Five Microeconomic Objectives

Some of the most innovative sustainability initiatives are being undertaken at the institutional level by businesses, schools, and NGOs. To measure effectiveness, a wide range of micro-level metrics are being deployed and used as benchmarks of organizational success. Table 2-3 provides a small sample of these.

Increasingly, sustainability metrics are being reported side by side with more-traditional financial indicators to satisfy investor and stakeholder demand for accountability with respect to important environmental, social, and economic impacts. Accountability itself is a proven force for change. As Andrew Savitz and Karl Weber note in The Triple Bottom Line, such metrics have become a "key driver" of progress toward sustainable business.24

Like macro indicators, institutional sustainability metrics can be grouped by objectives common to popular sustainability frameworks:

• certification of products, operations, and supply chains;

• workplace well-being; and

• community vitality.

Certification is a response to a pernicious effect of globalization: the disassociation between consumers and producers caused by supply chains that now span the globe. Consumers tend to know very little about the labor or environmental practices of corporations that produce goods they consume. This lack of accountability has contributed to a "race to the bottom" in which corporations choose locations that impose the least regulatory burden on their operations. Forced relocation of entire communities, sweatshops, contamination of water supplies, collapsing fisheries, and tropical deforestation are among the results.

The burgeoning new movement to independently certify goods as humanely and sus-tainably produced is a direct response to these practices. A key indicator is the degree to which institutions procure goods and services from certified sources. Some well-known companies are using certification to influence practices further down the supply chain. For example, Unilever's policy is to buy 100 percent of its fish from sustainable sources. To achieve this goal, the company helped design and now promotes Marine Stewardship Council certification by its suppliers. (See Chapter 5.)25

Other certification or sustainability rating systems evaluate a company's overall operations, not just the products or services they provide. The Global Reporting Initiative (GRI) has become the world's leading benchmark for measuring, monitoring, and reporting corporate sustainability efforts. Currently, the GRI includes 146 indicators drawn from economic, social, and environmental domains and 33 "aspects" within these domains, such as biodiversity, relations between labor and management, and investment and procurement practices.26

A conspicuous manifestation of unsustainable operations is a big waste stream in the form of air emissions, water pollutants, and refuse. Thus, a second key sustainability objec-

A New Bottom Line for Progress

Table 2-3. Sustainable Development Objectives and Microeconomic Indicators

Economic Objective

Sample Indicators and Desired Direction of Effect


Sustainability certification

Percent certified (+)

Percent of goods, services, and materials procured from certified sources

Sustainability reporting compliance (+)

Degree of consistency with Global Reporting Initiative (GRI) or similar standards

Pacific sustainability index score (+)

PSI score based on environmental, economic, and social criteria for relevant sector

Zero waste

Recycling rate (+)

Percent of waste stream recycled

Emissions (-)

Air and water emissions including greenhouse gases total and per unit output

Longevity (+)

Useful product life


Recycled content (+)

Percent of materials used as inputs that are recycled

Intensity (-)

Energy, water, and materials use per unit output

Facility rating (+)

Level of LEED certification for buildings and facilities

Workplace well-being

Job satisfaction (+) Turnover rate (-)

Average scores from employee satisfaction surveys

Percent of employees voluntarily or involuntarily leaving organization each year by category

Commuting (-)

Employee vehicle miles traveled

Community vitality

Local procurement (+)

Proportion of spending on goods and services provided by locally owned businesses

Local economic impact (+)

Direct, indirect, and induced economic impact of local expenditures

Community support (+)

Value of cash and in-kind goods and services donated for public benefit

Living wage ratio (+)

Ratio of wage rate paid to living wage for relevant employment categories

tive is "zero waste." Recycling rates and emis- should save money. For decades, 3M has sions of air and water pollutants, including greenhouse gases (GHGs), are common indicators linked to zero waste strategies. Once adopted, regularly published, and used to set targets, such indicators often drive substantial changes in business practices.

One of the longest running zero waste initiatives is 3M's Pollution Prevention Pays program, based on the notion that waste is a sign of inefficiency and that its elimination monitored all aspects of the waste stream and urged its employees to develop innovative waste reduction programs. The company now reports cumulative reduction of over 2.2 billion pounds of pollutants. Emissions of volatile organic compounds have dropped from over 70,000 tons per year in 1988 to less than 6,000 tons today. 3M estimates it has saved at least $1 billion by reusing the waste stream and avoiding expen

A New Bottom Line for Progress sive pollution mitigation measures.27

Carbon neutrality is another zero waste strategy, and offsets are one tool that companies are using to get there. (See Chapter 7.) For example, Green Mountain Coffee Roasters has monitored both its carbon emissions and the amount of offsets since 2003. In 2005, the company reported 9,823 tons of GHG emissions and an equal amount of offsets in the form of investments in wind and methane capture projects.28

Another important indicator related to zero waste is product longevity, often measured by useful product life. Products designed with longevity and upgradability in mind substantially reduce the flow of refuse to landfills. Additional longevity indicators listed in the Electronic Product Environmental Assessment Tool framework include availability of extended warranties, upgrad-ability with common tools, modular design, and availability of replacement parts.29

Eco-efficiency, a third microeconomic objective, is about reducing the amount of water, energy, chemicals, and raw materials used per unit output. Eco-efficiency is motivated not only by environmental concerns but by the prospects of significant financial savings in the form of reduced energy and water bills, less money spent on raw materials, and fewer regulatory hurtles. Swiss-based ST Microelectronics cut electricity use by 28 percent and water use by 45 percent in 2003 and reported saving $133 million. DuPont committed to a policy of keeping energy use flat no matter how much production increased, which reportedly saved over $2 billion in the past decade. The company Advanced Micro Devices tracks "kilowatt hours per manufacturing index" and reports a 60-percent reduction from 2.17 in 1999 to 0.86 in 2005. One way to monitor eco-efficiency for facilities as a whole is the Leadership in Energy and Environmen tal Design's Green Building Rating System, which is used to certify home, schools, or commercial buildings as silver, gold, or platinum based on green design features that conserve electricity, water, and waste throughout the entire life cycle—from construction to demolition.30

The World Health Organization identifies meaningful and satisfying work, open decisionmaking, worker health and safety, and just compensation as key aspects of sustainable workplace environments. Workplace satisfaction, turnover rates, and health and safety factors such as commuting distances are common indicators of workplace well-being— another sustainable development objective— and ones that are driving change. The work satisfaction of full-time staff at Finland's Turku Polytechnic has been monitored since 2000. In a Web-based questionnaire, respondents are asked to assess on a scale of one to five their satisfaction with work, features of the job, the working community, their supervisor's performance, recognition of their knowledge and skills, and the organization's operations. The aggregate employee satisfaction score rose steadily from 3.30 to 3.78 between 2000 and 2004. Problem areas uncovered by the surveys included collaboration and communication, which motivated the school to publish a weekly electronic newsletter for personnel.31

In 2004 and 2005, Mountain Equipment Co-op (MEC) in Canada undertook comprehensive employee engagement surveys with Hewitt Associates. They asked for responses to such statements as "our people practices create a positive work environment for me" and monitored the percent of employees in agreement. MEC's overall Hewitt engagement score was quite low—48 percent in 2004—and as a result the firm undertook a wide range of improvement measures such as a continuing education assis

A New Bottom Line for Progress tance, an upgraded maternity leave policy, extension of employee assistance programs, and increased accountability of senior staff. MEC's engagement score rose to 63 percent after the indicator was put in use.32

A final sustainability objective to consider is community vitality. Institutions committed to sustainable development universally recognize that they must contribute to the vitality of the communities in which they operate. While in-kind and cash donations are common, fundamental changes to business practices are increasingly important. One example is raising the share of goods and services procured from the local community rather than imported from afar. Local procurement can be a critical tool for regeneration of communities hard hit by globalization. For example, the London-based Overseas Development Institute is working with South African tourism companies and associations to promote local procurement as a way to fight poverty and other social ills plaguing rural villages.33

Paying living wages is another fundamental way for institutions to promote community vitality. Living wages take into account the cost of living at the local level and seek to provide a wage that fulfills the basic needs of workers and their families. Monitoring wages paid in relation to a living wage is a way to identify where adjustments need to be made. An exemplary example of this kind of monitoring is the international pharmaceutical corporation Novartis. The company works with local NGOs to identify a "basic needs basket" for a worker and family and to quantify the basket in local currencies. Using a methodology developed by Businesses for Social Responsibility, Novartis then calculates market-specific living wages and compares those with actual wages paid. By early 2006, the company had aligned the pay of all 93,000 employees with living wage levels.34

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  • arvi
    What are some results of the global economy in 2000?
    8 years ago

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