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GOLD-STANDARD ESG BENCHMARK FOR A
TRULY SUSTAINABLE BUSINESS
[email protected] www.sustainabilityadvantage.com
THE FOURTH BENCHMARK
X!1 Baseline
year!
Other companies!
Performance Today!
2 Company
Goal!
3 GO
AL LINE(S)!
4
Gold-standard benchmark !
Material, science-based KPIs and Goals for a
Truly Sustainable Business !Company X!
FIVE BENEFITS
1. It addresses the confusion factor
2. It creates a sense of urgency
3. It raises the bar and sparks innovation
4. It identifies true leaders and best practices
5. It helps identify material ESG issues
SEVEN REASONS THAT IT’S TIME 1. Leading companies are ready
2. Important stakeholders are ready
3. Capitalism is ready
4. Business case is stronger than ever
5. Opportunity to harmonize with ESG standards
6. We’re running out of runway
7. It is doable
TRULY SUSTAINABLE BUSINESS
Economy
Society
Environment
If it were to operate forever, it would not only do no harm; it would do well by doing some net good.
… contributing to the possibility that human and other life will flourish
on our planet, forever
… throughout its value chain/network
A truly sustainable business creates positive environmental,
social, and economic value
X
METHODOLOGY / FLOW OF LOGIC
8 science-based System Conditions for a sustainable environment (3)
and a sustainable society (5)
25 KPIs with measureable goals that confirm the Key Transitions have been made
21 Key Transitions to meet the Design Constraints
8 Design Constraints for a truly sustainable business model
KPI PRINCIPLES • Sustainability context: Each KPI is rigorously connected to a
science-based design constraint for a truly sustainable business model • Context-based: Fair share within regional thresholds • Offsets: Possible for some KPIs • Interim proxies: Metrics for currently unmeasurable KPIs
• Assurability: Measurable thresholds/goals; variety of metrics
• Materiality: Material to the environment and society à Material to company success à Material to investors
• Value chain: Include Tier 1 & 2 suppliers, and customers
• Comparability: Map to indicators in GRI and other standards
• Comprehensiveness: Each is necessary; all are sufficient
KPIs & GOALS
Governance / Financial (7) • Board oversight: ESG committee • Policies and systems: embed ESG principles • Procurement: heavy ESG weighting • Ethics: zero ethical violations • Disclosure: full, on ESG aspects • Public policy: transparent about lobbying • Financial performance: going concern
Environmental (8) • GHGs: zero or better • Energy: 100% renewable • Water used: fair share or net zero • Materials: 100% recycled/renewable • Waste: net zero or better • Land and water pollution: zero • Air pollution: zero • Land use: restorative
Social (10)
KPIs & GOALS
Governance / Financial (7) • Board oversight: ESG committee • Policies and systems: embed ESG principles • Procurement: heavy ESG weighting • Ethics: zero ethical violations • Disclosure: full, on ESG aspects • Public policy: transparent about lobbying • Financial performance: going concern
Environmental (8) • GHGs: zero or better • Energy: 100% renewable • Water used: fair share or net zero • Materials: 100% recycled/renewable • Waste: net zero or better • Land and water pollution: zero • Air pollution: zero • Land use: restorative
Social (10) • Stakeholder safety: zero harm • Stakeholder rights: for 100% of stakeholders • Stakeholder diversity: mirrors demographics • Stakeholder engagement: 80% annually? • Stakeholder development: 100% eligible • Employee remuneration: living wage? • Employee ESG pay link: 20%+ weight • Local economy: 80% of stakeholders are local? • Taxes paid: 100% of statutory obligations • Community benefits: positive social capital?
KPI PRINCIPLES • Sustainability context: Each KPI is rigorously connected to a
science-based design constraint for a truly sustainable business model • Context-based: Fair share within regional thresholds • Offsets: Possible for some KPIs • Interim proxies: Metrics for currently unmeasurable KPIs
• Assurability: Measurable thresholds/goals; variety of metrics
• Materiality: Material to the environment and society à Material to company success à Material to investors
• Value chain: Include Tier 1 & 2 suppliers, and customers
• Comparability: Map to indicators in GRI and other standards
• Comprehensiveness: Each is necessary; all are sufficient
SYSTEMS CONDITIONS
http://www.naturalstep.org/the-system-conditions
1. systematically increasing concentrations of substances extracted from the Earth’s crust 2. systematically increasing concentrations of substances produced by society 3. systematic degradation of nature by physical means
In a sustainable society, nature is not subject to …
…and, 4. in that society, people are not subject to conditions that sytematically undermine their capacity to meet their needs:
4a. Wellness 4b. Influence 4c. Learning and Growth 4d. Equity 4e. Meaning
Quality of Life Well-being Happiness
DESIGN CONSTRAINTS
… and 4. does not subject people to systemic barriers to their… 4a. Wellness 4b. Influence 4c. Learning and growth 4d. Equity 4e. Meaning
Social Capital
Natural Capital
Human Capital
Financial Capital
1. an ongoing buildup over time of substances extracted from the Earth’s crust 2. an ongoing buildup over time of substances produced by society 3. systematic degradation of nature by physical means
A truly sustainable business does not contribute to …