Thursday, 18 September 2014

Maturity Blog 3: The Climate Miles Sustainability Maturity Model

Here at Climate Miles we are continually building innovations to help businesses realize their sustainability goals. In our last sustainability maturity post, we discussed the need for a new maturity model – a model that provides a more objective perspective of how developed a company’s sustainability practice is, and a benchmark to compare performance against other companies in the industry. In this blog, we’ll discuss how we built our new sustainability maturity framework to do this and how it differs from existing models. 

How was our model designed?

First we looked at existing sustainability maturity models, which paint a broad picture of the levels of sustainability maturity. We translated these more subjective maturity levels into a clear set of objective indicators, based on metrics from the Global Reporting Initiative G4 Guidelines, as well as the FTSE4Good ESG Ratings (Environmental, Social, Governance). We included indicators which a company is likely to report or not depending on their sustainability maturity level, such as quantitative data and long-term goals, which are indicators of high maturity.

We mapped each of these indicators to a list of the most relevant and consistently reported environmental metrics for each industry, from water use to product design. For each environmental metric, we can check off the maturity indicators a company has reported on, creating a matrix from which the final maturity score is calculated.

What it Measures

The framework essentially measures how comprehensive an individual company’s sustainability initiative and reporting practice is. We look at the company’s sustainability reports, policies, interventions, goals and progress which are available on the public domain and enter this data into our simple framework to calculate a rating. The framework does NOT capture specific sustainability performance, such as the amount of carbon emission reductions, waste output numbers, or how successful an intervention was. It only looks at the thoroughness of the reporting and policy: whether all important sustainability factors are covered, if meaningful quantitative data is presented, and if goals and progress are established, tracked and reported.

The result is reported in an elegant quadrant that represents a sector. The companies are mapped according to their sustainability performance rating, as well as the time period over which their sustainability-related information is made available on the public domain.

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Climate Miles Industry Maturity Rating Analysis

Key Differences from Other Models

Most other models describe the different maturity levels somewhat subjectively, and rely on internal knowledge of a company to make an assessment. Therefore they are useful primarily for broad, internal analysis of a company. The primary advantage our model has is that it is based on clear yes/no type indicators, to allow for an objective, unbiased maturity rating of a company. We also base our model on information that is commonly reported in the public domain.

Benefits of Our Model

Using our model we are able to make a sustainability maturity assessment of practically any company in an industry, map the sectorial sustainability practices and trends, and identify the sustainability leaders and stragglers. Companies can use this information to benchmark themselves against competitors, or to understand trends in their clients’ industries in order to align their sustainability agenda with their clients’ goals.

The Limitation of our Model

While we did our best to ensure that our maturity model ratings are consistently accurate, they may not be perfectly representative of what a company is actually doing. Since we base our ratings only on public information, if a company does not report its practices accurately, their maturity rating will also be skewed.

Despite this limitation, we have found that the model provides good representation of overall trends, and is becoming increasingly accurate as companies adopt good reporting standards and communicate clearly and completely on their sustainability practices. It can also be used to measure the robustness of a company’s sustainability parameters and how consistently and how long a company has been reporting on sustainability.

How we are Using It

So far we’ve used the model to assess sustainability maturity of the major companies in 5 different industries (IT, textiles, fashion, hotels and aviation) and we are rapidly adding more to the list.

We have also integrated the framework into our U-Sustain sustainability management software, so that our clients using the software will automatically get an updated ranking as they enter data and generate reports and see how they compare to their peers and other players in the industry.

Get in touch with us if you’d like to know more about the Maturity Framework. We’ll be happy to conduct a free assessment and help you understand how to improve your company’s score and sustainability practices.

Wednesday, 10 September 2014

Maturity Model Blog 2: The Need for a More Objective Sustainability Maturity Rating

green rulers

Re-Cap of the Maturity Model

In the first blog of this series, we introduced an array of different sustainability maturity models, all of which served the same purpose: providing a vision for integrating sustainability within a business. Using the models, internal stakeholders can loosely determine their company’s maturity level and get a clear idea of what else they can do to improve their sustainability practice.

The models we looked at are great at providing vision, but they are generally based on subjective, internal information. They offer no means by which to make an external assessment of other companies, so it is not possible to accurately benchmark one company’s performance against the industry average. The models can really only be used for internal benchmarking, and for very rough estimations of other companies’ maturity levels.

The Need for a New Maturity Model

In our work, especially with small and medium-sized companies with nascent sustainability practices, we realized that in addition to an internally-oriented maturity assessment, there is a compelling reason for these companies to access an easy-to-understand comparative maturity rating of other companies within their business environment. To accomplish this, they need a maturity model that can be used to make unbiased assessments of other companies.

Being able to compare with competitors and establish benchmarks is fundamental in motivating managers to adopt more sustainable business practices, and helps define their vision of sustainability success. We have found that small and medium-sized companies often do not have a good sense of the state of sustainability practice in their sector – either what their competitors are doing, or what the sustainability agenda of their current and potential clients are. This lack of perspective impedes their ability to take appropriate decision related to sustainability initiatives. 

The Challenge of Creating the New Model

We have been working on the development of a Sustainability Maturity Model that learns from the existing models and overcomes some of their limitations. The goal is to create a more objective, unbiased way to assess a company’s maturity level that is easy for a non-specialist to.

One difficulty in creating such a model is balancing access to the necessary and accurate information with the ability to scale up the model so we can assess more companies and sectors.

There is no debating the fact that the most accurate information about a company’s environmental sustainability efforts – its intent, successes and failures – are recorded with the company’s internal functionaries, and can be accessed only through direct contact with them. A detailed study, even for one company, would probably take considerable time and effort. Even so, it is possible that some of this information might be confidential and cannot be disclosed to an external agency. While a model that is based on such detailed, well-researched information is ideal, it is unlikely that in the near future a concerted effort can be launched to map the sustainability efforts of a significant number of companies on a pre-decided set of parameters. As such, we needed a model based on data that is available in the public domain. Such data is reported by the companies through their websites or sustainability reports. The drawback of this approach is that we cannot be absolutely sure that the data is not exaggerated or under-reported.

Our other challenge in developing the model was balancing thoroughness with ease of use. There are many caveats of sustainability practice which are indicators of a company’s sustainability maturity level, but including them all would make maturity assessment a painstakingly laborious process. Additionally, not all of the indicators would be consistently reported in the public domain.

Introducing the Climate Miles Maturity Framework

After much deliberation, we settled on a solution which met our needs without sacrificing accuracy or ease of use. We have used a simple, objective framework that draws from the most indicative parameters derived from the most popular sustainability reporting standards. Our next blog in this series will give you a sneak peak of how our model works, and the advantages it provides in guiding a company’s sustainability journey.