Team goals: how to measure sustainability across the organisation

Envi­ron­men­tal, social and gov­er­nance (ESG) account­abil­i­ty is increas­ing­ly a fea­ture of many com­pa­nies’ annu­al reports, with the trend for link­ing sus­tain­abil­i­ty per­for­mance to exec­u­tive pay grow­ing by the year. In a sur­vey by Cor­po­rate Sec­re­tary, 60% of Euro­pean respon­dents stat­ed their board tied ESG goals to exec­u­tive pay, com­pared to only 37% of North Amer­i­can boards.

Report­ing and remu­ner­at­ing accord­ing to ESG per­for­mance remain a vol­un­tary deci­sion, based large­ly on recog­nised impacts on com­pa­ny effec­tive­ness and brand per­cep­tion; how­ev­er, manda­to­ry report­ing is on the way. Already more than 1,300 of the UK’s largest reg­is­tered com­pa­nies will need to report using Task Force on Cli­mate-Relat­ed Finan­cial Dis­clo­sures (TCFD) in finan­cial years start­ing after 6 April 2022.

Despite this, there is still a sur­pris­ing­ly large amount of green­wash­ing going on. Some com­pa­nies are still not afraid to make sus­tain­abil­i­ty claims that are based on cre­ative fudg­ing of the num­bers, and the reg­u­la­tors are tak­ing note. 

The Com­pe­ti­tion & Mar­kets Author­i­ty (CMA) has sent a shot across the bows of the indus­try to encour­age cor­po­rates to get their hous­es in order. In July 2022, it placed Asos, Boohoo and George at Asda under inves­ti­ga­tion to ver­i­fy their green cre­den­tials.

The car­rot and stick of bonus ver­sus lit­i­ga­tion is a start. But for mean­ing­ful change, sus­tain­able behav­iours need to be embed­ded across the busi­ness. As “what gets mea­sured gets done”, this means set­ting key per­for­mance indi­ca­tors (KPIs) at as gran­u­lar a lev­el as pos­si­ble, across every team and depart­ment.

Nes­tle UK & Ireland’s Dr Emma Keller, head of sus­tain­abil­i­ty, explains: “Break­ing down the big long-term goals into tan­gi­ble, action­able and mean­ing­ful goals at department‑, team- or indi­vid­ual-lev­el is essen­tial if all the actions are to lad­der up to the over­all aim. After all, reach­ing net zero and becom­ing a gen­uine­ly regen­er­a­tive organ­i­sa­tion that puts more back in than it takes out is new ter­ri­to­ry – no one has been there yet, and no one has all the answers.”

B Corp is mea­sur­ing the triple bot­tom line. It’s a change from a share­hold­er mod­el to a stake­hold­er mod­el

What is clear is that, over­all, there is an accel­er­a­tion in the num­ber of com­pa­nies tak­ing steps to make a mea­sur­able (and there­fore, account­able) impact on sus­tain­abil­i­ty. But first, it’s impor­tant to get ‘what’ you’re mea­sur­ing pinned down, as well as ‘why’.

“I pre­fer the word ‘impact’ to ‘sus­tain­abil­i­ty’. ‘Sus­tain­abil­i­ty’ is so overused and it’s con­cep­tu­al, where­as ‘impact’ is much eas­i­er to mea­sure. Every action you take has an impact on peo­ple and the plan­et and you can work out what that is,” com­ments Han­nah Keart­land, who was for­mer­ly finan­cial direc­tor and then head of inno­va­tion at Can­cer Research UK before launch­ing her con­sul­tan­cy as an out­sourced chief impact offi­cer. 

“Look at pro­cure­ment. If we buy this item, what is its impact? You can then look through the whole sup­ply chain and say, ‘What’s the pack­ag­ing? How was this pro­duced? How was it trans­port­ed? What were the impacts on peo­ple and the plan­et, water and waste in every sin­gle stage of that jour­ney?’ You can map that back.”

There are myr­i­ad exam­ples of how organ­i­sa­tions are try­ing to cod­i­fy their efforts to cre­ate a mea­sur­able and repro­ducible set of behav­iours that lead to tan­gi­ble change. But they are often as dif­fer­ent as they are many. 

Good provenance

Con­ven­tion­al raw mate­ri­als are gen­er­al­ly accept­ed to be more harm­ful to the envi­ron­ment and human health than organ­ic raw mate­ri­als. Wele­da is com­mit­ted to includ­ing 80% min­i­mum cer­ti­fi­able organ­ic raw plant mate­ri­als and the team reports direct­ly to the company’s man­ag­ing direc­tors. The com­pa­ny is also cer­ti­fied by the union for eth­i­cal bio­trade, mean­ing it must fol­low strict process­es to meet require­ments and sub­mit to audits. 

One of the most dif­fi­cult ele­ments of deliv­er­ing a prod­uct or ser­vice that is sus­tain­able through and through is ensur­ing that the sup­ply chain meets exact­ing require­ments. Fash­ion ecom­merce site Far­fetch insists on a strin­gent eth­i­cal sourc­ing pol­i­cy, demand­ing that part­ners and oth­er sup­pli­ers meet require­ments such as pro­vid­ing an envi­ron­ment that con­sid­ers employ­ee health and safe­ty and com­plies with nation­al laws. But the com­pa­ny acknowl­edges that “it is not always pos­si­ble to mon­i­tor and con­trol the con­di­tions of each indi­vid­ual involved in the pro­duc­tion of the prod­ucts”.

Tom Berry, glob­al direc­tor of sus­tain­able busi­ness at Far­fetch, would not be drawn on spe­cif­ic KPIs per depart­ment, only say­ing that: “Sus­tain­abil­i­ty is a very broad sub­ject and touch­es all depart­ments. Each depart­ment needs to take own­er­ship and lead­er­ship of the ele­ments it can most influ­ence.”

Eth­i­cal cos­met­ics com­pa­ny Lush relies more on forg­ing rela­tion­ships than actu­ar­i­al tar­gets to inspire its staff towards sus­tain­able behav­iours. “The Lush strat­e­gy is about how we build engage­ment by bring­ing the peo­ple on the front line clos­er to the peo­ple who must do the work. If we have direct con­nec­tions with the indige­nous com­mu­ni­ties being affect­ed by palm oil in Indone­sia, the peo­ple for­mu­lat­ing the prod­ucts have a vest­ed inter­est because they have formed a rela­tion­ship with these peo­ple. It’s not a num­ber, it’s not a tar­get, it’s real peo­ple, real lives and real rela­tion­ships,” insists Ruth Andrade, Lush lead for giv­ing, regen­er­a­tive impact and organ­i­sa­tion­al devel­op­ment.

Wise buys

In its advi­so­ry report Empow­er­ing Sus­tain­abil­i­ty Heroes, Nestlé high­lights the approach tak­en by Greene King pubs. With dif­fer­ent­ly sized sites, one of sup­ply chain direc­tor Vance Fairman-Smith’s tasks is to work with pub teams to iden­ti­fy dish­es that cre­ate waste in some loca­tions but not oth­ers. “We had bread in our sup­ply chain in box­es of 48 loaves, when for a lot of pubs this was too many. This cre­ates space and waste issues.” In the UK, food waste makes up 6% to 7% of green­house gas (GHG) emis­sions.

McLaren Rac­ing is the first For­mu­la One team to release a sus­tain­abil­i­ty report. It’s cur­rent­ly in the mid­dle of dis­cussing how intro­duc­ing sus­tain­abil­i­ty KPIs might work across its busi­ness. Kim Wil­son, McLaren’s direc­tor of sus­tain­abil­i­ty, reveals that KPIs under dis­cus­sion for pro­cure­ment could include being incen­tivised to work with key sup­pli­ers, those who have the great­est impact on the organisation’s GHG foot­print and/or where there is the great­est oppor­tu­ni­ty to imple­ment change. The aim would be “to decar­bonise the goods and ser­vices pro­vid­ed and active­ly address the social impacts of their sup­ply chain”.

All in the mix

Nat­u­ral­ly, many com­pa­nies are look­ing to include recy­cled prod­ucts in their out­puts or reduce car­bon in their pro­duc­tion process­es. For exam­ple, Weleda’s prod­uct devel­op­ment board is respon­si­ble for achiev­ing 65% recy­cled mate­r­i­al or bio­plas­tics in its nat­ur­al cos­met­ics pri­ma­ry pack­ag­ing (based on the weight of all pack­ag­ing pro­duced). 

“We are going to do this prod­uct car­bon foot­print that includes all the raw mate­ri­als, all the sup­ply chain, all the trans­porta­tion and we have this goal anchored in the cor­po­rate strat­e­gy,” says Weleda’s Kärlis Kalns, sus­tain­abil­i­ty man­ag­er. 

Impacts are also con­sid­ered in non-tan­gi­ble goods. Erris de Stacpoole, PR and com­mu­ni­ca­tions lead at inte­grat­ed agency group Unlim­it­ed, explains that adver­tis­ing pro­duc­tion is an area that can have rel­a­tive­ly high car­bon emis­sions. Link­ing to Ad Net Zero, the adver­tis­ing industry’s emis­sions pledge, the com­pa­ny is work­ing with AdGreen to intro­duce its levy on all client pro­duc­tions and will impose it on at least three client pro­duc­tions in 2022. “We’ve also looked at every ele­ment of a shoot to see how we can meet our 2030 car­bon neu­tral pledge,” she says.

The account teams join in these efforts, and their spe­cif­ic KPI is to be able to share the car­bon foot­print of briefs to encour­age clients to take sus­tain­able options in all Unlimited’s cre­ative work. A third-par­ty spe­cial­ist has been engaged to help mea­sure and mon­i­tor those emis­sions and report­ing will begin once the com­pa­ny has been able to estab­lish a base­line. 

It’s a people thing

Build­ing advo­ca­cy for sus­tain­able behav­iour across the busi­ness is almost as impor­tant as set­ting defined KPIs. Mak­ing sure staff under­stand the impact of their behav­iour is a crit­i­cal part. Greene King has cre­at­ed cham­pi­ons at each one of its sites – peo­ple who are pas­sion­ate about sus­tain­abil­i­ty. The busi­ness has also added sec­tions on ener­gy and waste to its train­ing, and incen­tives – includ­ing finan­cial ones – are being con­sid­ered for these cham­pi­ons in the future. 

Wele­da uses the The­o­ry U mod­el, which shifts from indi­vid­ual-cen­tred behav­iours to col­lec­tive ones that should sup­port a more sus­tain­able, healthy life. It is used to pri­ori­tise inter­nal goals, with 145 work­shops held over two years for col­le­gial lead­er­ship train­ing alone. “Peo­ple who want to work on inno­v­a­tive and sus­tain­able solu­tions need cre­ativ­i­ty, vul­ner­a­bil­i­ty and trust,” Kalns says. “They have to feel safe. We can nev­er make a KPI based on indi­vid­u­als’ abil­i­ty to be vul­ner­a­ble, but at least we can quan­ti­fy work­shops and train­ing hours. That’s where we’re at cur­rent­ly.”

Again, Lush prefers to replace class­rooms with action. At Brighton Pride 2022, the local store ran a lit­ter pick, part of the company’s over­ar­ch­ing aim to mon­i­tor the waste it col­lects. “It’s about win­ning hearts and minds, mak­ing peo­ple feel proud of what they’re doing,” explains Andrade.

Unless there is a reg­u­la­to­ry frame­work to fol­low, many com­pa­nies will beat their own path towards what ‘mea­sur­able sus­tain­abil­i­ty impacts’ mean to them. But there is a desire for those frame­works and datasets to mea­sure against and moti­vate where nec­es­sary. Even Lush, with its pref­er­ence for engage­ment over tar­gets, notes that it’s div­ing deep­er into insight to inform future activ­i­ty. 

Becom­ing a gen­uine­ly regen­er­a­tive organ­i­sa­tion that puts more back in than it takes out is new ter­ri­to­ry – no one has all the answers

“There’s a lot of work in inte­grat­ed report­ing and we’ve been dis­cussing how we do it much more. We don’t have it yet. We have been work­ing quite close­ly with the busi­ness intel­li­gence team to increase their capac­i­ty, so they can help us. Just now we are set­ting up dash­boards mix­ing non-finan­cial and finan­cial data,” reveals Andrade. 

Ais­ling Con­naughton, co-founder and sus­tain­abil­i­ty solu­tion­ist at women-led sus­tain­abil­i­ty con­sul­tan­cy Cyd Con­nects, reveals that, of all the sus­tain­abil­i­ty frame­works she uses to help clients reach their goals, one of her most used is the B Corp accred­i­ta­tion. Not only does being able to put the B Corp logo on brand assets pro­mote a great deal of trust in cus­tomers, but it also helps the organ­i­sa­tion make defined progress – and con­tin­ued improve­ment.

“B Corp is mea­sur­ing the triple bot­tom line. It’s a change from a share­hold­er mod­el to a stake­hold­er mod­el. Under­pin­ning it is the B impact assess­ment, which is now used all over the world,” explains Con­naughton, say­ing that there were 400 B Corps in the UK at the start of 2022 and by the end of the year, there are pre­dict­ed to be 1,200. 

“It’s a liv­ing, breath­ing dash­board – and it’s free,” she adds. “You can have dif­fer­ent team mem­bers look­ing at the ESG frame­works, bring­ing in mul­ti­ple stake­hold­ers across the busi­ness. It puts you on a points sys­tem and, in the same way you’d want to see your mon­ey go up, you also want to see your envi­ron­men­tal and soci­etal points go up.”

Con­tin­u­ous improve­ment comes from a process of ongo­ing audit­ing and year­ly bench­marks. Com­pa­nies need to acquire 80 points to gain the B Corp mark and then improve that score every year. Between now and 2025, for exam­ple, Wele­da is seek­ing to achieve 125 points to pre­pare for the next cer­ti­fi­ca­tion.

How­ev­er gran­u­lar a com­pa­ny can make KPIs that con­tribute to com­pa­ny-wide progress towards a more sus­tain­able future, it must ulti­mate­ly be led coher­ent­ly at a top lev­el. Again, there is some con­tention as to who exact­ly is respon­si­ble for sus­tain­abil­i­ty strat­e­gy.

Wil­son maps out the organ­i­sa­tion chart: “Organ­i­sa­tions where the CEO sees sus­tain­abil­i­ty as a strate­gic busi­ness pri­or­i­ty and proac­tive­ly dri­ves it from the top, hold­ing each mem­ber of the C‑suite account­able for dri­ving per­for­mance through their func­tion, will make the most impact. It needs both a top-down and bot­tom-up approach which is why we have estab­lished envi­ron­men­tal and social impact work­ing groups.”

Nestlé UK & Ire­land has a sim­i­lar view­point, “start­ing with the top” and mak­ing sure tar­gets “cas­cade down through teams and there is clear respon­si­bil­i­ty and account­abil­i­ty,” sug­gests Keller. At Wele­da, Kalns insists the process is always whol­ly col­lab­o­ra­tive and “any employ­ee can share their ideas” but ulti­mate­ly, after the small team of five ded­i­cat­ed sus­tain­abil­i­ty employ­ees, “the final deci­sion on strat­e­gy is made by the head of cor­po­rate sus­tain­abil­i­ty with the board of direc­tors at the high­est lev­el.”

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