Measure sustainability performance

Organisations select metrics for each sustainability topic to measure outcomes

Last updated: November 23, 2021

Overview

To measure sustainability performance on each topic, organisations select appropriate metrics and collect data against them.

Organisations must decide on the right mix of metrics based on:

  • the information needed to support their own internal management decision-making; and
  • the disclosures needed by external stakeholders to inform their own decisions.

Metrics can be grouped into two broad categories:

Figure 1: Selecting metrics to measure the outcome

An organisation’s inputs, business activities and outputs are largely within the organisation’s control, e.g. its use of resources, its operations, and its creation and delivery of products and services.

By contrast, outcomes are only partly within an organisation’s control, since interactions with stakeholders and the environment are varied, unpredictable, and can be countered or exacerbated by other factors. Measures of a well-defined outcome enable the most accurate understanding of the current level of specific aspects of well-being experienced by a stakeholder, or the condition of the natural environment.

Metrics may be designed to collect information that is self-reported from stakeholders, objective or subjective, or non-self-reported information.

  • Self-reported information is collected directly from people who interact with the organisation and can be objective (e.g. ‘I went to the doctor five times this month’) or subjective (e.g. ‘I feel better this year compared to last year’).
  • Non-self-reported information is information that has not been reported by the stakeholders themselves (e.g. number of patients discharged from hospital).

Managing sustainability performance requires that organisations form an understanding of how their actions affect the well-being of their stakeholders and the condition of the natural environment (the outcome). Organisations that choose to use measures of the inputs, business activities, or outputs, should examine and disclose the strength of the relationship between these measures and the social or environmental outcome.

If metrics are chosen where there is weak evidence of causation, then the effect on a stakeholder’s well-being or condition of the natural environment will be unknown, and impact risk will be high. For example, the number of students enrolled in a class is a weak proxy for educational attainment.

Figure 2: Metric with weak evidence of causation

Occasionally, the evidence of causation between the organisation’s inputs, business activities or outputs and the well-being of the stakeholder is strong and well-documented in a specific context.

In these cases – and where the organisation’s context is sufficiently similar to that of the evidence being used – metrics that measure inputs, business activities or outputs can be reliable for understanding the stakeholder’s well-being or the condition of the natural environment.

For example, there is a substantial evidence base outlining the quantum of environmental damage caused by specific volumes of non-recyclable materials being used and sent to landfill. However, organisations should be aware that they will always be taking impact risk if they do not measure the unintended outcomes that occur as the result of an activity, and therefore risk causing harm for stakeholders.

Figure 3: Metric with stronger evidence of causation

Resources

Multi-topic and multi-sector metrics

Although GRI and SASB’s disclosures are primarily intended for external reporting, the disclosures are designed to be useful for management decision-making too.

GRI Topic-specific Standards

Last updated: n/a

Reporting standards designed to help organisations understand and disclose their impacts in a way that meets the needs of multiple stakeholders. These standards are arranged by a set of Universal Standards that apply to all organisations, and 35 Topic Standards that contain disclosures for impacts related to economic, environmental and social topics.

Use this resource to:

  • Measure sustainability performance: Identify metrics to measure for each significant topic. The standards themselves provide guidance on selecting metrics to report. Using standardised metrics helps the organisation and its stakeholders compare performance with others.
  • Disclose: Report to all stakeholders on ‘material topics’ that reflect the organisation’s most significant impacts.

CDP’s Disclosure System

Last updated: 2021

Tool for investors, companies, cities, states and regions to manage their environmental impacts. The CDP Disclosure System supports companies in making their environmental impact transparent to stakeholders, better understanding how they can reduce their impact, and act to become environmental leaders.

Use this resource to:

  • Identify sustainability topics: Fill in CDP’s questionnaires to understand the relevant climate change, forests and water security impacts to measure, based on the organization’s size, sector, and geography.
  • Measure sustainability performance: Use CDP’s questionnaires as sets of environmental metrics.
  • Assess impact: Fill in the questionnaires to track change in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Disclose: Report to all stakeholders on climate change, forests and water security. The questionnaires provide a framework for companies to report environmental information to their stakeholders covering governance and policy, risks and opportunity management, environmental targets and strategy, and scenario analysis. Receive an A-D grading based on questionnaire responses.
  • Benchmark: Tool allows companies to benchmark their environmental performance against their industry peers and receive feedback on their progress each year. The information disclosed is also used by financial markets for stewardship and engagement, in investment research, new financial products, and global indices and ratings.

SASB Standards

Last updated: n/a

Reporting standards that provide industry-specific disclosure topics and associated metrics that measure performance against 26 General Issue Categories (or sustainability topics). Management or mismanagement of performance on these sustainability topics may create, preserve or erode value for the typical company in a given industry over time.

Use this resource to:

  • Identify sustainability topics: Identify the relevant industry standard to find industry-specific topics and accounting metrics. These standards can be a useful input when identifying which sustainability topics to disclose.
  • Measure sustainability performance: Identify metrics from the standards. The standards themselves provide guidance on selecting metrics to report. Using standardised metrics helps the organisation and its stakeholders compare performance with others.
  • Estimate value created: SASB evaluates sustainability topics for inclusion in the Standards by assessing whether a given topic is reasonably likely to materially affect the financial condition, operating performance, or risk profile of a typical company within an industry. Collecting information on these metrics provides insight that can inform estimation of value to the organisation.
  • Disclose: Report to providers of financial capital on sustainability topics that are likely to affect how value is created, sustained or eroded for the organisation over the short-, medium-, and long-term.
Last updated: 2021

This report recommends a set of sector-specific, SDG-related metrics by drawing on metrics from existing standard setters and benchmarks.

The Global Investors for Sustainable Development Alliance (GISD) is a group of 30 large investment firms convened by the United Nations Secretary General. The GISD sits within the United Nations Department of Economic and Social Affairs (UNDESA) and aims to scale-up long-term finance and investment in sustainable development.

Use this resource to:

  • Identify sustainability topics: The report suggests SDGs and related sustainability topics for eight sectors. Organisations can consider their sector and check whether the SDGs and related sustainability topics suggested are applicable to their own business.
  • Measure sustainability performance: The report suggests SDG-related metrics for eight sectors. Organisations can consider measuring the metrics specific to their sector.
  • Disclose: Organisations can include the recommended SDG-related metrics in their disclosure to stakeholders.

Guidance for developing custom metrics

Please note, topic-specific measurement methodologies are not linked to on this site.

Standard on Applying Principle 2: Understand What Changes (Part 1 – Creating Well Defined Outcomes)

Last updated: 2015

Standard and guidance on how to apply the second of SVI’s Social Value Principles.

Use this resource to:

  • Measure sustainability performance: Engage with stakeholders to collaboratively agree on which outcomes to measure. This practice standard contains guidance on how an organisation can examine ‘chains of events’ and engage with stakeholders to decide the most appropriate point of measurement to support management decision-making (framed as ‘well-defined’ outcomes).

Standard on Applying Principle 2: Understand What Changes (Part 2 – Designing Indicators (Metrics) to Measure the Outcomes)

Last updated: n/a

Forthcoming: Standard and guidance on how to apply the second of SVI’s Social Value Principles.

Use this resource to:

  • Measure sustainability performance: Design custom metrics. This practice standard builds on Part 1, which outlines how to design custom metrics to measure a ‘well-defined’ outcome.

SDG Impact Standards for Enterprises

Last updated: 2021

Practice standards that provide a common language and a system for integrating sustainable development issues, the Sustainable Development Goals and impact management into business and investment decision-making. These practice standards also outline the ‘ABC’ classification methodology, which helps organisations assess whether an impact ‘Acts to reduce harm’, ‘Benefits stakeholders’, or ‘Contributes to solutions’ in relation to the SDGs.

Use this resource to:

Set up processes and embed practices that orient an organisation towards achieving the SDGs. The SDG Impact Standard contains practice indicators that are relevant to several actions. Use the links below to access guidance for different practice indicators. Alternatively, view the whole guidance document here.

Management tools that include metrics

B Impact Assessment

Last updated: 2019

Tool designed to help organisations measure and manage their impact on workers, community, environment, and customers.

Use this resource to:

  • Identify sustainability topics: Fill in the online questionnaire to understand performance on sustainability topics that are likely relevant to manage, based on the organisation’s size, sector, and geography. B Lab’s questionnaire is developed through research and public consultation, and so provides an evidence-based starting point for identifying sustainability topics to measure.
  • Measure sustainability performance: Use the B Impact Assessment as a set of metrics. The questionnaire enables organisations to quickly get started collecting information on performance on sustainability topics that are likely relevant to manage, based on the organisation’s size, sector, and geography.
  • Assess impacts: Fill in the questionnaire to track change in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Benchmark: Compare performance with peers on each sustainability topic or as a whole organisation. If an organisation scores 80 points or above on the questionnaire, it can apply to be certified as a B Corp. The tool provides guidance to help organisations improve their score every year, and all B Corps must update their responses to the self-assessment to re-certify every three years.

SDG Action Manager

Last updated: 2020

Tool designed to help organisations measure and manage their impacts in relation to the Sustainable Development Goals.

Use this resource to:

  • Identify sustainability topics: Fill in the online questionnaire to understand the SDGs most relevant to manage, based on the organisation’s size, sector, and geography. The questionnaire draws from B Lab’s B Impact Assessment and the UN Global Compact’s 10 Principles. It was developed through research and public consultation and so provides an evidence-based starting point for identifying sustainability topics to measure.
  • Measure sustainability performance: Use the SDG Action Manager as a set of metrics. The questionnaire enables organisations to collect performance information on the SDGs that are most relevant to manage, based on the organisation’s size, sector and geography.
  • Assess impact: Fill in the questionnaire to track changes in performance over time. Each question is scored – some with reference to social or ecological thresholds – to help the organisation determine whether it is performing sustainably on that topic.
  • Benchmark: The self-assessment tool helps organisations compare performance with peers on each SDG or as a whole organisation.

UN Corporate Impact Analysis Tool

Last updated: 2021

Tool to help banks and investors understand the actual and potential impacts of their clients and investee companies, as part of their impact management strategies and processes.

Use this resource to:

  • Set and revise objectives: Financial institutions can use the tool to co-define relevant and meaningful objectives for their clients and/or investee companies. It provides an impact analysis and management workflow that starts from the identification of impact associations and needs, facilitates the collection and assessment of impact performance data, and accordingly enables an action plan and specific objectives to be set and monitored over time.
  • Identify sustainability topics: Use the tool to identify impact areas and topics (economic, environmental and social) associated with corporate clients and/or investee companies, based on an objective review (cartography) of the company’s sectoral and geographic breakdown. The tool contains collated research on the association between sectors (ISIC – International Standard Industrial classification) and 22 Impact Areas that cover all the SDGs, as well as a framework to enable a contextualisation of impact associations vis-à-vis the impact needs present in the company’s country(ies) of operation.
  • Measure sustainability performance: Use the Indicator Library embedded within the tool to review existing metrics for impact measurement. UNEP-FI has collated metrics from reporting standards and frameworks (GRI, SASB, CDP, TCFD), impact investor and development bank resources (IRIS+ and HIPSO), government taxonomies (EU Adaptation and Mitigation Taxonomies) and other sources to support indicator selection and interoperability between frameworks. This indicator library primarily supports use of the tool, but is also a useful standalone resource.

UN Portfolio Impact Analysis Tool for Banks

Last updated: 2021

Tool to help banks and investors holistically understand and manage the actual and potential impacts of their portfolios.

Use this resource to:

  • Set and revise objectives: Banks can use the tool to ensure they set themselves relevant and meaningful objectives. It provides an impact analysis and management workflow that starts from the identification of impact associations and needs, facilitates the collection and assessment of impact performance data, and accordingly enables specific targets to be set and monitored over time.
  • Identify sustainability topics: Use the tool to identify impact areas and topics (economic, environmental and social) associated with a portfolio, based on an objective review (cartography) of the its client, sectoral and geographic breakdown. The tool contains collated research on the association between sectors (ISIC – International Standard Industrial classification) and 22 Impact Areas that cover all the SDGs, as well as a framework to enable a contextualisation of impact associations vis a vis the impact needs present in the country/ies of operation of the bank and its clients.
  • Measure sustainability performance: Use the Indicator Library embedded within the tool to review existing metrics for impact measurement. UNEP FI has collated metrics from reporting standards and frameworks (GRI, SASB, CDP, TCFD), impact investor and development bank resources (IRIS+ and HIPSO), government taxonomies (EU Adaptation and Mitigation Taxonomies) and other sources to support indicator selection and interoperability between frameworks. This indicator library primarily supports use of the tool, but is also a useful standalone resource.

Definitions

Business activities

The resources and relationships that the organisation draws upon for its business activities.

Source: OECD Development Assistance Committee

Context

Refers to the circumstances that form the setting for an event, statement, or idea, and in terms of which it can be fully understood. Here the term specifically refers to the other information that an organisation needs to collect to fully understand what type of impact has occurred, in order to make a judgement about the nature of the performance. This contextual information is sometimes referred to as the multi-dimensional nature of impact. See Assess Impacts.

Source: Oxford English Dictionary

Impact risk

The risk to stakeholders that the desired impact is not occurring, or that unexpected negative impacts are occurring. This risk is distinct from financial risk, since it is risk of consequences for affected stakeholders, rather than risk to the financial value of an organisation. There are 9 types of impact risk currently identified.

Source: Impact Management Project (IMP)

Input

The resources and relationships that the organisation draws upon for its business activities.

Source: Adapted from Value Reporting Foundation (VRF)

Metrics

A standard of measurement. The words ‘metric’ and ‘indicator’ are typically used interchangeably. Metrics are used to measure the state of something at a point in time. Repeated measurement makes it possible to determine change over time.

Source: Adapted from Meriam Webster Online Dictionary

Outcome

The resulting level of well-being experienced by a group of people, or the condition of the natural environment.

Practitioners should be aware that some available standards and guidance (e.g. OECD, IFC, Capitals Coalition) define outcome as a change in-, rather than a level of-, well-being. Whilst collecting data about performance over time usually involves measuring the level (e.g. wage paid in prior period relative to wage paid in current period), it is not always the case that this data is disaggregated for decision-making (e.g. if management or the board of a company are only provided with a figure about the change, such as ‘percentage increase in wages paid’). Using information about the change alone prevents comparison of performance against a social or ecological threshold, and therefore determination of whether the level of performance is ‘sustainable’ or ‘unsustainable’.

Additionally, if an outcome is defined as a broad aspect of well-being (e.g. ‘health’) it may be too general to inform which metric should be used. To help with accurate measurement, a well-defined outcome is needed. See Glossary term Well-defined outcome.

Source: Impact Management Platform

Output

An organisation’s products and services, and any by-products and waste.

Source: Value Reporting Foundation (VRF)

Stakeholder

An entity or individual that can reasonably be expected to be significantly affected by the organisation’s activities, products and services, or whose actions can reasonably be expected to affect the ability of the organisation to successfully implement its strategies and achieve its objectives.

Source: Global Reporting Initiative (GRI); OECD Due Diligence Guidance for Responsible Business Conduct; OECD Well-being Framework; Value Reporting Foundation (VRF) Integrated Reporting Framework

Sustainable

Meeting the needs of the present without compromising the ability of future generations to meet their needs or overshooting Earth’s ecological limits (Brundtland Commission). In context of impact measurement, outcomes for people are sustainable if they are within the acceptable range determined by societal thresholds, and outcomes for the natural environment are sustainable if they are within the acceptable range determined by ecological thresholds (Science-Based Targets Initiative and Kate Raworth). Sustainability is the quality of being able to continue over a period of time (Cambridge English Dictionary).

Source: Brundtland Commission; Science-Based Targets Initiative; Kate Raworth; Cambridge English Dictionary

Well-being

The state of being or doing well in life; happy, healthy, or prosperous condition; moral or physical welfare. The OECD Well-being Framework states that the 11 dimensions of well-being are comprised of the outcomes that matter most to people.

Source: Oxford English Dictionary, Organisation for Economic Co-operation and Development (OECD)

Well-defined outcome

The specific aspect of well-being or condition of the natural environment that is most appropriate to measure. For example, a healthcare organisation might identify the outcome of ‘good health’ before identifying the specific health condition, which is the well-defined outcome. Organisations then select metrics to measure the outcome periodically, e.g. blood sugar level, self-reported mental health, body mass index. Social Value International promotes the practice of engaging with stakeholders to define the specific outcome that is of most value to them, to help with identifying the well-defined outcome.

Source: Social Value International (SVI)

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