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.
Organizations—private, public, and non-profit—have long understood the fundamental role that performance metrics and performance management systems play in effective management strategies. Traditional organizational performance indicators, while abundant, are primarily financial and managerial, and therefore generally widely accepted and well-defined. Sustainability indicators, on the other hand, lack general acceptance, due perhaps to the ambiguous definition of sustainability itself. While many take the term to mean environmental inputs and impacts, sustainability today has come to include various social, governance, and economic factors as well. These broad definitions of sustainability indicators leave organizations at a disadvantage as they try to navigate what to manage to improve their sustainability performance. Existing work on sustainability metrics ultimately suffers from not being fully reflective of all aspects of sustainability, a lack of parsimony, and a consequent lack of broad consensus. Therefore, the goal of this project is to to better understand the landscape of sustainability metrics and reporting, and produce a methodology to establish a set of indicators of sustainability within organizations that could ultimately be considered generally accepted.
In the first stage of our research, we conducted a thorough investigation of “environmental, social and governance” (ESG) metrics, analyzing the indicators, frameworks and standards used by organizations to measure, assess, compare, and report on sustainability across industries and sectors. We uncovered 557 distinct sustainability indicators, and also performed an evaluation of 129 indices in total, an assessment of sustainability platforms and frameworks, as well as research to analyze the link between progress on sustainability or investment in sustainability initiatives with financial performance.
Using this preliminary research, we will attempt to identify a core group of metrics that are formative in nature and have the potential to become generally accepted sustainability indicators with the legitimacy of generally accepted accounting principles. We aim to generate new data on the landscape of sustainability metrics and new data on the aggregation and weighting of these indicators, as well as provide further understanding of the role of sustainability in management decision-making by improving our knowledge of the methods and measures of sustainability initiatives. This project will advance the decision-making tools, models and frameworks available to a variety of stakeholders who are eager to incorporate sustainability into their management practices. Furthermore, convergence on a set of generally accepted sustainability metrics will drive momentum toward a pivot in organizational focus from reporting, disclosure and transparency towards uncovering real opportunity, competitive advantage and financial and non-financial benefits of sustainability. The long-term goal of this study is to serve as foundation to inform the discussion of a global network of scholars and practitioners.
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 and our broader research on sustainability metrics. It will also promote healthy and sustainable development of the Chinese economy, provide a unique example and model for other countries, and improve mutual understanding among different countries on sustainable development. Our first stage of work has resulted in a publication of a joint white paper which was released during CCIEE’s 4th Global Think Tank Summit at the end of June 2015, and a press conference was held during the Summit on the collaborative project and its preliminary work.
Part of the broader initiative with CCIEE, we are currently conducting a study under the Earth Institute’s Cross-Cutting Initiative, which integrates scientific and participatory approaches to develop an urban sustainability indicator set for Chinese cities, using three cities in China’s Henan Province as a pilot case. Although focusing on China, this study is one of the first to propose integrating both top-down and bottom-up methods, and will enable the creation of a set of indicators that measures what is important for local communities, but also captures key factors of sustainable development that are sufficiently universal for broad cross-comparison between cities. We envision that the indicator set will be taken up by local governments in our field sites and scaled up to other Chinese cities as part of our broader project.