The Green Tie – The Official Blog of NAEM

Let’s talk about metrics

March 14, 2011 at 11:29 am 1 comment

After an exciting week in San Antonio talking about environmental, health and safety (EHS) management information systems (MIS), I’ve been thinking a lot about what an impressive feat data collection and management really is.  All I can say is ‘Bravo.’

Perhaps nothing drives home the enormity of this task more than hearing EHS managers describe the process for mapping work flows or hearing Mark Stoler recall how he managed to get General Electric’s approximately 300,000 employees to adopt a single, global EHS tracking system.

Without this kind of peek under the hood, it might seem as though comprehensive data like this is easy to come by. It isn’t.

Beyond the initial challenge of figuring out how to document internal processes, though, identifying and reporting metrics is often just as laden with obstacles. While most of the information is intended to enhance internal decision-making or track performance, there is, of course, a growing interest in a company’s EHS and sustainability metrics by outside entities as well.

And when it comes to external requests for data, the burden of responding usually falls on the EHS function.  In our recent ‘Green Metrics that Matter’ survey of the NAEM Board of Regents, 74 percent of those who responded said the corporate EHS manager took the lead role in external reporting. For 17 percent of respondents, these requests took up as much as one-quarter of an employee’s time (and we expect these numbers to jump as we survey our full membership).

With the amount of time EHS folks are spending, it’s not surprising that about half of respondents said they were fairly dissatisfied with the current state of EHS/environmental, social, governance (ESG) disclosure.

There must be a better way.

In the latest installment of SustainAbility’s ‘Rate the Raters’ research, the firm identified the following steps ratings firms should take to improve their influence and make the process easier for corporate leaders:

• Improve transparency: Transparency leads to trust, according to the researchers.  “We find that the stronger ratings in our selection are the most transparent. When raters provide strong disclosure of their methodologies and results, they give companies clear blueprints for improving performance in the future…This also gives clients, ratings users and other stakeholders a sound basis on which to decide whether to use rating information when making decisions (which drives ratings adoption or uptake).”
• Start engaging stakeholders: It’s time for ratings firms to do the same kind of stakeholder engagement that sustainability-oriented companies now do, the study found. “The majority of ratings today are based on arms-length assessments of performance,” the report stated. “Going forward, we believe that every rater can and should spend more time with the companies they assess, and that there are myriad benefits to doing so (e.g. gain stronger understanding of their businesses, verify publicly-reported information, help companies understand ratings and improve sustainability performance).”

As a step toward improving the reporting process, NAEM will host a collaborative dialogue on May 4 for EHS and sustainability decision-makers, as well as representatives from research firms, investor relations departments and NGO’s. The purpose is to help attendees better understand one another’s objectives and concerns, which we hope will help improve the consistency, clarity and value of corporate sustainability efforts.

As we put together the program for the day, what are the kinds of issues would you like us to address?  What questions do you have for ESG research and ratings firms?

Entry filed under: Climate Change, Compliance Excellence, Corporate Social Responsibility, EHS Management, EHS Policy, Sustainability, Uncategorized, Wall Street. Tags: CDP, ehs metrics, Environmental metrics, esg, ESG ratings, GRI, investor relations, key performance indicators, sustainability analytics, Sustainability Metrics, sustainability performance, sustainability performance analytics, Sustainability Solutions, water metrics, WRI.