A new corporate performance measurement framework can encourage sustainable success, for business and for society

Posted by Peter Bakker, President, World Business Council for Sustainable Development (WBCSD)

This article is one in a series of opinion pieces written by prominent authors on issues covered in the OECD Development Co-operation Report 2016: The Sustainable Development Goals as Business Opportunities. The report will be available on 18 July.

Sustainability is the defining issue of this generation. Climate change, natural resource depletion and widespread inequality – all against the backdrop of a rapidly growing population – are arguably some of the most daunting challenges humanity has yet to overcome. Responsible businesses understand the risks that these challenges pose, but they see the opportunities as well. That’s why businesses everywhere are integrating sustainability into their core business strategies.

They know that responsible business goes beyond altruism: it’s also about spotting trends, being among the first to move and adapt to an ever-changing future. It’s about redefining the way businesses value nature and society so that they can understand the true costs, profits and values of their enterprises. It’s about cultivating a new development framework that encourages sustainable success, for business and for society.

The 2030 Agenda calls for a new corporate sustainability philosophy, one built on the SDGs and the Paris Agreement1 resulting from COP21. A strong, sustainable development framework will be crucial for a healthy global economy because businesses cannot succeed in societies that fail. The sooner companies integrate principles from the SDGs and COP21, the sooner they will reap the tangible benefits.

Responsible businesses recognise this critical period as a chance to get ahead. They’ve started by building a business case for transitioning to a low-carbon economy, demonstrating that this is one of the biggest opportunities for the foreseeable future. Through the Low Carbon Technology Partnerships Initiative,2 companies are working together to develop innovative and scalable solutions for addressing global issues – like supplying clean energy to developing areas and building infrastructure for climate-smart agriculture – all while maintaining a focus on economic objectives that spur continuous, independent and sustainable development.

In order to do this properly, we need accurate metrics and feedback on how we’re doing and where we can improve – financially, socially and environmentally. Current forms of reporting and measurement are failing, largely because they exclude crucial social and environmental measures from the balance sheet. Without this information, we are unable to fully unlock the solutions that will bring sustainability to scale. In order to address this need, forward-thinking businesses are using an integrated reporting framework supported by non-financial frameworks such as the Global Reporting Initiative,3 the Sustainability Accounting Standards Board,4 and the Natural and Social Capital Protocols.5

Cutting-edge measurement, reporting and valuation standards like these will eventually enable us to accurately evaluate our businesses, opening new avenues for success by incentivising integrated sustainability solutions and rewarding companies that adopt responsible business models early. Tools like these can enable the move beyond low-carbon technology and savings in energy costs to create an economy that’s based entirely on social and environmental sustainability.

Responsible business is the key to a sustainable world. Businesses must continue uncovering opportunities around all aspects of sustainable development, placing the emphasis on creating a responsible relationship with the world and fostering equitable progress for humankind as a whole. It’s time for all actors to seize the opportunities to address global socio-environmental challenges. Our future depends on it.

1. See: https://unfccc.int/resource/docs/2015/cop21/eng/l09r01.pdf.

2. See: http://lctpi.wbcsdservers.org.

3. See: www.globalreporting.org/Pages/default.aspx.

4. See: www.sasb.org.

5. See: www.naturalcapitalcoalition.org/natural-capital-protocol.html and www.wbcsd.org/SocialCapital.aspx.