This is another "burr report" - that is, discussion of something that's stuck in my head but hasn't yet blossomed into a plan. The planter was the book "Mismeasuring our Lives: Why GDP Doesn't Add Up". It is the non-technical portion of a report by an international commission to better align metrics of well-being to actual quality of life, with a forward by Nicolas Sarkozy and a quite thorough summary by Jospeh Stiglitz, Amartya Sen, and Jen-Paul Fitoussi.
There is an amazing amount of thought-provoking content in this slim volume, along with some beautifully concise articulations of what we've all been thinking ("One of the reasons that most people may perceive themselves as being worse off even though average GDP is increasing is because they are indeed worse off." Or "We have wound up mistaking our representations of wealth for the wealth itself.") But - back to the relevance to my job…
What the book has me thinking about is how a corporation can truly measure sustainability. I'm not talking about the indicators we use to measure the performance of sustainability initiatives (pounds of material diverted from landfill, metric tons of carbon emissions, number of employees trained, etc.), but rather identifying forward-looking indicators of how the company is positioned to make advances in in environmental, social and economic prosperity going forward.
Though they are writing about nations, Stiglitz et. al. assert that "what we need are indicators that inform us about the change in the quantities of the different factors that matter for future well-being." They equate what is needed to corporate balance sheets that provide insight into a company's financial assets and liabilities. Is there an equivalent for environmental and social performance? What indicators might provide an early warning of non-sustainability of current performance (which, as the authors point out, would have been nice to have during the subprime mortgage bubble)?
I can think of one way we sort of do that by looking at intensity measures. Yes, the push is for absolute targets, and for good reason - the world needs absolute GHG reductions, for example. But we shouldn’t be too quick to dismiss intensity metrics because they tell us about the likelihood that the reductions will persist. I liken it to weight loss - if you meet your goal because you were locked up against your will without food, you can't really claim you've achieved the objective even though the target is met. Fortunately, there's no real need to distill all performance down to a single metric (which I was pleased to see is a contention supported by this book). Perhaps instead we can think of the absolute reduction is an "income statement" measure that looks back on our performance; the intensity a "balance sheet" measure that heralds future performance.
So where to take this? Well, I think one thing to do is to comb through our metrics and those of other companies to see which really belong on the income statement and which on the balance sheet. Then we can look at the gaps, and explore whether there are metrics that can at least be indirect measures of ability to perform over the long term. Mostly, though, I think a little time out to "noodle" it and to brainstorm with others is in order. I've started this discussion with some folks in academia, and if you're interested in joining the conversation, do let me know!
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