Led by Dr. Steven Cohen and Dr. Satyajit Bose, the Earth Institute Research Program on Sustainability Policy and Management is currently executing a study on sustainability metrics and measures, which we hope will ultimately serve as a foundation towards developing a set of generally accepted sustainability metrics.
Sustainability management is a growing trend that major actors across many sectors of society are beginning to embrace in an ad hoc manner. Over the past several years, many organizations have recognized the importance of sustainability and have developed their own sets of metrics, scorecards, ratings, and tools for measuring and tracking it. However, the term “sustainability” means different things depending on who you ask and what you want, and they all seem to have their own set of organization-specific indicators that vary widely in scope and scale. While some people interpret sustainability as environmental inputs and impacts, sustainability as a holistic concept has moved beyond simply an environmental dimension to include various social, governance, and economic factors as well. As one might expect, with multitudes of sustainability definitions comes sustainability indicators that are equally varied and expansive. This lack of consistency leaves decision makers, as well as investors, consumers and the public, at a disadvantage. Consistent and reliable metrics for sustainability performance are needed for organizations, managers, consumers, and investors to adequately assess growth drivers and connect sustainability to strategic goals and investments.
The Earth Institute Research Program on Sustainability Policy and Management is currently executing a study on sustainability metrics and measures, which will analyze the myriad of frameworks and standards used by organizations (private organizations, governments, and public agencies – municipal, state, and federal) globally to measure, assess, compare, and report on sustainability Key Performance Indicators (KPIs). In the first stage of our research, we took stock of existing KPIs, conducting a thorough investigation of “environmental, social and governance” (ESG) metrics, and found 557 distinct sustainability indicators. Our analysis will next examine and evaluate methodologies for assigning and weighting KPIs, and will analyze the commonalities, to see whether a core set of indicators is emerging. We are examining where reporting is vague and discretionary, in an effort to improve consistency within industries and overall. The long-term goal of this study is to serve as foundation to inform the discussion of a global network of scholars and practitioners.
This research includes amassing a comprehensive understanding of how organizations across sectors, industries, and regions are measuring and reporting on sustainability initiatives. We are also examining frameworks, indices and scorecards which aggregate (and sometimes weight) various KPIs. We are also looking at trends within the field to identify best practices for organizations measuring and valuing their own sustainability initiatives; for organizations seeking to develop their own ratings frameworks; and for investors looking for sustainability information. Finally, we are analyzing reports linking progress on sustainability metrics and investment in sustainability initiatives/programs with financial performance, or, in the case of public organizations, how sustainability indicators impact economic development.
The goal of the Sustainability Metrics project is to better understand the landscape of sustainability metrics and reporting. Our current research focuses on KPIs and how frameworks can be improved so that their metrics inform better practices. This is the first step towards a common standard. Before convergence can occur, a thorough understanding of the current field is necessary.
China Center for International Economic Exchanges
Although the concept of sustainable development has been widely accepted in China, the use of sustainability metrics is still in an early stage. Due to the lack of clear definition of the number and applicability of the metrics that should be used, Chinese corporations and governments have a great deal of flexibility in randomly choosing indicators, which impedes meaningful comparison on sustainability performance and makes it harder to provide standardized policy directives. In order to effectively evaluate the balancing development of China’s economy, society and environment, the Research Program on Sustainability Policy and Management is undertaking a project with the China Center for International Economic Exchanges (CCIEE) to design a sustainability measurement and metrics system and evaluation framework adapted to specifically to China’s unique economic development situation. Our joint work will complement decision-making in sustainability policy, promote a healthy and sustainable development of the Chinese economy, provide a unique example and model for other countries, and improve mutual understand among different countries on sustainable development.