Current ways of measuring sustainability either exaggerate achievement or utterly fail to capture real progress. We need a new kind of metric that connects businesses with the scientific context surrounding their actions, and gives them a clear and compelling destination, says Geoff Kendall of the Future-Fit Foundation.
Almost 50 years ago we put a man on the moon. But here are a few questions for you about that extraordinary achievement: What was the first, necessary precondition for making it happen? Was it our ability to develop sophisticated technologies? Was it our willingness to embrace a seemingly impossible vision? Was it our commitment to invest whatever it took to get the job done? All these factors were, of course, critical. But the first and most important precondition was that the destination was clear and compelling – we knew exactly what to aim for, and we all wanted to go.
Unfortunately, we’ve had no such clarity when it comes to what has often been called this generation’s ‘moon-shot’: the transition to a sustainable economy. It is now widely accepted that we need to rapidly and radically change the way we do business if we are to avoid the worst effects of climate change, resource scarcity, environmental degradation and population growth. And we need every business to play its part in this transition, because our economy as a whole can only become sustainable if every company operating within it is sustainable too.
But what, exactly, does it mean for a company to ‘be sustainable’? And how can we measure – and thus manage – progress toward this destination? Until now there has been no clear answer to either question. You may be thinking: ‘but there are no end of ratings, rankings and indices that claim to measure corporate sustainability performance – surely they’re telling companies what to aim for?’ The answer, in a word, is no.
Current metrics measure relative improvements in today’s best practice. They do not track absolute progress toward tomorrow’s required practice. That matters because there are two problems with rewarding incremental progress. First, it can make companies look far better than they actually are. For example, last year the Dow Jones Sustainability Index announced that an oil company was 85% sustainable. That’s not exactly going to keep the company’s CEO and investors awake at night, pondering how to decarbonize their business model. Current metrics lull decision makers into believing that doing better than last year, or better than ‘the next guy’, is enough.
The second problem is that by not putting today’s actions in a future context, we’re failing to acknowledge those companies that are really stepping up to do what’s necessary. A handful of forward-thinking CEOs have committed to deliver net positive benefits to society, in areas as diverse as reforestation, carbon capture, and poverty alleviation. That’s what true sustainability leadership looks like. But metrics that dwell on the status quo often don’t even register such bold commitments, let alone capture their full potential.
A new kind of metric
So we need a new kind of metric, one that tells companies where they need to be – based on best-available environmental, social and systems science – and which encourages and rewards progress towards that point. That, in a nutshell, is the motivation behind the Future-Fit Business Benchmark, a new open-source tool grounded in a simple definition:
“A Future-Fit company is one that in no way undermines the possibility that humans and other life will flourish on Earth forever”
This is far from utopian. Future-Fitness is not about demanding that every company tackles societal problems, eschews growth, or renounces profit. Rather, it is about defining the minimum that any company must do to avoid degrading the social fabric and natural processes we all depend upon.
The Benchmark centres around 21 Future-Fit goals: performance thresholds spanning the full range of environmental and social issues that may be affected – positive or negatively – by a company’s operations, its supply chain, and the products it sells. These goals collectively define the line in the sand that all companies should aim for. And we’re close to completing work on a complementary set of Future- Fit key performance indicators (KPIs), to help companies measure where their biggest gaps are, and where to prioritise accordingly.
Over the past year we’ve worked with a range of companies – from social enterprises to global brands – to explore what the Future-Fit goals mean to them. No two businesses are the same, so it’s unsurprising that discussions have varied wildly. For example, one goal – all employees are paid at least a living wage – was quickly dismissed – not as unimportant, but as unproblematic – by a wealth management fund. But it proved a major sticking point for a company that depends upon cheap labour in developing nations.
Another goal – Products emit no greenhouse gases when used as intended – was understandably a source of concern for one car manufacturer, the bulk of whose products are still powered by fossil fuels. However, another car company – Tesla – has already reached this goal, as all of its cars are powered by electricity.
A conversation worth having
In every such discussion, reactions to Future-Fit goals tend to fall into one of three categories. There are goals that seem ‘easy’, because the company’s business model has very little impact in that area. There are goals for which the path to success is clear – it’s just a matter of time and money. And then there are goals that appear impossible.
This last category is the most interesting. When someone says that a particular goal can’t be reached, what they really mean is that it can’t be reached within the confines of their current business model. Which of course begs the question: how would the business model have to change? Now that is a conversation worth having.
Going to the moon was a choice; transitioning to a sustainable economy is not. The Future-Fit Business Benchmark offers companies something they’ve been lacking: a clear destination to aim for. But to reach it will require a willingness to explore and embrace completely new ways of doing business. Incremental improvement is not enough. After all, we didn’t reach the moon by shuffling up the nearest mountain.