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Companies learn to measure the unmeasurable

Companies and verification bodies are learning on the fly how to measure impact and quantify the qualitative indicators of a healthy planet.

Farm and measuring tape

How do companies measure the good or bad they are causing to the planet? Image by Sophia Davirro/GreenBiz

The following is an excerpt from GreenBiz Group's 16th annual State of Green Business, which explores sustainable business trends to watch in 2023. Download the report here.

The past few decades of corporate sustainability have been characterized by countless pledges and commitments targeting the end of this decade. But as those 2030 deadlines get closer, the talk has moved to action and impact — and even more so, measuring that impact.

Quantitative goals have applied to carbon emissions for a long time, such as net-zero emissions and 1.5 Celsius degrees of warming. However, the many other factors that contribute to the climate crisis as well as the embedded social impacts lack such straightforward numbers. So how does the adage of "what gets measured gets managed" apply to factors where the assessment is more subjective? That is the question companies and organizations are starting to unpack.

Understanding companies’ impacts and improvements will require innovative and more nuanced methodologies. Tracking biodiversity and nature conservation initiatives, for example, requires transforming qualitative assessments into quantitative metrics. That’s no small feat. All nature is local, making it difficult to create a global metric.

Some work is already being done to help companies measure and track such abstract attributes. The UN Convention on Biological Diversity met in December to create the equivalent of a 1.5-Celsius-degree pathway for nature. But unlike, say, greenhouse gas emissions, the target is not yet a number but this aspiration: "By 2050, biodiversity is valued, conserved, restored and wisely used, maintaining ecosystem services, sustaining a healthy planet and delivering benefits essential for all people."

A number of groups are working to change this imprecision. The Kunming-Montreal Global Biodiversity Framework includes some targets, such as bringing the loss of areas of high biodiversity importance close to zero by 2030, as well as conserving or restoring 30 percent of land by 2030, but even these leave plenty of room for interpretation.

The Capitals Coalition’s Social and Human Capital Protocol uses factors such as living wage, health and safety reports, number of job trainings, access to unions and other countable instances.

Meanwhile, the Science Based Targets Network is planning on publishing guidance in early 2023 for setting targets for land and water conservation. The quantitative metrics companies will be asked to use and report on are built off five main drivers of nature loss: land-use change; climate change; pollution; natural resource use and exploitation; and invasive species.

The idea is to take a qualitative statement such as "stopping land conversion" and turn it into actionable numbers, such as acres of natural habitat or species of birds on a given property.

And some first movers have already started down this path. In 2020, French luxury brand company Kering committed to becoming nature positive by 2025 and launched a regenerative agriculture program for 2.47 million acres of land. But of course, nature positive remains a buzzword that needs an exact definition. The Coca-Cola Co. has invested in protecting watersheds including providing funding for technical expert training in Guatemala to help local communities and farmers protect against deforestation. But these one-off projects need to become embedded into everyday business. IKEA’s 2030 Forest Positive Agenda commits to sourcing timber from deforestation-free suppliers.

As for the social side, after the increased focus on diversity and inclusion in 2020 and, more recently, the growing emphasis on the social aspects of ESG, measuring the impacts of companies on people and communities will be the next frontier. The Capitals Coalition’s Social and Human Capital Protocol uses factors such as living wage, health and safety reports, number of job trainings, access to unions and other countable instances. This year, the coalition plans to release an integrated protocol that links its nature and human capital protocols, which could be a major step forward.

These initiatives should help companies measure the unmeasurable and, along the way, provide more tangible appraisals that they and their stakeholders can use to assess progress.

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