Sustainability: It matters, but how to measure it?

Singapore is widely regarded as one of the world’s most forward thinking countries, modeling its development around the concept of the garden city. But despite this green image, Singapore ranks well down in its approach to sustainability.

The city-state sits at a lowly 52 on Yale’s Environmental Performance Index – far below regional neighbours such as Malaysia at 25 and Brunei at 26.

Or take the World Wildlife Fund’s measurement of countries’ ecological footprints – indexing factors like demand pressure on the world’s resources such as crops, forests, grazing, fishing and buildings as well as carbon emissions.

On this index Singapore does poorly too. Its footprint is six hectares per capita, or 500 times the country’s land mass.

Such statistics come as no surprise Graham Owens, the Singapore-based director of climate change and sustainability services at consultancy KPMG.

In 2010 the firm conducted a study of approaches taken by 3,500 companies around the world. Singapore came bottom of the list, Owens says, with only seven per cent of the top 100 companies producing any sort of sustainability report.

Owens was speaking at a forum on approaches to measuring sustainability jointly organised by the Chartered Institute of Management Accountants (CIMA) and NUS Business School’s Centre for Governance, Institutions and Organisations.

While the need to be sustainable is firmly on the corporate agenda worldwide, a fundamental issue, says NUS Professor Kenneth Richards, is the lack of agreement on how to measure sustainability or even how to define it.

Three Es

Richards’ research in the field has unearthed dozens of very different definitions. “The earliest focused on the environment,” he notes, “while the later definitions started to incorporate more social dimensions and eventually evolved to the three Es: environment, social equity and economics.”

The UN-backed Brundtland Commission, which first brought global attention to the issue when it was set up two decades ago, has defined sustainability as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

forumBut since then many other definitions and approaches to assessing it have emerged. Likewise, says Richards, there has been a proliferation of sustainability indexes but no standard methodology, muddying the waters yet further.

Against this background the NUS/CIMA forum came together to look at ways of bringing clarity to the issue of sustainability. One suggestion has been that an index measuring the performance of Singaporean firms might help push corporate action towards more sustainable practices.

However James Bruce, Chief Financial Officer for Unilever South-East Asia and Australia and a panelist at the forum suggested that there may be other useful steps first.

“It would be great if indices remain in the form of carrots and not sticks for the time being,” he said. “We have to create a positive agenda around sustainability, rather than not reacting quickly so that governments feel obliged to put in a limiting framework.”

But there even getting to this stage there will be many hurdles, not least of which is buy-in from skeptical companies.

“My fear is the world at large, and by which I mean governments, companies, consumers, customers, is not yet fully on board with the urgency of the sustainability mission,” Bruce told the forum.  “I wonder if we serve ourselves better by concentrating on thought leadership.”

Often businesses view investments in sustainability as simply a cost or something that will hurt the bottom line.

Central role

Bruce outlined how Unilever had taken a different approach – both making sustainability a central part of its business agenda while also actually growing group profits.

One example: Unilever – a major player in the detergents and cleaning products business – teaming with the World Toilet Organisation to improve sanitation in developing countries.

The result: healthier communities, cleaner environments and improving economies, both good for sustainability and good for business.

“If we are able through our creativity, rather than the stick of legislation that will come, to say how can we drive a sustainable agenda, we grow our bottom line; then you’ve got a natural eco-system working – the old profit motive – and everyone is happy,” said Bruce.

NUS Professor Kenneth Richards also believes business leaders can be persuaded to take sustainability seriously without the need for regulatory intervention.

“I think that government involvement might be desirable but it’s more in the form of providing information, raising awareness, helping firms spot those opportunities for cost savings,” he told the forum.

“Ultimately as firms become more and more invested and a subset of firms invest heavily in sustainability, it may be the role of government to level the playing field by regulating the entire range of firms so they are not disadvantaging the firms that are thinking long term about sustainability,” Richards said.

Pressure to act

But with awareness growing, the pressure on companies to take action is growing too – pressure that in many cases is coming from new employees entering the workforce.

Thomas Thomas, executive director of the Singapore Compact for Corporate Social Responsibility and another panelist at the forum, has been advocating for sustainability for much of his career and encourages students to ask potential employers during job interviews about social responsibility policies.

He told the forum he’d seen encouraging signs as companies respond to this pressure, realising that without change young talent would go elsewhere.

Likewise Unilever’s James Bruce said he had been “utterly amazed” from attending university recruitment events at the level of dialogue and understanding on the subject of sustainability.

With companies in a war for talent, he said, those that were able to engage with the conversation would be in a better position to attract the best talent.

But he added it was important for companies not to underestimate how long it takes to build momentum.

His advice: Find what the right time horizon is for your company and then look at the opportunities for sustainability within that.

“The future will not allow you to grow and be profitable unless you have sustainable practices in your business,” he said.

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