Standardizing Sustainability Context

Standardizing Sustainability ContextBrief Introduction: What Is Sustainability Context?

A Presentation by Mark W. McElroy, Ph.D.Executive Director, Center for Sustainable Organizations

New Metrics of Sustainable Business ConferenceWharton Business School

September 28, 2012

What Is Sustainability Context?

Let’s start with GRI’s definition (GRI 3.1)Performance information should be placed in context

Copyright © 2012 Mark W. McElroy, Ph.D.

What Is Susty Context? (cont.)

GRI’s definition (cont.)Performance information should be placed in contextThe underlying question of sustainability reporting is how an

organization contributes, or aims to contribute in the future, to the improvement or deterioration of economic, environmental, and social conditions, developments and trends at the local, regional, or global level





Reporting only on trends in individual performance (or the efficiency of the organization) will fail to respond to this underlying question





Reporting only on trends in individual performance (or the efficiency of the organization) will fail to respond to this underlying question

Reports should therefore seek to present performance in relation to broader concepts sustainability


What Is Susty Context? (cont.)GRI’s definition (cont.)

This will involve discussing the performance of the organization in the context of the limits and demands placed on environmental or social resources at the sectoral, local, regional, or global level




For example, this could mean that in addition to reporting on trends in eco-efficiency, an organization might also present its absolute pollution loading in relation to the capacity of the regional ecosystem to absorb the pollutant




For example, this could mean that in addition to reporting on trends in eco-efficiency, an organization might also present its absolute pollution loading in relation to the capacity of the regional ecosystem to absorb the pollutant

GRI’s Technical Protocol Sectione.g., water consumption might be expressed “in relation to

available supply in a particular location”


9

The world’s first

SustainabilityThreshold

Ecological Footprint Method

Source: World Wildlife Fund, 2012

Num

ber

of P

lane

t Ea

rths

Year whenperformancefirst became

unsustainableGaps


Types of MetricsConventional

“Absolute” e.g., Gross CO2 emissions or water use by a company Doesn’t take changes in company size, etc. into account




“Relative” Expresses absolute emissions relative to some other variable of

interest (e.g., emissions or water use per unit of production, dollar of revenue, FTE, etc.)




“Relative” Expresses absolute emissions relative to some other variable of

interest (e.g., emissions or water use per unit of production, dollar of revenue, FTE, etc.)

New Metrics“Context-Based”

Expresses impacts relative to social and/or environmental limits or thresholds – a more literal measure of sustainability performance


e.g., Context-Based CO2 Metric

Source: Wigley, Richels and Edmonds, 1996


2005 2006 2007 2008 2009 2010 2011

Absolute- tCO2 78,122

74,777

76,924

80,827

80,372

77,576

76,577

Relative- kgCO2 per 1000 lbs. of product produced

370.21 343.51

355.50

343.89

309.94

259.45

213.33

Context-Based- Actual emissions/normative emissions

1.000 0.905

0.740

0.871

0.794

0.822

0.762

Multi-Metric Study of Cabot’s CO2 EmissionsCopyright © 2012 Mark W. McElroy, Ph.D.

Notes:1. = Trending Favorably; = Trending Unfavorably2. = Sustainable3. Any Context-Based Score of < 1.0 = Sustainable; > 1.0 = Unsustainable

Os Os Os Os Os

Os

Os

2005 2006 2007 2008 2009 2010 2011

Absolute- tCO2 78,122

74,777

76,924

80,827

80,372

77,576

76,577

Relative- kgCO2 per 1000 lbs. of product produced

370.21 343.51

355.50

343.89

309.94

259.45

213.33

Context-Based- Actual emissions/normative emissions

1.000 0.905

0.740

0.871

0.794

0.822

0.762

Multi-Metric Study of Cabot’s CO2 EmissionsCopyright © 2012 Mark W. McElroy, Ph.D.

Notes:1. = Trending Favorably; = Trending Unfavorably2. = Sustainable3. Any Context-Based Score of < 1.0 = Sustainable; > 1.0 = Unsustainable

Os Os Os Os Os

Os

Os

Summing Up

Different ways of defining context for measurement and reporting purposes

‘Sustainability Context” per GRI, in which social or ecological limits or thresholds are involved, or…

Context more broadly defined

Different contexts serve different purposes

Question is: How do each of the 4 existing and emerging standards define context; what is its role in the standards; and what is its future?
