Brett Knowles, pm2 Consulting
Brett is a long-time thought leader in the Strategy Execution space for high-tech organizations, beginning in the late 80’s while teaching at Harvard and being involved in the initial Balanced Scorecard research and books. His client work has been published in Harvard Business Review, Forbes, Fortune and countless other business publications.
Pub: July 8 2021
Upd: May 18 2022
The Sustainability Scorecard makes sustainability everybody's everyday job. By providing monthly reporting against your strategies in business, the environment, and within society, all stakeholders are given on-going performance updates in the context of their choice.
Table of Contents:
- Why Scorecard Your Sustainability Efforts?
- The Multiple Faces of Sustainability
- The Sustainability Journey
- The Sustainability-Focused Organization
- Measuring Sustainability
Why Scorecard Your Sustainability Efforts?
- Employee Engagement: By allowing every team and employee to see their contribution to sustainability on an on-going basis, you'll enjoy improved employee recruitment (especially the Millennials), retention, and productivity; you'll also be seen as an employer of choice.
- Customer Satisfaction: Showing your customers the great gains you are making towards sustainability increases customer attraction, engagement, and advocacy; it will also provide access to new markets.
- Brand and Reputation: By promoting your sustainability efforts you will build a positive brand and reputation with key stakeholders and become a partner of choice.
- Cost Savings: Because the corporate sustainability scorecard enables moment-to-moment sustainability decisions, you are likely to see lower costs from reduced materials, water, energy use and waste management.
- Government Relations: Your sustainability scorecard will help you anticipate, prepare for and influence government regulations and standards.
- Supply and Resource Security: The on-going measurement of your suppliers will improve supply-chain security and maintain access to scarce resources. Ultimately you'll probably better manage price volatility.
- Innovation: The on-going focus that the Corporate Sustainability Scorecard provides has been proven to foster innovation and develop new products and services.
- Risk Management: The on-going monitoring of sustainability-related risks will decrease strategic and operational risks while enhancing business continuity.
- Capital Access: You'll be able to tell a clearer and more compelling story to green funds and increase the availability of capital.
- Strategic Success: Since the Sustainability Scorecard covers the triple bottom line, not only will your performance improve, but you'll also improve the operating context of the business; create external conditions for future success.
- Competitive Advantage: The on-going reporting against your strategic context enables better agility, building competitive and first-mover advantages.
- Social License: Your sustainability communications will strengthen stakeholder relations and social license to operate and grow.
- Works with all the existing frameworks: When we build your Corporate Sustainability Scorecard we do so with the cross-referencing of each metric to the various frameworks of your choice (UN-SDG, GRI, <IR>, Future-Fit, B-Corp, SASB, etc) . This ensures that all stakeholders, and new-comers, can see your sustainability performance through the framework of their choice.
The sustainability scorecard incorporates the Future-Fit Business Benchmarks. This generates these additional benefits:
- Anti-Greenwash: Because all 21 Business Goals are mandatory (they must be reported against, even if zero-weighted), we can avoid organizations cherry-picking sustainability measures in areas that make them look good!
- Provides International Consistency: The underlying Future-Fit Business Benchmark ensures a similar measurement from all locations.
- True comparability between organizations: The framework that we base the Sustainability Balanced Scorecard on is the Future-Fit Business Benchmark© , supported by the NFP Future-Fit Foundation, that ensures consistency across businesses to establish a true benchmark for organizations to use.
- Supports ROI calculations: Because it is science-based, the Sustainability Balanced Scorecard, through the Future-Fit Business Benchmark, enables calculations of the ROI on Sustainability.
ALL LEADING TO: GUARANTEED ACHIEVEMENT IS CONNECTED TO BRINGING FORTH A FLOURISHING FUTURE.
Because your ultimate Future-Fit goal is set first, and current activities are set by back-casting (as opposed to forecasting), it is guaranteed that as you move toward your Future-Fit goal, by definition, you are certain to be bringing forth a better future.
Benefits reworked from Coro Strandberg.
The Multiple Faces of Sustainability
The Sustainability Strategy Map and Balanced Scorecard allows you to restate the same measures in different frameworks...UN-SDG or GRI or <IR> or B-Corp... and for different stakeholders - regulators, employees, customers, suppliers and others.
It is analogous to using a prism to split the light from a source. The prism in this case is the Sustainability Scorecard software. The software needs to support the capability for any measure to roll-up to multiple different frameworks.
In some cases we can use the same Sustainability Strategy Map but filter the data for each stakeholder.
The Board of Directors, for example, would probably see the same Sustainability Strategy Map, but see only "communication"-type metrics.
Likewise, customers and suppliers need to see a public-facing view of the same Sustainability Strategy Map.
There are other stakeholders who actually have a different Sustainability Strategy. For example, think of different Brand or Product Groups. Their sustainability journey might involve packaging, vs water consumption vs post-use disposal.
Regulators, in particular, typically have their own Strategies and frameworks, requiring a different context and in some cases unique measures.
In the end, we need the capability of easily restating your sustainability activities in a way that others can understand…
The Sustainability Journey
"A journey of a thousand miles begins with a single step" (Chapter 64, Tao Te Ching ascribed to Laozi)
Many organizations approach us with confusion about where they should start their journey to sustainability… or worse yet, think that they must go into a long and protracted sustainability-planning cycle before getting underway with making a difference!
We propose that organizations can either "start where they are" and begin taking action right away or establish a solid sustainability strategy and move forward in a more thought-out way.
We have helped hundreds of organizations of all sizes, both private and public-sector, start wherever they would like.
In our experience, there are two broad categories of where organizations want to start – some do want to start with a comprehensive sustainability planning process, but others want to “Start where they are” (Bob Willard).
Starting “where they are” is all about baselining their current performance and just begin measuring and tracking their improvements.
We can easily do this in the sustainability world because we have so many pre-built measurement frameworks (UN-SDGs, <IR>, GRI, SASB, B Corp, etc.) that can aid us in addressing aspects of sustainability that might have been previously overlooked.
The trick here is to monitor at-the-speed-of-business. For example, if you have financial or performance meetings monthly, you need to report sustainability metrics monthly too (otherwise you are driving through the rearview mirror). We have developed an inventory of Key Sustainability Indicators (KSI) and a sustainability balanced scorecard that can easily be implemented within whichever framework you use and provide your business the important, real-time data required to know that you are doing well by doing good.
“Starting where you are” comes in two major approaches: Measure/Improve (or for the process thinkers PDCA Plan-Do-Check-Act) in which a couple of days are spent building your sustainability balanced scorecard and you are off and running. As the KSI show you sustainability-gaps, you launch projects, close the gaps. Repeat.
The second “start where you are” option is ‘establish a baseline-trend, then build your strategy’.
The idea with this approach is that strategy development is better if it is based on facts and data. Establish a measurement structure, monitor performance for a while… maybe knock off some low-hanging fruits, and THEN have a sustainability strategy session.
The third option is what seems to come to most people’s mind as the only sustainability journey…
“Build a sustainability strategy” and then begin measuring and making improvements. This route is often chosen because organizations do not understand sustainability enough to be strategic and to take action on it.
Fortunately, hundreds of thousands of people’s time has gone into designing extensive sustainability frameworks… Just because it is new to you, that does not mean it is new to the rest of the world and does not mean that you don’t have enough to get started.
Think of it this way… would you even think about building your own car from scratch? (I hope the answer is “no”!) You’d consider what car would meet your needs, would research your options, and then go out and buy the car… maybe ask for some add-ons or special options, perhaps even some after-market things, but basically run with the tried and proven solution.
You can do the same thing with sustainability…but it is way easier to add stuff on! All you have to do is:
- Establish your super-long terms goals: the KSIs are especially helpful if doing on your own; many organizations can educate on sustainability if that is desired; then,
- Backcast those into what gets done now and phased into the future; then,
- Get acting, get measuring and continuously get clear on what your gaps are. Repeat.
Provided that an organization is committed to the journey it chooses, any of those listed above can be highly effective means to get started. However, for any successful sustainability journey, the key is that the organization is closing its sustainability gaps as well as expanding its awareness of what sustainability is and what impact the organization is having over time. Taken together, any organization can accelerate progress and realize the benefits of moving towards a sustainable future.
"All Roads Lead to Rome" (Ascribed to Milliarium Aureum .... Golden Milestone)
So here’s the complete road map…
The Sustainability-Focused Organization
In today's business environment, sustainability has never been more important. Yet research shows that most companies fail to execute successful sustainability strategies. Behind this abysmal track record lies the undeniable fact: many companies continue to use management processes - top-down, financially driven, and tactical - that were designed to run yesterday's organizations.
That’s how the revolutionary management tool called the Sustainability Balanced Scorecard was introduced, since it provides a new operating system that makes sustainability a continuous process owned not just by management, but by everyone.*
1. Translate Sustainability into Operational Terms
Sustainability Strategy must be described and communicated in consistent, insightful operational terms. Organizations must provide on-going performance monitoring and navigational guidance to a myriad of diverse stakeholders.
Successful organizations use Sustainability Strategy Maps to describe and communicate sustainability and Sustainability Scorecards to provide on-going monitoring.
2. Align the Organization to Sustainability
Sustainability strategies only work if they are linked and integrated across many functions – finance, manufacturing, sales, marketing, budgeting, and so forth.
The Sustainability Ontology quantitatively links these disparate and dispersed functions and activities. We assess the impact of each core activity on achieving true sustainability and determine the key pressure points… and how to measure their current performance.
3. Make Sustainability Everyone's Everyday Job
Successful organizations ensure that everyone gets sustainability education, cascades sustainability down to their team and individual responsibilities, and is acknowledged, rewarded and compensated on their adherence to an implementation of the organization’s sustainability strategies.
The Sustainability Scorecard cascades down to the individual, ensuring engagement, alignment, and performance.
4. Make Sustainability a Continual Process
Sustainability is not an end-of-year checklist… it is the day-to-day decisions made by your team. The impacts are felt instantly…not only at the end of the year in your risk reports, regulatory filings and sustainability reviews.
The Sustainability Balanced Scorecard links your sustainability activities to your budget, compensation, reporting, risk and Board processes.
5. Mobilize Sustainability through Executive Leadership
Through a method of mobilization, governance and strategic management, executives embed sustainability strategy and new culture into their management systems, creating a continual process to meet the strategic needs of today and tomorrow.
Think of implementing a new operating system – one where the organization is aligned, mobilized and individuals are empowered to create a sustainable organization.
They vision the super longer-term goals around true sustainability and then back-cast it to what needs to be done now, next, and later.
So the same Balanced Scorecard can be filtered, or split, to produce the view of Sustainability required by each different stakeholder.
We thought that it would be useful to have one view of the sustainability measures that merged the best concepts from the multiple frameworks we use (e.g. B-Corp, <IR), GRI, SASB, UN-SDG,s, etc.)
You will need to paste these together…
Good strategy execution and a functional balanced scorecard requires that their employees have discipline, and this is achieved through setting detailed and doable tasks to move the strategy from paper into action. To achieve a goal, a strategy needs to be created through a plan that can be followed
Using a performance management tool like Hirebook helps remote teams link their day to day actions to strategic organizational outcomes. Try Hirebook for free today to utilize check-ins, 1-on-1s, OKRs and KPIs to help your team achieve the next level of success.
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