Guest blog by Martin Rich, Co-founder and Executive Director of Future-Fit.
Social responsibility and sustainability have been hot topics for some time now. What was once a trend has become the norm in the world of investment management. You’ve only to read articles in Bloomberg and the Wall Street Journal to find this in evidence for quite some time. But when we look a little deeper, beyond the headlines, how do we all measure up as businesses?
Think about your company.
Ask yourself this: is my company truly sustainable, in everything it does and sells? If not, then how must the company change before it is? And do we simply measure ourselves against others, or what we really believe a sustainable future needs to be?
If you’re struggling to answer these questions, you’re not alone: it’s hard to assess real progress if the destination is unclear. And until now we’ve had no clear, credible and actionable definition of what being a truly sustainable company really means.
Unfortunately the myriad corporate sustainability rating and ranking systems currently in existence don’t hold the answer because they focus on today’s best practice rather than tomorrow’s required practice. To see why this is a problem, let’s take an example.
The Dow-Jones Sustainability Index gathers data from over 3,400 listed companies around the world between 80-120 industry-specific questions focusing on economic, environmental and social factors that are relevant to the companies’ success, but that are under-researched in conventional financial analysis. It currently awards Thai Oil a total sustainability score of around 87%. There is no reason to doubt that this particular oil company is doing more than its peers. But in the face of climate change and a de-carbonised future, the very nature of the oil sector’s current business model is unsustainable. In that context is such a celebration of relative performance warranted? Can we really expect Thai Oil’s CEO and employees to question the carbon-intensive nature of their business if the given sustainable score is 87%?
Yet given the scale and complexity of the problems we face as a species, being less bad than others is just not good enough. Rather than merely focusing on today’s best practice, we must measure the gap between where business is now and where it needs to be.
We need a benchmark grounded in a scientific understanding of how the world works. One that identifies the minimum acceptable level of environmental and social performance every company must attain if society – and thus their business – is to prosper long term. One that defines the breakthrough point beyond which a company starts delivering positive value. One that inspires business leaders and employees – in other words, you – to push for truly innovative solutions which create greater value in a sustainable future.
That’s the purpose of the future-fit® Business Benchmark. A future-fit® business is one that in no way undermines – and ideally increases – the possibility that humans and other life will flourish on Earth forever.
The first benchmark, published in May 2016, comprises a set of 21 future-fit® goals that collectively draw a line in the sand that marks the transition point beyond which a business starts helping – rather than hindering – society’s transition to a sustainable future. Combined with a corresponding set of metrics, the benchmark enables those in the business to set their own targets, prioritise and measure their continued progress.
Ultimately, all companies should be constantly striving to improve their extra-financial business performance. But this must not be simply based on comparison to others, but rather through seeking to achieve tomorrow’s required practice in pursuit of a flourishing future.
Will you be featuring in the future-fit® Business Benchmark for 2017?