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Plenaries Unveil Next-Gen Goal-Setting Frameworks, Groundbreaking Product Assessments on #NewMetrics '14 Day 2

L-R: Dr. Allen White and HIP Investor's Paul Herman onstage Thursday at New Metrics '14 | Image credit: Sustainable Brands

It is no secret that markets are starting to demand a more complete picture of businesses' interactions with environmental and social realities of the world — a new, expanded set of success factors and risks to inform key stakeholders — or simply #NewMetrics. How New Metrics are conceived, brought to life, communicated effectively, and perfected over time, are the key questions metrics experts in the Sustainable Brands community are tackling this week at New Metrics '14, taking place in Cambridge, MA, in partnership with the Sustainability Initiative at the MIT Sloan School of Business.

Jason Jay
MIT Sloan's Jason Jay.

Following a warm welcome from MIT Sloan's Jason Jay, it took no time for this morning’s plenary speakers and attendees alike to dive deep into a dense lineup of both theoretical updates and brand case studies. Respected thought leaders such as Bob Willard, Allen White and Mark McElroy updated us on some of the most promising conceptual metrics frameworks, while BASF, Ben & Jerry’s, L’Oreal and Honest Tea, among others, helped bring best-in-class thinking to life by sharing the status of key pilot projects on the ground.

One of the most impactful presentations of the morning came from Dirk Voeste, VP of Sustainability Strategy at chemistry giant BASF. He unveiled a groundbreaking new process BASF has developed for evolving its product portfolio based on sustainability criteria. Called ‘Sustainable Solution Steering,’ the method is used to systematically review and evaluate the sustainability aspects of the approximately 50,000 product applicationsin the company’s portfolio, which represent sales of €56 billion.

Dirk Voeste
BASF's Dirk Voeste.

The analysis took a couple of years to complete, involved 1,500 experts (including external validation from PwC), and resulted in more than a thousand — yes, a thousand — specific plans for changing or phasing out products in the name of overall value-chain sustainability performance. All in all, a textbook-level case study that many in the audience immediately said they’d try to emulate. 

Another fascinating case study came from Ben & Jerry’s Global Director of Social Mission Rob Michalak. His team has just launched a pilot project to test the MultiCapital Scorecard™ (MCS), an integrated measurement and reporting system conceived by Mark McElroy of the Center for Sustainable Organizations. Stressing the importance of experiential learning, Michalak explained that the ambition of this project is motivated by Ben & Jerry’s desire to practice the kind of capitalism that enables all stakeholders to prosper at the same time.

Paul Herman, Rob Michalak, Mark McElroy
L-R: Paul Herman, Rob Michalak and Mark McElroy

That is why his team decided to see if they can apply MCS to combine all vital capitals — natural, human, social, constructed, economic and financial — into a comprehensive picture of the company’s performance.

A key aspect of MCS is that performance with respect to all capitals is explicitly reported in relationship to the ‘fair share’ of actual science-based thresholds. That helps Ben & Jerry’s figure out, for example, what sustainable thresholds for farmer livelihoods to strive for. Currently the pilot’s scope involves 87 farms in Vermont, with the hope that ultimately it will be a company-wide practice. The ultimate goal, Michalak shared, is to not only ‘comply’ with the fair share of these capitals, but to get to net-positive performance on all of them.

many more
New Metrics '14!

Paul Herman of HIP Investor, our MC for the morning, began by energizing the audience by reminding everyone that the search for superior new metrics is all about understanding future risk and upside potential — by uncovering knowable but previously ignored information to make markets run more efficiently. He went on to present a few scenarios in which recently constructed sustainable stock portfolios not only outperformed the S&P 500, but were also up to 75 percent less exposed to carbon than traditionally popular investment indices. Among the multiple reasons for building sustainable portfolios is the ability to reward leaders and employees at the same time — simply by rethinking how 401(k) packages are put together.  

Allen White of GISR — a Godfather-like figure to the sustainability movement in the US – laid out powerful reasoning for why and how credit ratings and sustainability ratings should join forces for faster progress in corporate sustainability. “We’ve learned the hard way that markets are neither self-regulating, nor self-sustaining,” Dr. White said, the point being that there is tension between free-market capitalism and sustainable capitalism. While many agree it’s time to move beyond ESG denial and defensiveness to more aggressive deployment of mainstreaming ESG reporting data, White explained, there is still not enough trust and respect in the way ESG metrics and ratings are currently delivered. Sustainability ratings are a field of growing activity, but at the same time they are lagging behind credit ratings — there are lessons in transparency, and comprehensiveness sustainability ratings can borrow from credit ones. To help bridge such gaps, GISR is playing a new role in making sustainability ratings more credible through a new hub-style website with detailed profiles and methodologies for hundreds of raters, allowing easy comparisons.

Bob Willard
Bob Willard.

In a similar spirit, Willard outlined a previously nonexistent way for companies to benchmark their sustainability performance. The Future-Fit Business Benchmark sets out a rigorous definition of what any company would have to do to thrive both in the near term and in an uncertain future. The result is a set of performance criteria, laid out as a manageable number of concrete KPIs. Willard stressed the distinction between the Future-Fit framework and the three ways companies measure their performance today: against past performance, against their goals, and against other companies. In contrast to those traditional approaches, Future-Fit compares a company to a new goal-line: what it means to be truly sustainable according to the latest science, in 20-30 specific KPIs. Willard received many nods to what may turn out to be the Holy Grail set of sustainability KPIs to aspire to.

Mary Jo Cook and Honest Tea's Jenny Burns
L-R: Mary Jo Cook and Jenny Burns.

After a break, Fair Trade USA's Mary Jo Cook and Honest Tea's Jenny Burns introduced Fair Trade's new Impact Measurement and Management Framework, which has been developed to define, measure and communicate — in a systematic and unified way — the impacts Fair Trade enables for farmers, workers, businesses and consumers. The Framework generates new insight into the complex relationships between value creation (risk management, reliable production, profitable growth), sustainable livelihoods (human well-being, income empowerment, environment sustainability) and consumer activation (product choice, preference for Fair Trade). It is built on a holistic theory of change and relies heavily on analyzing multiple streams of data from the field, as well as academic research and a storytelling component.

Stay tuned for much more New Metrics ’14 content to come, via more write-ups, plus video, audio and slides available soon in SB’s Digital Library.  

Dimitar is the Director of Content Development at Sustainable Brands. He joined the team after earning a Master’s degree in Management Science & Engineering – focused on sustainable business – from Stanford University. Before Stanford, Dimitar worked in international development… [Read more about Dimitar Vlahov]

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