A New Way to Measure

 

Measuring and reporting sustainability is not only a growing trend, but it is a critical part of ensuring that customers and competitors know what a company is doing to move to address today’s concerns about corporate sustainability values. There are tens if not hundreds of “standards” that are used for ranking and measuring company performance, or a subset of the company like how they operate buildings, treat employees etc. A few are well known such as the Global Reporting Initiative (GRI), LEED for buildings, Energy Star for Energy Performance, and dozens of “lists” of top performers. This week on GreenBiz, an article was exploring these lists from an energy company perspective.

Their analysis was focused on the 2013 Global 100 list, the Corporate Knights Inc. list identifying the top 100 most sustainable large-cap companies in the world. Their surprising find? Two of the top five companies on the 2013 Global 100 list are oil and gas companies. For their full explanation of how these ranking stack up, see the article here. 

I appreciated that the GreenBiz article called out the inconsistencies between these lists. Different lists get different media attention in different market sectors, and in different countries, and each one ranks companies differently.

“… just to show you how crazily inconsistent this list-making business has become, only one of the top 4 companies on Newsweek’s 2012 green global rankings -- Santander Brasil, Wipro, Bradesco and IBM -- made it onto Corporate Knights’ Global 100. And not one of the top 5 on the Corporate Knights’ list made the Newsweek rankings.”

It does not surprise me when I see well known product brands like Clorox on the list; their efforts to make more sustainable products go directly in line with their customer marketing. What really grabs my attention is when industrial businesses, like oil and gas companies, are called out.

It has long been my personal mission to work with and understand these large industrial companies, and how to pivot their business into more sustainable models. This is a huge task, when the core of their business proposition is grounded in something that is in-and-of-itself, not sustainable. The oil and gas companies alone make up 54 of the wealthiest 500 companies in the world, with a combined 2010 value of $4.17 Trillion.  That is a lot of value tied up in a business model founded on a finite resource.

We are learning about developing businesses that are flexible, sustainable, and designed to make the world a better place balancing people, planet and prosperity. Clearly, these non-renewable energy companies are doing fine on the profit side, but what is their long term strategy? Many of these companies are participating in the reporting game, appearing on sustainability lists and reporting to the GRI. Reducing emissions associated with operations, making extraction methods more efficient, highlighting community development and employee benefits. These elements point to a more sustainable company by definition, but do little to address the underlying shift that is needed to move these companies to a truly sustainable business model.

From Shell: “We began reporting voluntarily on our social and environmental performance with the first Shell Report that covered 1997. We do it to be open and honest, and to show how we are contributing to sustainable development.” 

The high tech oil and gas companies have the skill sets and resources to pour into alternative models, but there is little incentive to do that right now. Investment in renewable alternatives are simply side projects, while the core business direction is how to keep producing what we always have, but more efficiently, cleanly and safely. I do not want to downplay the importance of these efforts. They are critical as we do not have a working alternative model at this point and need to carefully use the current models as well as we can. However, making things “better” does not solve the problem.

Until the core business focus shifts, these companies are operating on an unsustainable trajectory. The current system of rankings and reports does not help force this shift. While they continue to appear on lists touting their “sustainable practices”, how are they publicly held accountable? I believe that these reports slow down public demand for urgency to change. I think it is time to add a new metric in sustainability rankings: how sustainable is the underlying business model of the company.