According to Peter Drucker’s now iconic maxim, “What gets measured gets managed.”
Every successful initiative requires high-quality metrics that can be clearly defined and whose changes are genuinely linked to what we want to measure.
In addition to their informational role, metrics serve another extremely important purpose. A well-chosen metric not only tells us to what extent we have achieved our objectives — it also influences the way we perceive the part of reality connected with our activities. For example, GDP (Gross Domestic Product) has become such a key indicator in our society that it is almost impossible to talk about a country without mentioning its GDP.
This indicator describes the total value of final goods and services produced within a country over a specified period of time, usually one year.
GDP per capita is often used as an indirect measure of societal well-being, but this approach has obvious limitations.
If a country is hit by an earthquake, the money spent on reconstruction may cause GDP to increase “on paper”, yet people and families affected by the disaster would hardly consider themselves better off.
Moreover, GDP does not account for factors such as the length of the working week, environmental pollution, the share of the population suffering from mental health problems, income inequality, access to education, women’s rights, access to clean water, and many others.
The development of alternative measures of human well-being proved to be a crucial step.
These measures increased the visibility of aspects of the economy that had previously been overlooked as difficult to quantify, despite being highly important to the people living within it.
They also became a powerful tool for those advocating positive change in society and the environment.
The existence of clearly defined and widely recognised alternative measures of well-being gave greater weight to arguments in favour of greener solutions.
In addition, these measures enabled both private and institutional investors to make more informed decisions about which companies should receive their capital.
The awareness that society expects the companies it supports to act
responsibly,
promote equality,
and develop sustainably creates a powerful incentive for action - one that no company can ignore in the long term.
where
companies choose to allocate their capital.
These measures therefore influence not only reporting,
but also real business decisions.
They help investors assess environmental and social performance.
They also make sustainability easier to compare across companies.
As a result,
businesses have a stronger incentive to improve their impact.
Clear ESG metrics
give greater visibility to environmental and social issues.
They allow investors to make more informed decisions,
while encouraging companies to act responsibly,
promote equality,
and develop in a more sustainable way.
A company’s future may depend on whether it takes
the right steps toward sustainable development.
So what are some examples of ESG metrics?
Environmental – environmental metrics
Water consumption
Energy consumption
Greenhouse gas emissions
Social – social metrics
Length of the working week
Size of the gender pay gap
Diversity in the workplace
Governance – governance metrics
Representation on the management board
Executive compensation
Anti-corruption policy
These examples are only the starting point
when it comes to the metrics a company can implement in order to improve its impact on society and the natural environment.
What is more, companies with stronger ESG performance tend to perform better overall.
Want to learn more about ESG and sustainable development? Join us at the Warsaw ESG Summit!
Summit!
Click the link: https://sknkonsultingu.pl/events/konferencja-warsaw-esg-summit-2024/
