getting attention from big business – and how you could be seeing these standards affect your
own operations.

The GRI Metrics under the Spotlight

One of the frontrunners in the sustainability tracking and metrics debate is the Global Reporting
Initiative (GRI) - a comprehensive set of sustainability indicators that can be used to create in-depth
and economically useful sustainability reports. The GRI model addresses a large spectrum of
sustainability metrics that range from basic measurements to advanced sustainability tracking. It
covers everything a business would ever need to measure its sustainability progress.

The GRI has two major benefits: first, that it provides standards for an extremely broad range of
social, economic, and environmental factors – giving businesses unparalleled options for what they
could be tracking. Secondly, GRI reporting comes with different tiers of comprehensiveness; a
business can do a satisfactory GRI report with only a few core metrics, or they can choose a tier that
has a greater number of GRI metrics. This gives businesses greater flexibility in how much effort and
resources they can pour into sustainability reporting.

For example, the GRI covers the most commonly-accepted sustainability metrics like your carbon
footprint and workplace safety incidents, but it also covers more intensive metrics like local
biodiversity, human right contributions, working with local suppliers, and training tracking. That’s the
kind of data you can’t just plug into a simple spreadsheet.

GRI can also be applied to any type of business, from large to small, in any industry. As a
completely voluntary standard, what you choose to include in your GRI report can be tweaked to
fit your needs. Just remember that the more you include the stronger your report and the results will be.
If manufacturers in your industry tend towards using the GRI standards, it’s a good idea to consider
starting your own GRI report, using the most basic and smallest GRI tier. That way you can market
yourself as being a GRI reporter, and you’ll have experience with the standard if your clients ask you
to provide higher GRI tier reports.

At ERA we tend to recommend the GRI as your first and primary framework for two reasons: most of
the major OEMs we get to work with are already using or investigating GRI, and our research shows
that using GRI standards will also give you most of the data you need for other sustainability
standards due to its comprehensiveness.

Triple Bottom Line

The triple bottom line approach consists of social equity, economic, and environmental factors. It’s
very similar to the GRI in this way. The people, social equity, or human capital bottom line pertains
to fair and beneficial business practices toward labour and the community and region in which a
corporation conducts its business. A triple bottom line-focused company utilizes a structure in which
the well-being of corporate, labor, and other stakeholder interests are interdependent.

Under the triple bottom line methodology:

 Social sustainability examines living wage, workplace safety, and innovative capacity.

 Economic sustainability examines equity, borrowings, and competitive prices.

 Environmental sustainability examines water supplies, solid wastes, and the climate
system.

Most manufacturers have adopted a triple bottom line mindset when it coms to sustainability, and
this marks an important shift from the previous way of thinking that sustainability was all about the
environment. If your business still focuses all of its sustainability projects and marketing around
being green, looking more closely at the triple bottom line model will be a useful starting point for
you.

However, today you won’t see as many sustainability reporting projects based solely on the triple
bottom line, simply because this model doesn’t necessarily come with a set of metrics or specific
recommendations – instead it simply refocuses and broadens a company’s way of understanding
sustainability. That means if you work for a company that is locked into only “thinking green”, you
can use this model to introduce social and economic sustainability. But if your organization is
looking for specific guidelines and action items to start reporting, we recommend looking at entry-
level GRI reporting.

Carbon Disclosure Project

The CDP or Carbon Disclosure Project is an organization based in the United Kingdom which
supports companies and cities in disclosing the environmental impact of major corporations. Its
focus is on air emissions, particularly greenhouse gases. For companies that want to focus their
sustainability reporting on environmental footprint and climate change, CDP is a great place to start.
However, CDP provides recommendations on several core environmental factors.

The main individual programs include: climate change, water, supply chain, forests, and cities. The
aim of the CDP is to make environmental reporting and risk management a common business
practice.

The categories for the CDP include:

 Governance and Strategy- Includes Emissions trading, carbon credits, and engagement
with policy makers
  Risk and Opportunity Management- Includes Risk management, climate change risks,
climate change opportunities

 Verification- Includes Scope 1, 2, and 3 GHG emissions

 Emissions Management- Includes Emission reduction targets, reduction activities,

methodology, and reporting with Scope 1 and Scope 2 breakdowns.

CDP is a fairly popular and well-respected sustainability reporting framework, and you may very well
find members of your supply chain asking for data to support their CDP reporting initiatives. If you
want to focus solely on environmental sustainability, CDP could be a great fit for your business.

The International Integrated Reporting Council

(IIRC)
The International Integrated Reporting Council (IIRC) is a global coalition of regulators, investors,
companies, standard setters, the accounting profession and NGOs. The IIRC’s vision is to align
capital allocation and corporate behaviour to wider goals of financial stability and sustainable
development through the cycle of integrated reporting and thinking.
The International Integrated Reporting Framework categorises activities and outputs of an
organization as financial, manufactured, intellectual, human, social and relationship, and natural.
Across these six categories, the Integrated Report gives communication about how an organization’s
strategy, governance, performance, and prospects in the context of its external environment, lead to
the creation of value in the short, medium and long term.

IIRC is a good fit if you’re looking for a comprehensive reporting option that is a bit more corporate
level than the GRI. IIRC is especially useful when it comes to proving sustainable value to potential
investors.

What to take away from the sustainability

tracking debate
There are two important takeaways from the whole sustainable manufacturing debate: first, that
sustainability is, more than ever, a vital part of running a successful business; and secondly that
there’s a growing demand for a standardized method of approaching sustainability.

This growing interest in standardization will require your business to work closely with your
competitors, allies, and all those other sectors you never thought you would share a common goal
with. Communication up and down your supply chain is paramount.

The length and intensity of the sustainability methodology debate is proof that sustainable
development and manufacturing is not simply a fad that will fade out in a few years.

This probably comes as no surprise to our readers, but practices like environmentally preferable
purchasing and pre-emptive supply chain assessments will soon be standard practices across every
industry. Manufacturing is a large and lucrative enough industry that it has been leading the
way for most global sustainability trends, and once it adopts a standardized methodology, nearly
every other business and institution will follow suit.

This quest to find a standardized system for sustainability tracking also demonstrates that there’s a
demand for an industry-wide method that produces reports that can be shared and benchmarked.

As sustainability tracking becomes more standardized, transparency about your performance,

outputs, emissions, and investments will also increase. The arena for business success is about to
change dramatically once sustainability tracking becomes a standard practice - so prepare yourself
now.
What’s Your Return On
Sustainability (S-ROI)? 7
Metrics To Measure
Michael S. Davies CFA, CMVP September 27, 2019Sustainability

It’s a fact: Business executives and customers agree that companies

should be concerned with their impact on the environment. It’s also true
that an increasing number of organizations are incorporating sustainability
into their business strategies, taking steps to reduce waste and use
resources more efficiently.

But while the idea of sustainability in business continues to pick up steam,

there’s one piece of the puzzle that has yet to come into focus for most
companies: What’s the return on my sustainability efforts? A successful
business must remain profitable, even as it looks for ways to become more
environmentally-friendly.

Your sustainability program can actually help you become more profitable
—but only if you can demonstrate real results. That’s where the Internet of
Things comes in.

Your sustainability program can actually help you

become more profitable—but only if you can

demonstrate real results.CLICK TO TWEET

In this article, we’ll provide a definition of sustainable return on investment,

and provide details around why and how to measure your efforts in a way
that benefits you.
Return On Sustainability Investment:
What is it?
Return on sustainability investment (ROSI), or sustainable ROI, is a
performance measure used to evaluate the gains produced as a result of
corporate sustainability initiatives relative to the amount of money invested
in those initiatives.

The “gains” produced by sustainability efforts may come in different forms:

 An increase in investor demand. Mainstream advisors and investors

are increasingly looking for ESG [Environmental, Social Governance]
funds, to the point where ESG investing is now, according to Forbes,
“big business.” (Those three factors have been determined to be central
to measuring sustainability.) In the past year, the number of sustainable
investment funds has increased by nearly 50%, with a record number of
them—37 to be exact—launched in 2018. Not only did the sustainable
funds attract record net flows, but 63% of them also finished the year in
the top half of their respective categories.
 An increase in brand value. A Nielsen report shows U.S. consumers
are using their spending power to support sustainably-minded
companies. Since 2014, sustainable product sales have grown by
nearly 20%—that’s four times more than conventional product growth.
“In a limited store growth environment, U.S. consumers continue to
choose sustainable products over conventional options, making
sustainability a consistent growth opportunity for manufacturers.”
 Increased employee engagement. What employer doesn’t want
employees who are “all-in” when it comes to their mission? Seventy-five
percent of Millennials said they’d be willing to take a pay cut to work for
a company that is environmentally and socially responsible. Other
research has shown that providing a healthy, green environment for
your employees to work in boosts their productivity and satisfaction
levels, as well as improves their overall health. A separate
study showed that spending $40 per person per year to improve indoor
air quality resulted in a $6,500 increase in employee productivity!
Looking for a partner who can help you get started on
your sustainability goals? Talk to us about what you want
to achieve and we’ll tell you how we can help.
In order to enjoy those gains, however, it’s becoming increasingly important
to provide proof of your commitment to the environment. In years past,
sustainability reporting took a more qualitative than quantitative approach.
Companies could talk about strategies they were implementing to improve,
but there were very few ways to actually quantify the results. Today, the bar
is higher. Sustainability reporting should:

 Show that sustainable practices have a material benefit for the bottom
line.
 Be able to be communicated via user-friendly documentation and use
comparable data.
 Demonstrate improvement in specific areas over time.

That said, exactly how do you measure the sustainability of a company?

Keep reading for an overview of the various aspects of sustainability, how
they can be measured, and how that measurement can be translated into
demonstrable environmental impact.

How To Measure The Sustainability Of A

Company
As of now, there’s not one “right” method of measuring sustainable
development. But based on a review of current prevailing wisdom and
taking into account the recommendations provided by the Sustainability
Accounting Standards Board and the Global Reporting Initiative, we believe
the most crucial sustainability metrics can be divided into seven categories:

1. Energy Consumption
Energy use is the largest component of sustainability. Becoming more
energy efficient saves costs and improves overall operations, which
contributes to financial performance. Additionally, it’s a direct contributor to
greenhouse gas emissions and other compounds which are detrimental to
the environment.
Energy use is readily measurable with IoT sensors. Rather than measuring
energy use at a single point in time, IoT sensors continuously monitor your
energy consumption in a dynamic process, giving you quantifiable numbers
you can use to show an actual reduction. That reduction can then be
translated into environmental impact in terms of carbon offset and air
pollution reduction. IoT sensors and analytics provide a framework to
monitor, measure, and catalog data from energy and environmental
sensors, including energy consumption and demand, air quality, and water
consumption in a granular and dynamic manner.

2. Climate
The emission of CO2 and other compounds resulting from the burning of
fossil fuels is the major factor contributing to climate change. Fossil fuels
are used in generating electric power, providing power for transportation
(cars, trucks, and air travel), and heating of homes and buildings. Electric
generation, transportation, and heating represent one-third each toward
fossil fuel consumption. Therefore, efforts to improve energy efficiency,
migrate to renewable energy, and shift from coal to methane provide a
process to reduce harmful emissions. The large production of CO2 from
burning fossil fuels is the major concern for reducing energy consumption,
which then reduces greenhouse gas (GHG) emissions. The chart below,
based on EPA data, shows the average emissions per megawatt-hour of
electricity reduction:
The source of your energy also matters. The reason utilities are migrating
from coal to natural gas is because methane—the primary component of
natural gas—is 85% more efficient in producing electric power in
comparison to coal. So as utilities migrate from coal to natural gas, greater
energy efficiency is achieved while lowering GHG emissions. A complete
migration to hydrogen fuel would, in theory, eliminate CO2 and other
harmful emissions and offer the highest level of energy efficiency. The
following chart illustrates the specific energy of fuel sources as measured
by kilo-joules of power per gram of fuel:
3. Water Usage
Water is an important metric for sustainability because it is a primary
component of everyday usage within most facilities. The dynamic
monitoring of water quality and leakage can play a crucial role in ensuring
health and safety as well as conserving water. IoT sensors can provide
near real-time monitoring of conditions and consumption.

The following graph, derived from the U.S. Energy Information

Administration (EIA), shows water consumption per square foot by industry.
While the numbers may look small, they are substantial when applied to the
more than 100 billion square feet of building space in the U.S. For example,
the US average is approximately 20 gallons per square foot, indicating that
a 100,000-square foot building consumes over 2 million gallons of water
per year.
Water leakage is also a concern. The loss of water from leaking pipes or
water distribution lines is quite significant. Leakage detection through
dynamic water consumption monitoring could substantially reduce both
consumption and waste. The graph below illustrates how everyday water
leakages could waste large quantities of water if left undetected for 30
days.
4. Waste/Pollution
This category includes metrics surrounding your efforts to prevent or
reduce waste and pollution whenever feasible. For example, are you
working to reduce waste by redesigning your packaging to use recyclable
and reusable materials, or by using less packaging altogether? Are you
recycling a large portion of your own waste? Are you buying materials that
are recycled from other sources? Are you making an effort to incorporate
sustainable energy sources—like solar, wind, geothermal, or biofuels—into
your energy portfolio? Preventing waste and pollution are key practices for
any sustainable business.

5. Employee Health & Safety

As sustainability is synonymous with corporate responsibility, this category
would also include items related to occupational safety and health.
Providing a safe and healthy work environment involves a number of
things. For example, the quality of air inside your building impacts people
directly. According to the EPA, poor indoor air quality affects 33% to 50% of
commercial buildings in the U.S., sometimes causing “sick building”
syndrome.

An important study, Associations of Cognitive Function Scores with Carbon

Dioxide, Ventilation, and Volatile Organic Compound Exposures in Office
Workers, found that “employees in the green condition environment
performed 61% better on cognitive tasks than in the standard office
conditions.”

Indoor air quality monitoring can help you achieve a healthier, more
productive environment for your employees. IoT sensors can monitor
continuously to detect the presence of common pollutants such as volatile
organic compounds (VOCs), carbon monoxide, and particulate matter
(PM). Over time, the data you receive will paint an accurate picture of your
building’s overall air quality, and help you determine what actions might
need to be taken to improve it.

Given that most of our time is spent indoors, focusing on improving

environmental conditions should be paramount. Employee productivity,
time off for health issues, sick days, and work environment are important
considerations. Several studies suggest there are numerous benefits to
improving building conditions.

Other aspects to consider in this category:

 Are you doing everything you can to promote safe work practices?
 Are you conducting regular audits and inspections of practices to
minimize risk?
 Are you implementing programs that encourage employee health and
safety, and reduce or manage stress?
 Are you providing the necessary training to help workers be safe on the
job?

6. Supply Chain
Recognizing that your organization is (most likely) part of a larger system
means taking steps to improve sustainability at all levels of your supply
chain. For example, within the semiconductor industry the supply chains
are lengthy and complex. Chip manufacturers may use minerals that are in
short supply; you should know how and from where are they being
collected, if your supplier is adhering to the legal methods of extraction, or if
water runoff from mining is contributing to pollution. Anywhere along your
supply chain there may be practices that go against your sustainability
efforts. Working closely with your suppliers can help you stay on top of
potential issues and work to improve them.
7. Management Behavior
Adopting ethical and sustainable practices starts with management. Have
they created a culture of sustainability? Implemented policies and
procedures that support it? Are they ethically responsive to the
environment, employees, and products? Have they allowed the
organization to incur lawsuits related to product liability, waste disposal, or
any other aspect that violates the principles of sustainability? These might
be just footnotes in a 10-K or 10-Q form, but it will help investors ascertain
whether you’re just giving lip service to sustainability or developing a
coherent policy to ensure that your entire operation is on the same page.

Measuring Your Sustainable Development

While some of the above metrics may still be somewhat subjective, the IoT
can provide greater visibility into your processes and environmental
conditions—specifically energy consumption, air quality, and water quality.
Examining that data over time will give you a feedback mechanism,
allowing you to actually “see” the impact of your efforts.

Depending on your company and your goals/priorities, one or more metrics

may be “weighted” more heavily for you than they are for another
organization. Ultimately, your performance in these categories should all be
blended into a comprehensive reporting mechanism—a kind of “Balanced
Scorecard of Sustainability”—that can be easily assessed. Not only will you
gain better insight into the effectiveness of what you’re doing, but your
stockholders, investors, and customers will have a quantifiable way to
evaluate your sustainability performance over time.

These measurements can also be compared against other data, such as

changes in employee engagement, customer satisfaction, or sales data.
Correlations may indicate your efforts are having an impact, and that your
ability to quantify sustainability efforts is, for example, boosting your brand
value or improving employee engagement.

Start Measuring Your Own Return On

Sustainability
Are you interested in monitoring elements of your company’s operations for
purposes of calculating sustainable return on investment? We can help you
get started.

At Iota, we use IoT sensors to continuously monitor, measure, and catalog

granular data related to your building’s energy consumption, as well as
your indoor air quality and water use. Our advanced analytics platform
analyzes the energy and environmental conditions, alerting you of
unhealthy circumstances and aberrant events, and can even detect faults
in your systems. It also helps put your building data into perspective so it
can be interpreted and acted upon to achieve your sustainability goals.

If you’d like to tell us more about your facility and talk about how we can
help, get in touch. We’d love to partner with you in making your
sustainability investment pay off.