MIM 521/ BA 548 Evaluating and Measuring the Sustainability Performance for Global Organizations

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MIM 521/ BA 548Evaluating and Measuring the
Sustainability Performance for Global
Organizations

• Certification GRI Social Metrics
• Day 4, June 30

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• I expect the deliverables will, to some extent
• articulate the question and the scope of the
  project work,
• discuss and/or identify best practices in the
  domain of the question,
• address the Citys/PSUs current status in
  relation to this question,
• identify methods or frameworks that could be
  brought to bear on the question,
• identify the data needed, the data-capture
  process (in some detail), how the data will be
  reported, and
• propose things that the City/PSU might do to help
  them understand, evaluate, and/or report about
  this question.

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Certification definitions

• Standardsattributes to attain
• Certificationsignal of attainment
• Accreditationauthorize to certify
• Verificationcheck on the N (whatever is being
  certified)

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Foundations of Independent Certification Systems

• Governanceoversight over the entire process
• Standardizationdeveloping the standards
• Accreditationcertifying the certifiers
• Verificationcertifying the subject
• Tracking and Labelingusing the certification
• Much of this is from a white paper by Metafore

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Governance

• Mechanisms and procedures for operating a
  certification system
• Groups involved
• How decisions are reached
• Influence of parties
• Procedures to ensure implementation
• GRI

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GRI Governance
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Standardization

• Developing, maintaining, and enhancing standards
• May be guidance and/or performance requirements
• Participation (public, industry, NGOs?)
• Procedures for addressing disputes
• Decision making process (consensus, majority?)
• Who is represented, who reviews, who approves

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EPEAT-Standard participants
Pitney Bowes Corporation - Dave Gallaer Sharp
Electronics Corp. - Frank Marella Silicon
Valley Toxics Coalition State of Massachusetts
- Eric Friedman State of Minnesota - Garth
Hickle State of Oregon - Gayle Montgomery The
Center for a New American Dream - Naomi
Friedman Tufts University - Patricia Dillon
U.S. Department of the Interior - James Weiner
U.S. EPA - Oliver Voss U.S. EPA - Viccy
Salazar U.S. Government - John Howard United
Recycling Industries, Inc. - Lauren Roman
University of Tennessee - Socolof Waste
Management - Bobby Farris Zero Waste Alliance -
Larry Chalfan

• Apple Computer - Dave Cassano
• California Integrated Waste Management Board -
  Terri Persons
• City of Seattle - David Matthews
• Dell Computer - Mark Schaffer
• Electronic Industries Alliance - Holly Evans
• GATX Inc. - Ronalda Meson
• Hewlett Packard - John Burkitt
• IBM - Tim Mann
• INFORM - Sarah O¹Brien
• Intel Corporation - Allen R. Wilson
• International Assn of Electronics Recyclers -
  Peter Muscanelli
• New Jersey Institute of Technology - Reggie
  Caudill
• Noranda Recycling Inc. - Steve Skurnac
• Northeast Recycling Council, Inc. - Lynn
  Rubinstein
• Panasonic Matsushita Electronics Corp. - David
  Thompson

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EPEAT IEEE Standard 1680

• determined through stakeholder consensus
• contained in the IEEE 1680 Family of Standards
  for Environmental Assessment of Electronic
  Products
• Bronze, Silver, Gold

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Accreditation

• Authorizing an individual or entity as capable of
  certifying the subject item
• Certifying the certifier
• Application
• Evaluation (by some certifying body)
• Reporting
• Attention to non-conformance
• Decision (not by the evaluator)
• Monitoring

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Forestry Stewardship Council

• Entity submits application to be a certifier
• FSC Review team assess the application
• Values consistency over globe
• Competence
• Processes
• Review team office audit, review prior
  evaluations
• In absence of non-compliance, separate team makes
  decision
• Regular monitoring
• Re-accredited every 5 years

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Verification

• Confirming that organization/product/process
  meets the requirements of the certification
  system
• Credibility for certification comes here
• Pre-assessment
• Main assessment
• Decision making
• Monitoring

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Verification schemes

• First partyinternal
• EPEAT
• Second partyexternal, with stake in organization
  being verified
• some GRI
• Third partyexternal, independent
• FSC

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Fairtrade

• Application form -- will be informed if you
  qualify.
• Application Pack with how to continue with your
  application500 Euros..
• You are audited for Fairtrade compliance
• FLO-CERT (third-party certifier) certification
  manager will plan an on-site audit
• Auditor will visit site and check against
  compliance criteria.
• Certifier may highlight non-compliance
• Once compliance is determined a certificate will
  be issued

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Tracking and Labeling

• Labels
• indicators of certification
• provide information to observers
• Tracking
• method of transparency
• auditing the certificate (not certification)

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Food Alliance (Labels)

• Labels (Food Alliance)
• Food Alliance Certified
• Products
• Handlers
• Producers
• FAC Grassfed
• Made with FAC ingredients (50-79 FAC)

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Wood Products (Tracking)

• Tracking (wood products)
• Chain of custody (FSC)
• Product level activities
• Physical separation
• Batch modelcertifies temporally
• Mixed certified and not
• Sustainable procurement (SFI)
• Business level practices

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GRI

• Create reporting standards
• Element of certification, of reporting, but not
  performance

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GRI Reporting Principles
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Part C of the Guidelines comprises five sections

• 1. Vision and Strategy description of the
  reporting Organizations strategy with regard to
  sustainability, including a statement from the
  CEO.
• 2. Profile overview of the reporting
  Organizations structure and operations and of
  the scope of the report.
• 3. Governance Structure and Management Systems
  description of Organizational structure,
  policies, and management systems, including
  stakeholder engagement efforts.
• 4. GRI Content Index a table supplied by the
  reporting Organization identifying where the
  information listed in Part C of the Guidelines is
  located within the Organizations report.
• 5. Performance Indicators measures of the
  impact or effect of the reporting Organization
  divided into integrated, economic, environmental,
  and social performance indicators.

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Report content (GRI-guidelines)

• CEO statement
• Profile of reporting organisation
• Executive summary and key indicators
• Vision and strategy
• Policies, organization and management systems
• Performance
• environmental
• economic
• social

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GRI guidelinesprinciples and indicators

• Principles
• What information to report
• Quality of reported information
• Accessibility of reported information
• Indicators
• Economic
• Social
• Environmental

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Global Reporting Initiative
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• EN17. Other relevant indirect greenhouse gas
  emissions by weight.
• 1. Relevance
• Greenhouse gas emissions are the main cause of
  climate change and are governed by the United
  Nations Framework Convention on Climate Change
  (UNFCC) and the subsequent Kyoto Protocol. For
  some organizations, indirect greenhouse gas
  emissions are significantly greater
• 2. Compilation
• 2.1 Identify the greenhouse gas emissions
  resulting from indirect energy use. Exclude as
  these are covered by EN16.
• 2.2 Additionally, identify which of the reporting
  organizations activities cause
• When deciding on the relevance of these
  activities, consider whether emissions
• Are large compared to other activities Are
  judged to be critical by stakeholders
• Could be substantially reduced through actions
  taken by the reporting organization.
• 2.3 Report the sum of indirect GHG emissions
  identified in tonnes of CO2 equivalent.
• 3. Definitions
• Indirect emissions
• Carbon dioxide equivalent
• CO2 (Carbon Dioxide) equivalent is the measure
  used to compare emissions from various greenhouse
  gases based on their global warming potential
  (GWP). The CO2 equivalent for a gas is derived by
  multiplying the tonnes of the gas by the
  associated GWP.
• 4. Documentation
• Information can be obtained from external
  suppliers of products and services. For certain
  types of indirect emissions such as business
  travel, the organization may need to combine its
  own records with data from external sources to
  arrive at an estimate.

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Global Reporting Initiative
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The Guidelines Foundation for GRI
Technical protocols Measurement guidance
The Guidelines
Energy Water Child labour
Sector supplements Sector-specific indicators
Resource Documents Topical and user-specific
supporting material
Automotive Financial Tourism Mining
SMEs Productivity HIV/AIDS
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Certification attributes
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General Notesfrom GRI

• 1. Boundaries
• 2. Use of technical protocols
• 3. Metrics
• 4. Time frames and targets
• 5. Absolute/normalized data
• 6. Data consolidation and disaggregation
• 7. Graphics
• 8. Executive summary

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Social Indicators

• Difficulty
• Morally thick

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Social return on investment

• Evaluation of social benefit resulting from
  variety of inputs
• REDFpretty much the gold standard, by default
• We will also look at work by the New Economics
  Foundation
• formerly Roberts Enterprise Development Fund

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Concept behind SROI proposed by REDF

• Historical Non-profit capital
• Charity based
• Process measures
• Directed to funders needs, financial accounting
• Current Non-profit capital
• Investment based
• Outcome measures
• Internal operations focused, MIS

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REDFSROI calculations
Economic
Socio-Economic
Social

• Based on enterprises with multiple functions,
  economic and social
• Omit solely Social
• Blend Economic and Socio-Economic

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Adapted from REDFs SROI Analysis (2001)
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Enterprise value

• Project enterprise cash flows
• Time horizon
• Assumptions of future performance
• Income, adjust to cash
• Investments and repayments
• Calculate terminal value
• Standard valuation methods
• Discount the cash flows

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Complete enterprise value

• Discount cash flows
• Use some model (Capital Asset Pricing Model) to
  determine cost of equity
• Risk free rate risk premium industry beta
  small business premium Cost of equity
• Use Weighted Average Cost of Capital (WACC) to
  determine discount rate

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The importance of discount rate

• Determines the value of the out-year cash flows
• Too high, implies too much risk, undervalues the
  cash flows
• Too low, implies too little risk, overvalues the
  cash flows
• Huge issue in trying to establish distant
  benefits when compared with current costs
• 10 years _at_ 5, 10, 20 (.61, .39, .16)
• 25 years _at_ 5, 10, 20 (.29, .09, .01)

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Calculate social purpose value

• Project social cash flows
• Time horizon
• Assumptions of future performance
• Cost savings adjusted to cash
• Calculate terminal value
• Standard valuation methods
• Discount the cash flows

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Blended value
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From New Economics Foundation

• Become increasingly sophisticated
• Understanding accounting
• Activity based accounting/costing
• Segregate costs by activity

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Expenditure v. capital

• ROI is generally thought of as on invested
  capital
• SROI may well be on continuing revenues as well

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Concepts for adjusting

• Accounting for deadweightthings that would have
  been done without the program.
• Displacementaccomplishing something that
  diminishes the work of another program
• Outcomes may have future value even if
  organizations disappear
• What is the true benefit period?
• What other interventions are relevant

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Benefits per stakeholderthen totaled

• Who are the stakeholders?
• What impacts occur to each stakeholder?

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• Training program for hard to employ
• Average starting salary in Year 1 for all
  participants is 9500
• Average annual growth in salary is 3 from year 1
• Welfare payments 6800 per year (130 per week)
• Income tax 10 of salary plus 5 for employer
  contribution
• Non-accumulative 10 That is 10 of the
  participants probably would have found a job
  without the intervention.
• Cannibalizing other programs is assumed to be
  zero.
• Drop-off 12 annually. Each year 12 of the
  prior years employed participants lose their
  job.
• Time period to accrue benefits 5 years
• Discount rate 3.5
• Investment Public funding paid up front
  500,000 to fund one-year pilot project

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NPV 1,250,444 ( 1,750,444- 500,000)
1,750,444 / 500,000 3.5 (SROI350)
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Less economics oriented

• Address more types of indicators
• Easier to accept
• Less socio-economic and more Social

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Janet Hammerframework elements for development

• 5 elements, 20 objectiveswith questions to
  assess each objective
• 1. Corresponds to community context
• 2. Fosters healthy living
• 3. Strengthens community fabric
• A. Community Sense of Place and Identity
• B. Inviting Public Spaces
• C. Enhance Social Connection and Civic
  Engagement
• D. Empowerment
• 1. In what ways, if any does the project
  support or offer programs designed to build
  individual and community leadership capacity?
• 2. In what ways, if any, does the project
  support community ownership and governance?
• 3. In what ways, if any, does the project work
  with and support community organizations and
  networks?
• E. Community Involvement by Project Developers
  and Project Businesses
• 4. Fairly Distributes Burdens and Benefits of
  Growth
• 5. Contributes to a Vibrant Community Economy
• Note that these are based on the impacts of
  development

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Shorebank Pacificcommunity indicators
Work includes jobs, job quality, benefits,
job safety, and opportunities for personal growth
Necessities includes shelter, infrastructure
and transportation, education, food, medical
care, as well as walkability, reduced driving,
and multiple modes of access
Stability/Quality of life includes wealth
creation and retention, community leadership,
business connectivity, education, entrepreneurial
development
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Framework for assessing a buildingintegrating
sustainability into appraisal of property worth

• Criteria
• Building flexibility
• Energy efficiency
• Transport
• Pollutants
• Location
• Occupier
• Ecology
• Design

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Shorebank Pacificenvironment
Conservation Energy includes onsite and
regional distributed capacity, as well as
alternative power, storage and transmission
Materials/Resources includes materials
recycling, reuse, durability, green building
actions, utilization of local food Land and
Water Capacity includes restoration, building
neutral capacity and reducing impacts
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Shorebank Pacific-Economy

• Risk Assessment Management includes risk
  ratings and business management operations
• Local Business Connectivity includes
  interactions between locally owned and operated
  businesses, and the use of local labor, goods,
  and services
• Scalability includes business capacity for
  growth, the ability to franchise its approach in
  other markets, or the potential for an education
  franchise.