Is your corporate strategy focused on eco-friendliness? If not, it should be.
Sustainability is no longer a nice-to-have extra. It’s a critical piece of the puzzle for companies looking to stay ahead of the competition and protect their bottom lines.
According to the 2018 BSR and Globescan survey, 64% of North Americans are “very interested” in sustainability. That’s a large pool of potential customers looking for eco-friendly products and services.
The good news is that sustainability can be easy to implement and track with the right tools in place. One of those tools? Metrics.
Sustainability metrics are the KPIs used to measure your company’s environmental progress. There are a variety of metrics that you can use, depending on your specific sustainability goals. In this article, we will discuss five of the most important environmental metrics and how to track them.
Why your company needs to become sustainable
As the world deals with global warming, resource scarcity, and an increasing number of natural disasters, sustainability is becoming more important than ever.
In a study by Forbes, it was found that companies with sustainability programs outperform their peers by factors such as:
- Return on Equity (ROE): 15% higher for sustainable companies
- Operating Margin: 20% higher for sustainable companies
- Net Profit Margin: 24% higher for sustainable companies
Becoming a green business allows you to meet your current needs without jeopardizing the ability of the next generation to meet their future needs. Here are five important sustainability metrics that you should measure to achieve your goals.
5 Important Sustainability Metrics All Companies Should Track
Although your business can gain a lot from sustainability, it can be challenging to implement it. One of the challenges that businesses of all sizes face is tracking their progress. Here’s a list of environmental metrics that will help in tracking your progress:
- Greenhouse gas emission
- Water use
- Energy consumption and reduction
- Waste production and recycling rate
- Climate risk
Let’s look at each one of them in detail.
- Greenhouse gas emission
The greenhouse gas emission metric measures the amount of carbon dioxide, methane, and other gases that your company produces. These gases are known as greenhouse gases because they trap heat from the sun. This trapped heat causes the Earth to warm up, which leads to climate change.
Carbon dioxide is the primary greenhouse gas that most businesses emit. The 2015 Paris Agreement aims to reach net-zero carbon dioxide emissions by 2050. This will help limit the global temperature increase to below two degrees Celsius.
As a business, you can track your carbon dioxide emissions using a sustainability metric called “carbon footprint.” To calculate your company’s carbon footprint, you need to track the total amount of greenhouse gases that your organization emits directly and indirectly over time.
You can reduce your carbon footprint by migrating from using fossil fuels such as coal and oil to cleaner burning fuels such as natural gas.
- Water use
Water is a precious resource that is quickly becoming scarce in many parts of the world. The United Nations predicts that by 2025 two-thirds of the world’s population will face water shortages.
Businesses can help prevent this by tracking their water use and comparing it against benchmarks, or similar businesses.
Instead of just tracking water use, your company can also track these related environmental metrics to see if it’s eco-friendly:
- Water abstraction and stress rates: Aside from looking at how much water you are using, these metrics factor in how much renewable water, such as from rainfall, an ecosystem is getting. Together, they’ll tell you the amount of water from a particular ecosystem that you can use without adversely affecting it.
- Water discharge is the amount of water that a company releases into the environment, such as through wastewater treatment plants or stormwater drains.
Like with other sustainability metrics, there are several ways to reduce your company’s water usage. For example, you can install low-flow toilets, use drought-resistant plants in your landscaping, and recycle greywater for irrigation. You can track your company’s water use by installing meters.
- Energy consumption and reduction
These sustainability metrics will help you track the amount of energy your company uses and how much usage you’re reducing:
- Energy use intensity: This sustainability metric measures how much energy a company uses to produce a certain level of economic output. For example, it may measure how many kilowatt-hours are used to produce $100 worth of products or services. Compare against benchmarks.
- Energy reduction rate: This sustainability metric measures the percentage by which a company reduces its energy use over time. For example, if a company reduces its energy use by 20 percent from one year to the next, that would be considered a good reduction rate.
To reduce your company’s energy consumption, you can install energy-efficient lighting and appliances and promote the use of renewable energy. Many utilities offer a renewables package — you could also install solar on your own facility. Nowadays, the payback period is surprisingly quick. Track your company’s energy consumption by installing meters that measure how much electricity or gas is used.
- Waste production and recycling
Waste production is one of the most important sustainability metrics that businesses should measure. Producing waste is not only bad for the environment, but it’s also costly for businesses. Businesses spend $120 billion a year to manage their solid waste.
Since you cannot run a business without producing waste, there are a few sustainability metrics that you can use to track waste production:
- Total waste generated: Thisrefers to the total amount of waste a company produces over time. You can track this by keeping a record of the waste you generate each week or month.
- Recycling rate: This refers to the percentage of waste a company recycles.
- Waste diversion rate: This sustainability metric measures the percentage of waste that a company diverts from landfills. For example, if a company recycles 50 percent of its waste, its waste diversion rate would be 50 percent.
Plastic waste is a particular concern, as it’s not biodegradable and can take centuries to decompose.
Now more than ever, there are tons of ways businesses can recycle plastic waste into useful products. Companies like Arqlite are turning what is typically deemed “nonrecyclable” plastic into “Smart Gravel,” a new commodity for the built environment. Have plastic that you can’t recycle? Reach out to them here and they will take care of the rest.
Companies can also purchase plastic bonds to offset their waste generation.
- Supplier environment sustainability index
Supplier environment sustainability index is the sustainability metric that measures how well a company’s suppliers are doing in terms of sustainability.
The supplier environment sustainability index is important because it can help you track the environmental impact of your supply chain. It’s also a good way to motivate your suppliers to improve their sustainability practices.
There are a few different ways to calculate the supplier environment sustainability index:
- The first way is to ask your suppliers about their sustainability practices.
- Another way is to look at the sustainability ratings of your suppliers’ products.
You can use the supplier environment sustainability index to ensure that your supply chain is as sustainable as possible. This metric can also help you identify areas where your suppliers need to improve.
Make sure you communicate your findings with your suppliers to let them know what they need to work on.
When it comes to sustainability, every business needs to do its part. By tracking these sustainability metrics, you can ensure that your company is on the right track. Not only will this help you save money, but it will also help you protect the environment.
