Do you know how to measure how sustainable your business is?

‘What gets measured gets managed.’ These words often attributed to Peter Drucker (1909-2005), have more recently and to great regret seem to have spawned their own anti-correlate ‘You can’t manage anything you can’t measure‘. This management aphorism, in either of its flavours, dominates the landscape of the fields of economics, management and the environmental aspects of business.

It reveals a problem that has lain at the heart of thinking about business ever since the Industrial Revolution. The problem is this: What really matters in business are the things which are most difficult to measure, and as difficult tasks, they often get relegated to the categories of ‘impossible’ or ‘irrelevant’.

The accountancy profession has a name for this. Externalities. These are the costs of doing business that are not borne as costs by the business itself.

So, to take a simple manufacturing business example: the costs of raw materials; their transport to the factory; the capital costs of machines; the power to run them; the wages of their operators; the packaging of finished goods, and their delivery to retailers or customers – these are all factors that appear in the books of account. Debits on the left, credits on the right, as we were all drilled on our first day.

But where, in the ledgers, do the costs of the decades long damage to amphibians in the stream that runs alongside the plant’s outlet pipes, go? It is clearly a debit, but unless the business suffers a loss in litigation the costs will never be entered anywhere. They are everyone’s loss, and no-ones.

Similarly, the costs of the damaging effect of the tons of carbon emitted annually by the factories belching smokestacks. The cost can be quite readily measured nowadays, and the impact, on a global scale, is notorious. But for the time being any costs to the company are invisible and subject to further intergovernmental agreement.

As a third example the costs of the diminution of life expectancy of the workers in the factory, even if not directly attributable to an industrial disease for which quantifiable compensation may be awarded often go uncounted as a cost borne by society, not by the shareholders of the enterprise.

Ensuring an holistic approach to sustainability

There’s a growing recognition that if we want a sustainable, just, and inclusive world, we must invest and do business differently. Once seen as a radical idea – the notion of giving equal importance to social, environmental and economic value is now core.

Issues like climate change, fragility of supply chains and inequality continue to advance around the world and consumers, shareholders and stakeholders are starting to demand evidence of change and positive impact.

Insightful business leaders are now looking to reimagine their corporate strategy and create fresh business models for sustainability. These changes reach across products, services, operations and systems, bringing with them opportunities to gain from sustainable competitive advantage.

The concept of sustainability is holistic and broad, it is extremely important that no one element is promoted under the name ‘sustainability’, if this keeps happening, the impact everyone desires will be undermined.

This is where a new sustainability assessment tool, christened BEAR – Business Ethics Assessment Resources, launched this month in Jersey, but with global ambitions, can help.

The tool helps businesses to holistically measure, plan, assess and continuously improve their positive impact on sustainability.  It takes a holistic approach, where a business must consider their impact relating to the areas of Community, Governance, Environment, Workforce and Value Chain.

It can be a daunting process to bring sustainability aspects into business models, so this tool has been designed to take businesses on a gradual journey through 3 levels of achievement, ensuring simple, bite sized chunks with practical business objectives.

Each area has a question bank which assesses against BEAR’s standards based on core areas of sustainability. There are a set of resources to help if questions or terms seem tricky.

Question scores are weighted and aggregated using BEAR’s algorithm.  Once the business has completed a level, results will be presented in a set of insightful data visuals, that can be  interpreted to identify risks and opportunities, and create future plans.  The questions and answers are designed to help develop a roadmap of measurable improvements.

An important early customer was the Jersey Good Business Charter. This is a charitable movement for better business in the areas of people, environment, community, customers and suppliers.  Founded in 2018, the movement aimed to add fuel to the early, faltering, steps towards environmental, social and corporate governance (ESG) among Jersey businesses, both within the dominant finance sector and in the Islands indigenous real economy.

ValueMetrix, a Jersey-based sustainability and corporate ethics global consultancy, will be using this tool as part of their product offering to support business measure their sustainability.  It can be used as a stand alone assessment or as part of further offerings to support businesses with sustainability advice and project delivery.

As a Jersey-based start-up, the tool has been launched as a ‘minimum viable’ product with the online version for level 1 only. This is to ensure we get it right for businesses. We have plenty of plans in the pipeline to build the online version of level 2 and 3 out, as quickly as possible and enhance the product offering.

Written by Hilary Jeune and Simon Nash, Directors, ValueMetrix