EnergyPoints was at the Sustainable Brands 2012 conference last week in San Diego. One of the priority topics of the show was how the broader industry can achieve an integrated form of reporting that combines CSR and financial reports.
A strong majority of companies are generating CSRs – they know that consumers are increasingly rewarding demonstrating sustainable behavior. The problem to date is that most businesses still can’t effectively communicate their environmental sustainability in a simple or consistent way.
Ory Zik recently wrote about this topic for Sustainable Industries – breaking down the barriers between the Chief Financial Officer (CFO) and the Chief Sustainability Officer (CSO).
For the CFO – they have the data points that clearly demonstrate the company’s annual international revenues and losses by quarter. The CSO however has multiple files representing a myriad of environmental sustainability projects and initiatives, tallying the resulting kilowatt hours (kWh) saved, tons of CO2 abated, gallons of water reduced, etc…
The CFO knows that the data on the CSO’s desk is critical to the organization’s risk mitigation and branding and therefore Wall Street’s perception, shareholder value and ultimately financial success. Both the CFO and CSO will produce a report highlighting these numbers – but the CSO’s challenge is comparing the environmental impacts of electricity to natural gas, determining how many gallons of water were saved. The CFO simply has to convert foreign currencies into the US Dollar.
The problem plaguing the industry is that the CSO has no universal metric to provide a consistent, accurate means of measuring environmental sustainability measures over time and across all domains in a way that’s representative of both bottom line environmental and financial business impacts. It is this problem that is limiting the true integration of CSR and financial reports.
Capturing and communicating the value of environmental sustainability as part of a financial report requires that sustainability be quantified in a clear, rigorous and intuitive way. Simply showing CO2 abated or water saved doesn’t provide a full picture as to whether these initiatives are impactful beyond a cost-reduction standpoint. Businesses must be able to track their environmental and financial efficiency by integrating these different resource silos into one universal metric. When integrated with financial reporting, this provides a holistic look at a company’s environmental sustainability initiatives and their true impact on the business and environment.
This is why the industry is in dire need of a universal metric for measuring sustainability. In our work with one of the leading academic institutions in the world, we’ve been able to help them integrate electricity use, water use, waste and other domains, and put them into primary energy terms. Translating these domains into a simple, universal metric allows the institution to accurately convey the true performance of their sustainability initiatives, while revealing new or different strategies that may be more effective.
To achieve optimal transparency and ROI, the CSO and CFO’s data points must be integrated in a shared report to reflect the use of universal metrics across all business and resource areas. Ultimately, that integrated report can and will define the decisions and results necessary to true environmental and financial sustainability.