The Sustainability Measurement Merry-Go-Round

The Merry-Go-Round

Tens of thousands of companies around the world have just completed a months-long process of collecting data to publicly report on their greenhouse gas emissions, energy use, and other sustainability data. The end of the fiscal year brings this annual rhythm that – certain as taxes, or cicadas – sees companies sprint to report against a wide variety of voluntary standards and regulations, including GRI, TCFD, and, for many large companies in the European Union this year, the CSRD. 

This annual exercise of collecting sustainability data, often across complex supply chains and global operations, is a critical first step toward strengthening a company’s sustainability. The adage “you can’t manage what you don’t measure” is popular for a reason.

But for many companies, the annual reporting cadence and sheer weight of disclosure obligations means that “measure” comes at the expense of “manage.” Having just published reports, companies will soon restart the data collection process from the same starting point, and then it’s on to the next report. If the sustainability measurement and reporting cycle is a merry-go-round, they’re in the brief pause before the music starts again.

Increasingly, however, companies are less eager to get back on the ride. Many sustainability leaders are hungry to go beyond disclosure and take action. Having just gone through all the hard work of collecting, analyzing, and reporting on their data, they’re asking: “So what? And, now what?”
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Three Practices to Drive Business Value

At Gravity, we think there’s a better way — one where companies step off the merry-go-round and start moving forward, rather than in circles. One where companies are able to put the data they’ve collected to work to advance sustainability and drive business value during the measurement process itself, without waiting for the narrow window between reporting cycles.

In our experience, three practices help companies escape the merry-go-round and allow measurement and reporting to create value:

1. Using automation not just in data collection and calculations, but to surface value creation opportunities in near-real time as you measure.
2. Capturing the right level of detail. Granularity does not equal actionability, but many forms of actionability are impossible without (the right kind of) granularity.
3. Uniting sustainability and financial analysis to facilitate conversations with operations, supply chain, and other cross-functional teams to advance the opportunities identified.

The importance of automation in sustainability measurement and reporting is increasingly well understood, if still under-adopted. Every minute a sustainability team spends on manual tasks — such as sending emails to request data, entering and cleaning data in Excel, and manually reading utility bills — is time not spent moving the needle on a company's sustainability goals. A strong desire to reallocate time to more valuable activities has been a key driver of demand for carbon accounting software.

Pulling actionable insights from sustainability data, however, is less common. Many data points that teams already gather for reporting can provide insight into operational performance, in addition to sustainability. Take emissions, for example, where almost every kilogram of CO2e in scopes 1 and 2 ties back to dollars spent on energy or fuel. After collecting and assuring this data across a company’s operational footprint, sustainability teams can not only report on emissions but also identify cost-saving energy efficiency opportunities at scale. These insights are valuable to colleagues in facilities, plant management, and operations. Under the right circumstances, they can spark initiatives that save money and move the needle on sustainability.

For a powerful example of embedding value creation during measurement – and breaking free from the merry-go-round – consider the Wisconsin Aluminum Foundry (WAF), a highly acquisitive, increasingly vertically integrated supplier of metal castings to leading automotive, medical device, and other brands.

WAF had measured its greenhouse gas emissions and energy consumption to satisfy customer requirements, but recently took a more proactive approach to get value from this disclosure. By integrating near-real-time energy consumption data with equipment-level intelligence, they identified $400K+ in energy efficiency savings through process improvements at a single facility.

Companies like WAF are leading the charge. By leveraging the work they are already doing for measurement and disclosure, they will be able to gain a facility- and asset-level understanding of how individual actions fit into a broader transition plan.

In future posts, we will dive deeper into each of the key practices for escaping the merry-go-round, including what unlocking sustainability data looks like in practice, using additional examples from real companies.

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