WHAT IS A SUSTAINABILITY SCORECARD?
The key to becoming a sustainable business is to have a sustainability scorecard that tracks progress and measures results.
As the old adage says, what gets measured gets done. And with a sustainability scorecard, you can hold yourself accountable while providing a formal structure for your sustainability program, with goals and KPIs that can be measured.
To be successful on the sustainability front, you need to have a framework that lets you assess how sustainable your business is so you can measure progress and report on your results.
Sustainability Performance Management (SPM) is what we at the Green Business Bureau (GBB) call a sustainability measurement framework, which is essentially a scorecard for sustainability. The scorecard shows what initiatives you’ve completed and assigns points based on the impact of each initiative. Your score determines what level of sustainable business performance you’ve reached.
BENEFITS OF USING A SUSTAINABILITY SCORECARD
A sustainability scorecard provides the following key benefits and success drivers for a sustainability program:
- Accountability: Hold your company and employees accountable.
- Communication: Share your results with all stakeholders.
- Program management: Establish a baseline and track your progress.
Without these elements, most sustainability programs flounder.
A sustainability scorecard gives accountability
The key to the successful execution of any major program is accountability. Every person assigned to take some action has to be held accountable for their role and responsibility. This is only possible when you establish explicit goals and KPIs and then review the progress of those goals.
Accountability is important at the corporate, green team, and individual level, with specific goals established at each. These goals need to be captured and tracked. For GBB members, the most common goal is to complete the available initiatives listed in the GBB EcoPlanner.
For instance, an initiative for the current year might be “replace all lighting with energy-efficient alternatives like LEDs” or “replace our fuel-powered delivery vehicles with hybrid or electric vehicles”. These chosen initiatives become goals in your sustainability plan. Tracking whether the people or teams assigned to a given initiative complete them brings accountability to the organization.
A sustainability scorecard promotes effective communication
To be successful, a sustainability program must include a communication plan. This includes a launch plan, training plan, communicating goals, KPIs, and periodic status and progress reports.
Just like report cards communicate a student’s performance, a sustainability scorecard can communicate a company’s sustainability performance. Instead of course, the sustainability scorecard might list functional areas for both environmental (energy, waste, recycling, buildings, packaging, supply chain, food) and social responsibility (diversity, inclusion, gender equality, worker wellbeing, fair wages, community support, and charity contributions). The scorecard will show a percentage to indicate what initiatives are complete, and will give the total points plus an overall grade. GBB uses a point system to show how many points you scored out of a max potential points total.
A sustainability scorecard is central for successful program management
A sustainability program needs to be managed like any other major initiative or project in the company. There are goals, task owners, deliverables, milestones, due dates, critical paths, status reports, etc.
With this in mind, at the heart of a GBB-based sustainability program is the scorecard. It becomes a key framework for creating your program structure and goals. GBB initiatives become the major tasks for the program and the steps for each initiative become the sub-tasks. The GBB initiative library provides you with the structure you need to create your sustainability plan and manage your program.
TYPES OF SUSTAINABILITY SCORECARDS
There are many ways to measure the sustainability performance of a business using a scorecard. Each method determines the type of scorecard used. With this in mind, there are three types of scorecards, as follows:
- Initiative-based sustainability,
- Policy-based assessments,
- Carbon footprint-based calculations.
Let’s have a look at these scorecard types in more detail.
An initiative-based scorecard gives you the most complete and accurate assessment. It’s based on actions and provides a view into what you’re doing right when it comes to applying sustainable practices. At its core is an in-depth list of actions that should be taken to be sustainable.
A policy-based assessment only shows what you’re missing in your sustainability program, policies and procedures. It does not hold your company accountable for actually completing initiatives and taking action. A policy-based assessment covers purchasing, manufacturing, recycling, business travel, diversity, and employee benefits.
Carbon footprint-based approach
A carbon footprint-based approach focuses on the environment and a company’s carbon footprint. It’s more technical, but also more difficult to calculate given all the data that needs to be collected and analyzed. The carbon footprint gives you an estimate of your company’s carbon emissions.
The EPA provides a simple carbon calculator for the household, which demonstrates this scorecard type. Yet, the EPA’s scorecard is not very practical for a business whose emissions go beyond heating, electricity, and vehicles. What’s needed is a more robust carbon calculator like that provided by GBB. GBB’s carbon calculator accounts for business emissions across all three scopes (for a better understanding of business scope emissions, read Scope 1 2 3 Emissions Explained: Understanding the GHG Protocol’s Emissions Classification System).
The biggest shortcoming of the carbon footprint-based approach is that it does not cover any social responsibility aspects. It also fails to track many environmental aspects beyond carbon, e.g. water management, waste management, pollution, and scarce resource management.
Sustainability scorecard versus an ESG scorecard
A sustainability scorecard is typically inward-facing, focusing on tracking the internal performance of your employee projects and overall sustainability program. It focuses on three pillars: The environment, social responsibility, and economic performance.
Environmental aspects include your operations, supply chain, products, and services, with an emphasis on protecting scarce resources, plus fighting pollution and climate change.
Social aspects include diversity, gender equality, employee well-being, and community support, with an emphasis on protecting workers, treating them fairly and with respect.
Economic performance includes economic impacts such as revenue and cost savings.
An ESG scorecard is typically outward-facing, focusing on tracking your overall corporate performance in 3 areas: Environment, social, and governance (ESG). Typically ESG scorecards are used to communicate your results to the investment community.
ESG reporting is a major requirement for public companies, as such, reporting helps investment managers understand the risk profile of a given organization (e.g. climate risks and social welfare risks).
The ESG scorecard is very similar to the sustainability scorecard but adds the 3rd pillar, governance. This aspect looks at your account, transparency, and governance policies, along with important economic outcomes.
ENVIRONMENTAL SCORECARD ELEMENTS
The Green Business Bureau EcoScorecard is a checklist of how to become a more environmentally responsible business. Here are the 10 areas within your business to look at and the questions to ask yourself.
- Energy: How much energy do we use? Can we use less or adopt clean alternative energy sources?
- Waste and recycling: What waste do we produce and where does it come from? Is it hazardous? How can we reduce waste and prevent pollution? Can we find ways to recycle or upcycle waste materials (e.g. install recycling bins in the break room)?
- Buildings: How eco-friendly are our buildings? Are there opportunities to improve energy efficiency and upgrade lighting, insulation, heating, and cooling? Are we maximizing natural light or natural airflow whenever possible?
- Products and packaging: Do our products use sustainably sourced and eco-friendly materials? How does manufacturing our products impact the environment? Is our packaging also safe for people and the planet?
- Supply chain: Are we using vendors and suppliers who are environmentally and socially responsible? Are we sourcing products locally or from the closest source? Are there areas to improve supply chain efficiency in terms of lowering waste and carbon emissions?
- Water: How much water do we use? How much do we waste? Can we conserve water with smart technology (e.g. motion sensor faucets)? Do we use plastic bottles for water?
- Food: Where do we source our food from? What food do we provide employees? Is it healthy and produced from sustainable sources? Can we minimize meat and offer more plant-based options? Are we composting food waste?
- Transportation: What vehicles do we use for distribution and operations? Can we reduce employee business travel? If not, how can we offset our carbon emissions?
- Community: Do we support our local communities and local farms? Do we get involved in environmental causes, events, and associations? Are we evangelizing green business?
- Employees: Do we offer employee training in sustainability? Do we have a green team? Are we creating a green culture? What’s our level of employee engagement? Do we communicate policies company-wide?
SOCIAL RESPONSIBILITY SCORECARD ELEMENTS
A social responsibility scorecard typically includes these 12 areas:
- Responsible business partners: Have a clearly defined policy that specifies how you will screen partners and vendors, and screen significant partners and vendors to ensure that their business operations are socially responsible and eco-friendly.
- Transparent stakeholder communication: Communicate your social responsibility initiatives with customers and other stakeholders in a way that clearly defines your company values, policies, objectives, and actual performance.
- Philanthropy: Philanthropically donate a percentage of your revenue or profits and/or company time.
- Community contribution: Provide a product or service, as part of the business’ core strategy, that delivers a social or environmental benefits, and/or focuses on an underserved part of the community.
- Customer service and support: Commit to inviting, receiving, and acting upon customer feedback in a welcoming and constructive way at all times.
- Gender equality: Provide equitable opportunities to ensure women have equal access to employment, leadership roles, and pay.
- Employee benefits: Provide a benefits package that meets the needs of employees, and is well defined, accessible and transparent to all workers.
- Fair wages: Provide a living wage for all employees, at all levels of the organization including both full-time and part-time workers.
- Professional growth: Provide a regular formal review, linked to a comprehensive development plan, with clear and constructive feedback to all employees using a well-defined and consistent process.
- Diversity, equity, and inclusion: Define, institute, and communicate a policy to prioritize employee diversity, equity, and inclusion.
- Management training: Require all business leaders to be trained in, maintain current knowledge of, and commit to complying with the company’s environmental, social, and employee wellbeing policies and practices.
- Conflict resolution: Provide a trusted, impartial, and empowered 3rd party for the remediation of significant conflicts arising between employees and the business/business leaders.
THE GREEN BUSINESS BUREAU SCORECARD
The Green Business Bureau (GBB) uses a scorecard and assessment that’s entirely initiative based. GBB has documented a list of initiatives that best-in-class sustainable companies have completed. It takes a points-based approach where your company receives points for every initiative it completes.
For the environmental aspects, GBB’s EcoScorecard’s initiatives are organized by the business area they impact, such as operations, business practices, cafeteria, transportation, bathrooms, and office space. This set of assessment questions is something your company can easily answer to measure your efforts and uncover your company’s needs and opportunities. Completing the initial GBB Assessment will produce an overall scorecard that correlates to a specific ranking; Gold or Platinum levels reflect strong sustainability performance.
For GBB members, the scorecard is built into the online EcoAssessment and EcoPlanner tools. Members track the initiatives they’ve completed against a library hosting over 400 initiatives, to produce an EcoScore and scorecard categorized by functional area.
BUSINESS VALUE OF SUSTAINABILITY PERFORMANCE MANAGEMENT
Companies that maintain a sustainability scorecard to track their performance will likely make more progress than a program that does not have a scorecard. It’s Business 101… what gets measured, gets managed, and gets done.
How you set up your scorecard is up to you. As we’ve discussed, using a scorecard to measure the results of your sustainability plan and program will bring accountability and make it easier to assess your current situation to then set future goals. Setting goals, identifying deliverables, and assigning owners will hold people accountable.
A Sustainability Framework Is Needed For Effective Program Management
Most green teams or sustainability committees need structure to manage their program and projects. This structure starts with a foundation of initiatives that are possible and desired. Assigning goals, tasks, and owners and managing the progress of the initiatives becomes the structure a program needs to be successful.
Scorecards Provide a Way To Communicate Progress
Maintaining a scorecard engages your employees, creates a deeper understanding of sustainability, and demonstrates your commitment to being a sustainable business. While measuring and tracking initiatives, you may uncover business risk that was not identified in the past. Ongoing assessment can also uncover opportunities to be more energy-efficient and less wasteful. Regardless of how you fare, ongoing tracking will help you prioritize what to work on next.