Led by Dr. Steven Cohen and Dr. Satyajit Bose, and supported by a team of nine, including Dr. Dong Guo and five masters-level research assistants, the Earth Institute Research Program on Sustainability Policy and Management is executing a study on 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. Organizations, large and small, have begun to recognize the importance of sustainability management as it pertains to their core operations. However, it is still a new field, and reliable, consistently applied metrics have not yet emerged. 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.
Over the past several years, a variety of organizations (consulting firms, non-profits, private corporations, government agencies, etc.) have developed metrics, scorecards, indices, ratings, tools, and programs to measure and track sustainability. These vary widely in scope and scale. Sustainability today means different things depending on who you ask and what you want, and this lack of consistency leaves decision makers at a disadvantage. In addition, much of the focus in this space focuses on disclosure or reporting one’s environmental impact and/or risks, not on their performance or impact (i.e. just because a company reports all of their emissions, material inputs, etc. does not mean they are putting in place policies to reduce their environmental footprint). It is not clear that the measures under development are appropriate, reliable or valid. Moreover, the collection and reporting of these metrics is voluntary, self-completed, inadequately audited and there is no penalty for deceptive, incomplete or incompetent reporting.
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 globally to measure, assess, compare, and report on sustainability Key Performance Indicators (KPIs). This analysis will take stock of the existing KPIs, 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. This focuses on all types of sustainability metrics, including what is most often termed “ESG” or environmental, social and governance indicators. We are also examining frameworks, indices and scorecards which aggregate (and sometimes weight) various KPIs. The units of analysis for this review include private organizations as well as governments and public agencies – municipal, state, and federal. 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 report 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.
Sustainability Policy: Hastening the Transition to a Cleaner Economy
Steve Cohen, Bill Eimicke and Alison Miller are currently writing a new book, Sustainability Policy: Hastening the Transition to a Cleaner Economy, which presents an overview of the opportunities for government to encourage sustainability in the public and private sectors. It will be the policy complement to Steve Cohen’s last book, Sustainability Management, which came out in 2011. Much of the discussion regarding sustainability management has been within the context of the private sector, typically in the form of corporate sustainability; however, the public sector has a critical role to play in hastening the transition to a sustainable global economy. This book takes a high-level approach to U.S. sustainability policies, introducing sustainability management and describing politically-feasible policy tools, demonstrating their current and potential applications. The book will focus on public sector actions that spur innovation and organizational change in the private sector and behavioral change at the individual level towards sustainability. The book focuses heavily on the local and state levels, where most of the innovation in the US has occurred over the last decade. The book is expected to be published in early 2015.
Environmental, Social, and Governance Analytics Scoring Application
Led by Satyajit Bose, and sponsored by ESG Analytics, the Earth Institute Research Program on Sustainability Policy and Management is creating a benchmarking methodology for a scoring model for users of environmental, social, and governance (ESG) data available on Bloomberg terminals. The model will facilitate analysis, comparison, and scoring of publicly listed companies on relative ESG performance. We are collaborating with ESG Analytics to develop a statistical methodology for the assessment framework. This research will enable ESG Analytics to develop the software application that can provide users with critical ESG information relevant to investment decision-making.
The Sustainability Consortium
The Earth Institute Research Program on Sustainability Policy and Management and the Columbia Global Center | East Asia are executing study for The Sustainability Consortium (TSC), complementing its research in China through an evaluation of the application of the Sustainability Measurement and Reporting System (SMRS). The study will assess the deployment of the SMRS in China, and its success as a tool for improved decision making on sustainability initiatives. This project aims to assess the effectiveness, appropriateness, and practicality of the SMRS in China, which would be an integral part of TSC China’s initial research agenda, and critical to the development and expansion of TSC in China. The project will evaluate the subsequent outcomes for user entities like Walmart and how it helps them achieve their sustainability goals.
Institute for Sustainable Communities
The Earth Institute Research Program on Sustainability Policy and Management is conducting a project for the Institute for Sustainable Communities (ISC) with the aim of advancing our collective state of knowledge about Environment, Health & Safety (EHS) training programs.
The Research Program will conduct a review of ISC’s EHS+ training program with a primary focus on the training program’s existing approach of relying on leadership and advocacy of trainees to affect EHS change on the factory floor. The review will also identify metrics and tools that could be used to assess the success of the program in terms of its effect on program participants, and in turn, on the factory floor. This research will include a literature review that focuses on EHS programs or relevant and similar training programs in China and elsewhere in the world, onsite visits to ISC’s EHS+ training facilities, and interviews with training participants.
Environmental Metrics for Jiyuan, China
The potential tradeoff between the twin goals of reducing environmental impact while maintaining growth will require China’s cities to evaluate the economic impact of urban pollution at the local level. Using economic input-output analysis, city-level indicators of economic activity and environmental impact, and available estimates of the benchmark relationships between output and pollution by sector, we outline a method to quantify–in monetary terms–the marginal damages of air pollution by sector at the city level. By applying the framework of environmental accounting to the pilot case of Jiyuan, a small city in Henan province, we demonstrate a method for local public agencies to facilitate administrative tracking of monetized air pollution based on underlying economic activity, and outline a minimum set of metrics which a small city in China must track in order to estimate the monetized damage of air pollution by sector.
Pollution Reduction and Job Creation in China, Lessons from the U.S.
Economic growth is still the top priority in China, but to maintain sustainable growth, the emphasis has been shifted towards maintaining employment level while eliminating the devastating effects of environmental pollution. Therefore, in this study we are examining the perceived tradeoffs between environmental regulation and employment, and the most effective policy measures for the creation of sustainability-related jobs in the U.S. This study will also outline the government policy responses, local or federal, which are seen to reduce pollution while not impeding economic growth, with examples of industries and companies that appear to have increased value added by reducing pollution impact. Lastly, the study will uncover the mechanisms through which such improvements were made; for example, outsourcing of dirtier processes to other countries or reengineering of materials handling processes, and if these efforts can apply to low labor cost countries such as China.