By Ory Zik, Founder and CEO, Energy Points
From the time we can walk and talk, most of us are familiar with the concept of measurement. Pencil lines on the wall are measured up from the floor in inches to prove we’re getting taller, words we spell right on our weekly quizzes are counted to determine how many points we get out of the possible total, and we learn that the 25₵-per cup earned from our sunny-day lemonade stand can be added up to buy plenty of candy and gum for our slumber party, displayed as evidence of our entrepreneurial success.
In today’s business culture, measuring environmental sustainability is seemingly not too different from these examples. We institute energy, water, and waste reduction measures, and report those reductions to shareholders and the public.
But taking a closer look at the lemonade stand example proves that simple math doesn’t always apply. Subtracting $10 or so for ingredients from our daily profits does not equal dollars earned. Why?
Well, assuming we aren’t requiring customers to bring their own drinking containers, we also buy cups, and maybe, if we’re enterprising, the poster board and markers to make signs announcing our business. And let’s not forget the gasoline our parents burned driving us to the grocery and craft stores, the depreciation on the vehicle itself from miles traveled, or the natural gas burned to boil the water that also had to be pumped in and paid for on the family’s water bill. Now, as a family, the aforementioned costs and impacts are likely negligible. But when we expand the analogy to a company or industry, the costs—and the environmental resource consumption—skyrocket.
Around June’s Rio+20 conference, organizations banded together under the Natural Capital Leadership Compact, NASDAQ joined stock exchanges in Sao Paulo, Johannesburg, Istanbul and Cairo to issue a statement urging listed companies to disclose information about their environmental, social and governance risks. The London Stock Exchange made global headlines with its announcement that listed companies will soon be required to report their CO2 reductions.
With all of these headlines, it’s clear that high-profile resource consumption accountability is here for the long haul. But what are we really measuring, and how are we defining it? With the hundreds of daily articles and conversations around the topic, it’s all too easy to get lost in the “sustainability” jargon, when what we’re really talking about is environmental resource consumption— ensuring we’re not consuming more resources than the earth can produce.
Jargon in mind; let’s look at the aforementioned announcements and indices:
- Natural Leadership Compact: Well-intended to be sure, but the Compact, through which businesses pledge to demonstrate their commitment to “real delivery on the ground to sustain natural capital,” lacks a common, cross-environmental-domain resource consumption goal that companies can strive toward.
- NASDAQ OMX CRD Global Sustainability Index: Intended to facilitate “materiality” in sustainability reporting, NASDAQ and the other exchanges are urging companies to measure and report on (among other things) environmental issues like greenhouse gas (GHG) emissions and water usage. Unfortunately, without one, common metric to do an apples-to-apples comparison across environmental resource domains, that materiality may have to wait.
- London Stock Exchange Carbon Reporting: Like many initiatives out there, the LSE plans to base its determinations of how companies are doing on their reported GHG emissions. But while announcing massive CO2 abatement may make a bold statement (much like the kids’ earnings at the slumber party), those reductions are meaningless without additional context. That’s because CO2 measurement is domain specific, rather than a broad measure of overall environmental sustainability. It is comparable to looking at the cost of sugar in dollars, the cost of lemons in Euro and the cost of everything else in Yen.
Added to that, let’s face it, if you ask the average person to tell you how the impact of abating those reported tons of CO2 compares, on a global scale, with reducing water use by the same number of gallons or increasing energy efficiency by the same number of kilowatt hours, and you may just need a CPA to calculate the cost of your lemonade.
Companies and the consumers who depend on them need strong mathematics and science to consistently and accurately evaluate and compare environmental consumption across all resources—allowing visibility into where and what the real of impacts their sustainability projects are. As suggested in Rio’s natural capital declaration, it’s far past time for the global community to cut through the adjectives, looking beyond simple lemons and sugar to all influencing factors and the real, bottom-line consumption numbers. To collectively create “the future we want,” we need to be able to apply a single, universal metric that accounts for variables like regionality and resource scarcity. It’s time to make resource consumption reporting about the math and measurements.
[Image Credit: Abhijit Tembhekar, Wikimedia ]
In 2010, Dr. Ory Zik founded Energy Points to enable corporations capture the value of sustainability in a practical way.
Prior to founding Energy Points, he was the founding CEO of solar thermal augmentation company, HelioFocus Inc., which develops solutions for conventional power plants. Dr. Zik led HelioFocus from 2007 to 2010 and currently serves on its board. The company is now growing in Israel and China with strategic partners such as Israel Corp and the Sanhua Group. Dr. Zik holds a B.Sc. (cum laude) in Physics and Mathematics from Tel Aviv University; M.Sc. (cum laude) and Ph.D. in Physics from the Weizmann Institute of Science. He is a recipient of the National Amos De Shalit Physics prize. In 1993, he was the curator of Israel’s National Museum of Science. Dr. Zik holds worldwide patents for his inventions.