Most companies report financial results at year-end. Compiling financial information can include more detailed review of products, business lines, or operations. It’s a common time for performance evaluation of individuals. It’s also a good time for a self-evaluation of functions, including your Sustainability program.
Your company has a Sustainability program, whether you have designated a Sustainability manager or not – or whether you know it or not. Much of the focus on Sustainability is on external reporting – company Sustainability reports, reports to customers or investors, etc. Here are five tips on what to include in a year-end self-evaluation of your Sustainability program.
1. Evaluate conformance with applicable regulatory and legal requirements. Sustainability’s three focus areas are environmental, social/ stakeholder, and a broad array of economic parameters – the origins of the “triple bottom line” reporting concept for Sustainability. Most companies are subject to regulatory requirements for some aspects of Sustainability, including safety (OSHA), environmental regulations (EPA or state counterparts) and privacy (HIPPA). Increasingly, companies must comply with contractual requirements on issues including greenhouse gas (GHG) emissions reporting, use of safe materials in content, recyclability of products, or assuring safe workplaces in your supply chain. If there are gaps in any of these areas, determine what resources are required to close these gaps, and incorporate this into next year’s budget.
2. Compare performance to goals established at the beginning of the year. Compare the company’s performance with goals established for the year. Common goals involve reductions in energy use, water use, or waste generation. Examples of other goals include increased employee or customer satisfaction, effectiveness of corporate giving, completion of training, implementation of employee suggestions, levels of stakeholder engagement, or links between Sustainability programs and operational or business efficiencies. If your company did not have Sustainability-related goals for the year, consider establishing some for next year.
3. Conduct evaluation honestly, using all three bottom lines. The traditional Return on Investment (ROI) method of evaluating Sustainability programs or projects is a good start, but may not fully convey benefits – or limitations – of projects. Business people may not think to identify environmental or social benefits, or consider how they can improve the company. For example, improving natural light in the workplace can reduce absenteeism and increase productivity. Suggestions to reduce energy use could also reduce the time to manufacture a product, enabling faster shipment and improving customer satisfaction. Similarly, proponents who have suggested projects primarily for environmental or social benefits may not understand financial implications. They may minimize environmental or social trade-offs or unintended consequences. For example, a program to encourage carpooling can result in some employees leaving earlier than they would have. Or, the employer may pay costly taxi fare for a stranded carpooler to go home later [and there are additional emissions and energy use].
4. Evaluate performance on all projects undertaken in the last three years. The full effect of Sustainability projects may not be apparent in the first year. For example, energy savings can be accomplished through more energy-efficient office equipment, light switches, or appliances. They can also be accomplished via changes in more subtle ways, such as reducing the size of cars rented on business travel, or changes to employee culture. The full extent of social benefits may not be recognized immediately. For example, increased telecommuting could be launched to allow more flexible work hours for employees to monitor online sales real-time during extended hours. Employees may only realize other social benefits if this program allows them to care for sick children or parents without taking sick days. This can increase employee satisfaction further, and reduce employee turnover, training costs, and company costs for sick time. Consider both positive and negative outcomes of projects where Sustainability components were a factor. If you don’t current keep a three year tracking program in place, consider adding it to this year’s process.
5. Consider other avenues for reporting. After a thorough, honest self-evaluation of the Sustainability program, consider the results in the context of a broad array of your organization’s stakeholders. To paraphrase the old saying of “if a tree falls in a forest and nobody hears it, did it make a noise?”, if your company went above and beyond the basic requirements, and did something awesome, and nobody knew about it, did it really count? If you have achieved successes, consider reporting them to external stakeholders. Communications can be via your website, standalone Sustainability reports, presentations at conferences or trade associations, or discussions with your customers, business partners, or employees. For example, if you have reduced employee turnover, use that in your recruiting. If you have reduced energy use, consider discussions with your landlord regarding your share of the building’s utility bills. If your company’s safety compliance has improved, report this to your insurance carrier and see if you can negotiate lower premiums. Generate or improve your Sustainability report, and target stakeholders where you can leverage performance to business advantage: customers, prospective customers, or potential Board members.
End-of-year evaluation of financial, business, or individual professional performance forms a basis for the following reporting period. A thorough, honest self-assessment of Sustainability performance should do the same. Use this exercise to identify areas for improvement, and launch them in the coming year. Next year, see how they worked.