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The Sustainability Reporting KPI Question: Too Much or Not Enough?

Posted by Alex Chamberlain

Alex Chamberlain is a writer for ERA Environmental Management Solutions.

overwhelmed by sustainability KPIsIn the past few weeks, we've been paying some close attention to sustainability and compliance reporting: what type of information goes into a report? What's the best way to manage reporting activities? And who should reports be targeted to?

That's why we're sharing an article from Environmental Leader that offers a different take on what makes - or breaks - a sustainability report. It's titled "Reporting Could Suffer From Too Many Indicators", and you can read it online here.

In short, the article argues that a study done on the reporting done by 94 Canadian companies points to the conclusion that there may be too many different sustainability key performance indicators (KPIs) being used (585 were found in this study alone). This surge of KPIs may be related to why sustainability continues to be a somewhat undefined and definitely unstandardized concept.

"The incredible diversity in the indicators disclosed may have been caused by a number of factors including differing interpretations of sustainability; a relative lack of mandatory standards for reporting; the fact that different sectors have different reporting priorities; and local circumstances, the study said."

What the data definitely shows is that sustainability reporting is still in development, and will likely develop in drastically different ways for each type of industry.

In last Friday's post, we talked about the emergence of Enterprise Sustainability Management (ESM), and the ways it's starting to address not only how sustainability differs from industry to industry, but from department to department within a single business.

It's no wonder that hundreds of different sustinability KPIs are being used!

Asking the Big Questions

The real question that the article leaves us asking is whether or not this explosion of sustainability data is a good thing or a bad thing for industrial sustainability. Would it be better to select the top 100 KPIs and tell every industry to start using those? Or does the "big is better" philosophy apply to sustainability reporting?

The article does point out one potential solution to this question:

"A number of voluntary guidelines for corporate sustainability reporting have emerged. The most prominent of these are the guidelines produced by the Global Reporting Initiative."

The rapid growth of voluntary sustainability reporting standards like GRI or GADSL (for the automotive industry) is definitely a good thing and could be one effective pathway leading towards more useful sustainability reporting.

But the article is also quick to point out that a great number of those using the GRI KPIs are still not 100% standardized:

"And of the companies reporting on GRI indicators, only one reported on all 79 of the performance indicators suggested by the GRI; 10 reported between 50 and 78 indicators; seven reported between 30 and 49; and 13 reported between 10 and 29 indicators."

Is Standardization Worth It?

Here's the big question: is it the right time to be worried about standardizing sustainability reporting? If the end goal is to make business more sustainable, will creating a universal framework for sustainability reporting make it easier for small businesses to join in, or will it create a bigger barrier to entry?

Our goal here at ERA is to empower any type of business to be able to track and report their sustainability goals - and to choose for themselves what sustainability means for them. We want businesses to measure the sustainability KPIs that matter to them and their consumers. But we're also working with some of our partners to create shared benchmarking practices across industries so that side by side comparisons are possible and more effective.

Clearly there' no simple answer, but one of the guiding philosophies we believe is that information and environmental data is empowering. There may be a need for a standardized methodology for measuring sustainability, but there will also always be a place for businesses to track and account for the hundreds of other KPIs that they want to for their own internal goals. 

We think that businesses can have it all: a standardized global system and a fully customizable sustainability program. 

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Alex Chamberlain ERA

About the Author: Alex Chamberlain is a writer and blogger who regularly contributes to ERA Environmental Management Solutions' blog. You can find Alex on Google+LinkedIn & ERA's Environmental Compliance Blog

Topics: Sustainability, Environmental Compliance & Data Management