So. It’s World Environment Day (WED) – the United Nations global event to encourage worldwide awareness and action for the environment. There are lots of exciting things happening all over the world. From clean-up projects in Kosovo to beach tidies in Wales and Sri-Lanka. And, of course, there are the WED challenges. You can feel the excitement and momentum yourself by visiting the WED website.
In the hope of maintaining that level of enthusiasm and excitement, I’m going to write about business performance reporting and key performance indicators. No, seriously, I am.
In the past few days, I’ve had several encounters with a developing conversation emerging from the normally serene world of enterprise performance management. That conversation is all about the widening of conventional corporate reporting beyond the usual drivers of revenue and profit.
Increasingly, it appears, businesses are taking a more holistic view of reporting; one that includes performance indicators around carbon emissions or ethical manufacturing or reputation management or employee sentiment or volunteering hours ... it’s a big list. Indeed, one company with which we are working is currently refreshing its performance dashboards and they will end up with only 20% of their KPIs being typical financial indicators.
The challenge for companies who are beginning to think about metrics that extend beyond the Finance department is the subjectivity. There isn’t necessarily the same type of objective index when it comes to measuring sentiment based indicators as, say, sales in a particular region. It becomes much more difficult to pull the necessary information together and even more difficult to interpret it. That’s the bit has our consultants excited.
Of course, in reality, the conversation will still be about revenue and profit but the more progressive board rooms are making the connection between profit and strong corporate stewardship.
So how does this relate to World Environment Day?
In the coming decade or two, governments and businesses will finally wake-up to the fact that an immediate and urgent response to climate change is required. Environmental impact metrics will become increasingly important (and maybe even legislation-led) to enable businesses to demonstrate not only that they can measure a negative environmental impact but that they can drive a positive environmental impact.
Wishful thinking? It’s already starting to happen.