On 8th March, at the CleanEquity Monaco 2018 conference, there were various break-out sessions by the stalwarts of the sustainability sector, and one of them was the Covington CleanEquity Conversations, where the partners of Covington & Burling spoke about different aspects of sustainability. One session was “Sustainability- What Goals Should Businesses Prioritise and what are the Right Metrics?” which was hosted by Andrew Jack, Partner at Covington & Burling.
Andrew Jack began the conversation by stating, “Sustainability is a vast topic and the sustainable development goals, and all 17 of them are vast topics. There are multiple NGOs and for-profit organizations driving the change towards sustainability. Companies are being ranked in terms of their sustainable exposure and sustainability efforts. We are going to talk about what are the sustainability objectives that the businesses should prioritise, as well as what are the right metrics for measuring sustainability.” Jack also went on to add, “We have major corporations which are establishing sustainability goals. But what should mid-level companies do to work towards sustainability goals to emulate these major corporations?”
Jack questioned the audience about what are the sustainability goals which businesses should prioritize ranging from goals such as GHG emission reduction, water use reduction, energy efficiency, solid waste reduction, avoided deforestation/ reforestation or some other resource efficiency goals, which drew answers from the audience ranging from water use reduction, energy efficiency to GHG emission reduction and so on. There were also points raised about how SDGs can be integrated as a metric and become an industry standard to be measured.
”One of the reasons I was asking you all to prioritise was to define a way to measure impact, and we need to develop comparable metrics for all of these," said Jack. “What are the right goals for corporations to drive individually to achieve sustainability goals? That is the question. There is also a parallel session happening about whether market-driven innovation can save us from climate change, or do we need governmental intervention. Investors also believe that companies are not reporting their sustainability metrics properly. 82% of the S & P 500, publish a sustainability report. So that is more of a response to their investors than what the government expects," he added.
Jack also went on to add, “To look at GHG emissions per dollar of revenue, is that a metric which would be reasonable to apply to allow comparability? For example, seeing who among the aviation sector is reducing GHG emission per dollar of revenue. I agree that it should be measured within a sector and relative improvement should be rewarded.”
Speaking to BW Businessworld, Jack said, “I’d rather not comment on what sustainability goals should be prioritized or the right metrics, as only based on what I find after compiling the answers given, can I comment on that. I can give a better answer tomorrow. I think it depends upon the business, the opportunity the business has, the risks that the business is managing, ultimately the role of the board of directors. My view is that as long as the company has a general strategy to generate long-term sustainable shareholder value, while also accomplishing that, they need to pay heed to all the constituents, which is the customers, the supply chain and the environment.” Jack also added, “The environment is an under-represented constituent. I think that’s what the large public equity funds are now stepping in and talking to boards of directors and saying, ‘help us to understand how you’re managing these risks’. So it’s not a simple answer, if there were 3 simple metrics that everyone should follow, they would all be adopted right now.”