New Metrics
Sustainability Metrics 3.0:
Measuring ROI of Regenerative Approaches, Social Impacts, Brand Trust

This is one of a series of posts filled with insights gained from dozens of industry leaders, practitioners and innovators on a variety of themes at SB’21 San Diego. Read more insights on product and business model innovation, brand storytelling, stakeholder engagement,supply chain optimization, regenerative leadership and more …

Connecting sustainability and regeneration credentials to sales

While there is no silver bullet in connecting your company’s sales to regeneration credentials, each member on this Tuesday afternoon panel shared similar experiences on tactics that have proven beneficial. Leslie Hushka, SVP of Global Corporate Responsibility at Bumble Bee Seafoods, quickly set the tone: “A critical factor for success is alignment throughout the company, which means having a broad base of your employees understand the company’s sustainability programs and making that part of their day-to-day job.”

Engaging with and training your sales team is critical in authenticating your sustainability goals, as this leads to positive consumer perception of your brand. Kellie Ballew, VP of Global Sustainability at Shaw Industries Group, emphasized the importance of a sales team that is able articulate the aesthetics, design and performance details of products with hard-earned sustainability certifications. This requires commitment to support and prepare the team as much as possible outside of the basic duties. At the same time, it’s also important to help the sales team find a balance between short- and longer-term objectives.

“A sale today versus a partner for the sale of tomorrow,” Ballew said.

Rebekah Moses, Director of Impact Strategy at Impossible Foods, touched on the challenge of addressing the awareness gap in consumers. She pointed out: “Consumers who are sustainability-motivated but have an awareness gap around a whole category of consumption — it is difficult to tap into them and to help them align their wallet to their values.”

One way Impossible has worked to address this is by labeling every product with its Life Cycle Assessment data, as a show of transparency and educating consumers — thus, bridging the gap between their values and their knowledge of a company’s holistic regeneration goals.

Jason Pelz, VP of Sustainability, Americas at Tetra Pak, stressed the importance of a long-term view in looking at ROI on regeneration commitments. For example, investing in R&D to innovate on your already-great product so it will be even better five years from now. Some regeneration commitments require an upfront cost but ensure a payoff down the road through generating future sales and building relationships.

In looking at sales lift and ROI, Ballew said it’s hard to attribute anything specifically to sustainability when you have a huge portfolio. The test-and-learn model has helped Shaw gauge if the market is choosing certain products for the reasons that were messaged; and for Ballew, this ROI is very clear. This is another reason to ensure alignment with the sales team — to ensure they are comfortable with sustainability language.

The sustainability leader’s guide to climate commitments and disclosure

Tuesday morning, Alexandra Albro of security software giant ESET North America and Phil Redman from OneTrust ESG discussed how their collaboration led to meaningful progress in ESET’s ESG goals, and how their lessons learned can jumpstart a company’s journey into climate commitments and disclosures.

At ESET, employees were asking about the company’s commitments in emissions, diversity, and community engagement. The culture was ripe for a robust ESG platform; and with help from OneTrust, Albro said they successfully identified ways to identify, commit and communicate ESG goals and disclose them authentically.

Taking stock of brand culture, consumer and company values, and existing governance structures is step one in making authentic commitments and disclosures. Next, sustainability goals need to be aligned with business values and metrics.

Whether these steps are started grassroots or top-down, leadership buy-in is paramount, Albro said. Without unified language, policy and governance structures, grassroots interest from consumers and employees will never reach critical mass.

“[Momentum] can really come from different areas; and if the leadership team is receptive, I think you can take it quite far,” she said.

But even with sufficient buy-in throughout, many organizations don’t have resources to tackle the massive ESG problems they face. Synced governance structure and relentless collaboration are paramount to aligning ideals throughout an organization.

“It comes down to collaboration,” Albro said. “Combining all of the parts under one umbrella is going to be vital to pull all of these efforts together and be responsible for it.”

Redman notices many companies adopting science-based targets. Pledges and commitments are an important rallying point, as well as a north star to drive fragmented ESG efforts in organizations. An understanding of Scope 3 emissions is a great indicator of where to invest ESG efforts, Albro said — but she warned about keeping ambitions realistic: “If you’re not sure you can achieve what you’ve set out for, be cautious,” she cautioned. “It’s really important to understand where you’re at and if it’s even possible to go where you want to go.”

If you don’t have targets today, be upfront about it; but ensure stakeholders a target is coming soon. Not acting out of fear of missing a goal is worse than failing to meet one.

Disclosure is voluntary now, but Redman and Albro firmly believe mandatory disclosures are coming. Wary businesses are diving headlong into self-disclosures to mitigate significant regulatory and financial burdens later.

Even voluntary reporting can be problematic, though — as companies report on what they think is material to them. Compliance reporting will likely ask for brand-new disclosures, as is happening now in Europe.

Future-proofing ESG disclosures is possible, though. Albro recommended identifying salient stakeholder dialogues and selecting a reporting tool that facilitates successful communication. Lastly, she recommended reporting on as many platforms as possible — including SASB, GRI and the SDGs.

Boosting sustainable product sales with Amazon’s Climate Pledge Friendly

Amazon’s Climate Pledge Friendly (CPF) program currently has over 200,000 certified sustainable products — a small number in comparison to the total population of products available on Amazon, yet the largest selection in retail today.

Adam Werbach, Senior Integrated Marketing Leader at Amazon, said the CPF program is one way the ecommerce giant is stepping up to the sustainability plate: “Scale and success bring broad responsibility,” he said.

Nnika Leiba, Principal Manager of theSustainable Shopping Program, brings an extensive background in scientific research and toxicology-focused certification into her new role with Amazon. Working closely with third-party certifiers, Leiba stressed that “trustworthy and scientifically robust certifications are needed to help customers sort through all of the claims and marketing jargon.”

Leiba described her oversight of the company’s rigorous internal process to verify third-party certifiers. The process includes an in-depth review of the organization’s scientific rigor, and performance across various sustainability attributes — including carbon reduction, natural resource conservation, energy savings, and chemical and material safety, among other criteria. Currently, Amazon leverages 36 high-bar third-party certifications that vary greatly in size and type; but according to Leiba, all the organizations are highly regarded for their integrity and the robustness of their program. “They engender trust,” she said.

There are two pathways to qualify for the CPF program. The first path is to hold one of the 36 certifications currently partnered with Amazon. The second is through Compact by Design, Amazon’s internal certification for products designed for better packaging and more efficient shipping. This program extends beyond the frustrating box-within-a-box inefficiency faced on the consumer end — to qualify for Compact by Design, products must have best-in-class unit efficiency.

Customers can find CPF products through the filter and search tool, and brands can create their own CPF aisle on their store pages. Of note, Amazon Business implemented a CPF buying policy, which has been their fastest-growing buying policy thus far.

Launched just nine months ago, early research shows that the CPF badge builds trust with consumers and leads to increased repeat purchases. And, as Leiba pointed out, certifications have a tremendous impact on moving the market towards safer and more sustainable products.

For Amazon, CPF is a long-term investment plan that still has a lot of area for growth. The company says it aims to integrate CPF into every point of the customer’s buying experience, nudging sales in a sustainable direction by providing more transparency and education to the customer while balancing simplification.

Companies or certifiers interested in joining the program can reach out to Amazon for more information.

Straightforward social impact measurement any company can use

Sustainability professionals are finding themselves spending more and more time on reporting instead of doing work that needs to be done; and existing frameworks such as GRI or SASB contain long lists of indicators that can dilute or divert from authentic impact reporting. And in contrast to the widespread consensus held for environmental metrics, many companies are challenged by the lack of a consensus on how to measure social impacts.

In response to this situation, Ford Motor Company partnered with the University of Michigan’s Erb Institute for Global Sustainable Enterprise to develop a framework that streamlines organization and communication around social impact. As Rebecca Shelby, Ford’s Manager of Social Sustainability, pointed out: “To build a better world, the environment is really only one piece of that.”

Two years later, the Erb Institute shared Ford’s Model of Human Progress at the Sustainable Brands™ 2020 Corporate Member Meeting. While the model was developed in partnership with Ford, it was designed to be non-proprietary and sector-agnostic to enable cross-sector adoption, reiteration and data comparability between companies.

Tiffani Jarnigan, Manager of ESG Process and Innovation at Hewlett Packard Enterprise (HPE), said the company took the model and adapted it to the tech industry — simplifying the process and focusing on the metrics that drive the most social impact.

Jarnigan explained that the model provides guidance on creating a more focused list of metrics to tell the story of your company’s social impact goals and initiatives. Likewise, the model’s streamlined nature helps small sustainability teams balance effort in project execution and reporting.

“The underlying story here is they’ve done a lot of research, so that other companies don’t have to,” Jarnigan said.

Trust was quickly identified as being core to the model — as well as to any business model for its value creation — said Phil Redman, Offering Manager in ESG at OneTrust. Innovation is another core principle for building development and leadership throughout the model, and top-down commitment and integration into existing work processes are equally important for the model to influence company decision-making. Redman summed up by acknowledging that social impact is still difficult to measure, but possible when it’s a step-by-step process.

Measuring regenerative outcomes along the value chain

The data is clear: Net zero isn’t enough. Brands must shift sustainability models from “do-no-harm” to “net-benefit.” In this Wednesday panel, General Mills and Interface discussed their relationship with biomimicry as the best way to achieve net-positive operations as quickly as possible.

No natural systems or organisms create a net-detriment to an ecosystem — and human systems should be no different. Better buildings and processes are the starting point, but the end goal is empowering them to be net-regenerative contributors to both human and natural ecosystems.

“Regenerative” means creating conditions conducive to life, said Erin Meezan, VP and Chief Sustainability Officer at Interface. The challenge is quantifying that into actionable goals aimed at sequestering as much carbon as a high-performing ecosystem.

Biomimicry 3.8 helped Interface consider the implications of net-positive operations in its value chain. The consultancy considers how facilities have ripple effects in the community and local ecosystem, using place-based analysis to move closer to net positivity. Managing Director Nicole Miller reiterated that nature is the best model for net-positive design.

“We don’t want to get to zero — we want to get to positive,” she said.

General Mills started investing in regenerative agriculture in 2019. It siloed its investments in soil health, water conservation, and farmer livelihoods; then finally recognized the interconnectivity of it all: What worked looked like how nature operates.

“What if we took these lessons from nature and applied them to business?” said Mary Jane Melendez, Chief Sustainability & Global Impact Officer at General Mills.

General Mills began to shift from an extractive mindset to a regenerative one, leading to a partnership with Ethan Soloviev, Chief Innovation Officer at HowGood — a SaaS data platform with the world's largest database on food and personal care product sustainability. HowGood is guiding the food giant beyond silos towards the whole, considering interventions that can move the entire system.

Like nature, there’s no one-size-fits-all solution to community health.

“If you ever see someone give you a checklist for regeneration, bullshit,” Soloviev said. “If you ever use someone else’s scorecard to assess yourself, then you’re not connected to what's unique about your business and what you can generate in the world.”

Yet, progress towards regenerative goals must be measurable, Meezan cautioned. Though quantifiable outcomes are essential, they will look different for each company and its stage in the journey.

Businesses should start with what they’re doing well, Miller said — realizing their unique value propositions as part of a diverse ecosystem. Regenerative steps from there should be calculated and programmatic.

Net zero shouldn't be a required pitstop in the regenerative journey, the panel unanimously agreed. Adopting a net-positive mindset foments more innovation and purpose than net zero alone.

Regeneration requires metric disclosure as much as a mindset shift. Brands will arrive at the regenerative intersection of qualitative and quantitative by fusing existing capital and frameworks with biomimicry.

The Math and the Path: EY on meeting increasingly rigorous investor expectations on climate commitments and disclosures

Sustainability departments and leads have had to be nimble in order to drive change within companies. But now, whole enterprises must get on board; and there’s an alignment issue between large-scale organizations and the nimble nature of many sustainability functions.

“We’re at an inflection point” We need to go big, we need to go fast, and we need to find how we do that and bring the whole organization along,” said Bruno Sarda, Principal of Climate Change and Sustainability Services at Ernst & Young (EY).

External and internal stakeholders are asking reporting organizations to raise their climate game. Regulators are, too.

The SEC issued a sample comment letter showing several typical comments they issue to companies. The first question asks companies to explain why their stated ESG goals aren’t represented in investor-focused documents provided to the SEC.

There’s a shortening tolerance for brands saying one thing on sustainability reports and another in their disclosures. From 2018 to 2020, investors that conduct structured and formal reviews of ESG disclosures have more than doubled, according to EY research. This shows investors are taking climate risk and disclosure seriously, seeking info pertinent to their investment decisions.

SEC’s scrutiny and increased disclosure reviews are emblematic of trending scrutiny about communicating ESG to audiences. There’s pressure mounting from investors and regulators; and the solution is building credibility and cohesion while simultaneously driving down climate risk.

But it’s not as easy as just more reporting.

EY’s Global Climate Risk Disclosure Barometer looks at coverage and quality, examining how organizations report on various climate issues. The Barometer discovered more organizations are reporting on climate than ever before; but quality of that reporting is stagnant, and meaningful climate strategies remain unimplemented.

These discrepancies in coverage and quality are usually owed to the nebulous nature of quantifying financial impact of climate risks, said Kristin Sterling, Senior Manager of Climate Change and Sustainability Services at EY. But other risks disclosed in 10Ks come with their own blinding challenges, so the excuse of “nebulous” climate risk assessment is running out of steam.

Sterling recommended integrating existing frameworks used to control risk environments in reporting and applying them to an ESG context. Internal control structures, such as auditing departments, can be retrofitted to assess climate risks, too.

“Many organizations already have well-established processes to make big decisions and evaluate decisions,” Sarda said. “Tap into that, because they already have a lot of credibility with internal and external audiences.”

COVID was a good dress rehearsal for climate disruption, painfully illuminating externalities and pain points. COVID has been a wakeup call for transparent and meaningful climate commitments and disclosure, and aligning the language in investor-facing documents and public-facing sustainability reports.