Sustainability and the Bottom Line
Managers may feel lost at sea with the many sustainability metrics and tools. Discover five that work in NBS's Executive Report on Valuing Sustainability.
Your firm may be interested in CSR activities to grow the bottom line, but few tools exist to help managers actually measure that relationship.
Navigating Sustainability Metrics
The business case for sustainability has been studied extensively in the academic literature, and research has shown there is a small, positive relationship between sustainability and financial performance. There are many consulting tools to help individual organizations quantify their own business case; however, there is no synthesis of these frameworks nor a summary of their overall results. Furthermore, analyses of their strengths and weaknesses, or of the contexts under which each tool is most appropriate to use, is seldom provided.
Managers may feel lost trying to navigate the sea of measurement tools and determine which is most suitable for quantifying their firm's goals. To fill in these gaps, NBS topic editor John Peloza, along with various authors on the NBS team, systematically reviewed and synthesized over 150 academic and practitioner papers on sustainability valuation methods..
The Jury is Out on 'One' Correct Method
There is no consistent set of metrics that managers can use to value business sustainability. Some tools exist, but no one tool or methodology is widely accepted. This year, NBS published the Executive Report on Valuing Sustainability, recommending five valuation tools developed by other organizations used to benchmark and measure their progress towards sustainability.
Sustainability metrics can be categorized into three buckets: financial, operational, and strategic. This in-depth Executive Report describes each category and provides examples.
How Can Managers be Selective?
Managers should identify the processes through which sustainability activities in their firm relate to the bottom line, then develop metrics to evaluate performance throughout that process. Future research must work to understand better the mediating processes and metrics that tie sustainability activities to the bottom line.
Peloza, J. 2008. "Valuing Business Sustainability: A Systematic Review." Network for Business Sustainability Knowledge Project Series. nbs.net.