Sustainability Indicators - Definition and Examples of Corporate Sustainability Signals (2024)

How to Design and Measure Sustainability Indicators for a Business

As a company that designs sustainability measurement and reporting software and regularly advises leaders on sustainability strategy and data, we're often asked what the best corporate sustainability indicators are. Sustainability is holistic by nature, encompassing a wide range of metrics and data around a company’s supply chain, energy use, products and packaging, environmental impact, and more. Above all, sustainability indicators should be material, specific, and relevant to how an organization works. For example, water use might be an important sustainability indicator for a clothing company because materials like cotton are water-intensive to grow, whereas greenhouse gas emissions (GHG) are a more important indicator for an energy company.

What is a Sustainability Indicator?

A sustainability indicator is a measure used to assess the environmental, social, and economic aspects of a particular system or organization, with the aim of evaluating its overall sustainability

Sustainability indicators can be quantitative or qualitative, and may cover a range of topics such as resource use, emissions, biodiversity, and circularity. Sustainability indicators are used to:

Common examples of sustainability indicators include energy efficiency, 'carbon footprint', water use, and waste.

Environmental Sustainability vs. Social Sustainability Indicators

If your definition of sustainability extends beyond environmental sustainability to also include social and economic sustainability pillars, then sustainability should also consider indicators like health and well-being, human rights, education, sustainable investment, and social equality.

Effective sustainability indicators should be comprehensive, but not overly complicated. Good sustainability indicators enable clear sustainable performance measurement and reporting around an organization or system's material environmental topics, without overburdening teams with too much administrative data tracking or micro-measurement.

In most cases, smart sustainability indicator selection and sustainability performance go hand-in-hand. Being able to make a strong business case for sustainability initiatives (and their outcomes) - then backing up your sustainable ROI case with compelling measurement and reporting - is one of the best ways to win more support and investment in sustainable initiatives, while also signaling sustainability performance more clearly to people, investors, governments, and other stakeholders.

In our work with sustainability leaders and teams, we typically recommend and work around a 6-step sustainability indicator design process:

1. Use materiality to connect the dots between sustainability standards, stakeholders, indicators, and strategy

Sustainability indicators should reflect the organization, business model, context, and value chain where they're being used. For example, if you’re a technology company, energy usage and greenhouse gas (GHG) emissions from your servers should be a priority carbon accounting indicator. By comparison, a consumer goods company should focus on its materials, products, packaging, and Scope 3 emissions from its value chain, because those are most material to its sector.

A thoughtful, thorough Materiality Assessment process can be a helpful initial step in designing sustainability indicators (all of which can be encoded into Brightest's software for easy data collection, performance tracking, and stakeholder communication)

Look at your company's business model, brand, and purpose: sustainability indicators should tie back to that foundation and be a vehicle for positive environmental change and organizational performance improvement. Your materiality market screen should analyze industry benchmarks, peers, and leading sustainability standards, which will help provide an initial universe of indicators to select from.

For more on this topic, please read our materiality guide here. Or feel free to contact us directly for materiality help or questions.

2. Map your priority sustainability initiatives to measurable indicators

Once you’ve established your material sustainability themes and topics, work with different stakeholders in your organization - finance, operations, supply chain, product - to design a focused set of indicators to track them.

Generally, for most organizations, a common, universal accounting unit for sustainability measurement is the greenhouse gas carbon dioxide (CO₂), and "carbon equivalents" (CO₂e) - the sum of carbon plus all other emissions like methane converted into carbon. Most medium and large companies now practice "carbon accounting," the process of counting up all their carbon and other emissions from operations, and converting it into one total CO₂e number which represents the company's annual carbon footprint.

In most cases, your first steps in environmental sustainability measurement should be to map and count all your carbon, typically in tons or metric tons (tonnes), create progress indicators to track emissions over time, and design targets for emissions reduction.

For example, measuring your greenhouse gases (GHG) in terms of indicators like of carbon equivalents (CO₂e) generated from operations should be a top environmental measurement priority. For most companies, annual, quarterly, or even monthly Scope 1, 2 & 3 GHG emissions is a indicator that should be tracked and improved over time.

Beyond emissions measurement, depending on your industry you may want to consider additional sustainabilty indicators, such as those related to:

Make sure to always select environmental indicators that are material and relevant. For example, employees picking up plastic bottles at a beach cleanup is a nice community gesture, but it probably isn't a strategic sustainability indicator for your business, unless you operate in a plastic-intensive sector like CPG or cosmetics with a broader set of targets to reduce plastic usage across your value chain. When sustainability indicators aren't material (and then get communicated publicly) it raises the risk of provoking external criticism for "greenwashing" or being insincere.

The more your sustainability initiatives and indicators are grounded in materiality, material change and credible, data-driven claims, the stronger your overall sustainability reputation will be.

Similarly, rather than trying to measure everything and appease everyone, focus on doing (and measuring) a few specific indicators well, then build from there.

3. Engage stakeholders, suppliers, and partners

While you know what's best for your business or brand, often your partners (ex: suppliers, third party experts, independent standards organizations, or sustainability measurement firms and systems like Brightest) can provide helpful best practices for designing sustainability indicators and performance targets.

This is one of the main reasons we invest so much in supporting cross-organizational collaboration inside our sustainability software. Whether it's internal collaboration, cross-team data gathering, supplier sustainability scorecard engagement, or environmental data from offices and facilities, the theme's always the same: it's always some combination of hard, slow, or an incomplete picture pulling together your sustainability data and reporting in a silo.

Positive internal and external relationships are critical for sustainability indicator and measurement success.

Be sure to listen, collaborate, and engage your partners throughout the measurement and indicator conversation.

4. Supplement your environmental sustainability indicators with product lifecycle analysis (LCAs)

Make sure to consider your products, each input ingredient, and its related environmental impacts and intensity when designing your sustainability indicators. Your lifecycle scope or lens should include:

Where are your biggest environmental impacts? How can the business set indicators and targets against improving them?

For example, in their initial 501 Jeans LCA, Levi's identified six material LCA themes (and sustainability indicators) to measure the product's lifecycle impact.

Source: Levi's

5. Create the right sustainability measurement and indicator system

Most sustainability professionals understand the relationship between strategy, actions, data, indicators, and outcomes. The challenge is creating a consistent process to efficiently get the data you need to measure those indicators, report on success, and reaffirm business performance. The reality is most sustainability professionals we know spend way too much time gathering and organizing data. Yes, we need the right data to track our indicators and create reporting, but we shouldn't spend all our time on that when there's other valuable sustainability work to be done.

The more you simplify, centralize, and streamline your sustainability data collection, management, and business intelligence capacity, the more time you'll have to focus on sustainability program implementation, project oversight, cross-company engagement, and improvement, rather than just reporting.

In our experience, a system like Brightest can save and automate hours of sustainability data work per week to unblock valuable team time and productivity.

6. Close the loop between sustainability indicators, reporting, and communication

Effectively understanding and communicating sustainability performance to stakeholders is one of the most important responsibilities for any sustainability team or project. Your sustainability reporting strategy and indicator approach should be closely tied to your communications strategy: where, when, how, and why are you authentically telling your brand's sustainability story? All the pieces need to fit together.

This is important for a variety of reasons:

There are many opportunities to use sustainability indicators within your overall sustainability strategy or plan when you have the right data and process to make use of them. From there, sustainability indicators can be shared and communicated through a variety of different methods: internal communications and dashboards, annual reports, websites, social media, press, sustainability surveys, and more.

Most importantly of all, it's important to keep assessing if your sustainability indicator approach continues to provide credible proof your organization's achieving its sustainability targets and plan.

Wherever you are with implementing your sustainability action plan, we wish you all the best as you continue making (and measuring) positive progress. If we can be helpful at all (at any step in your process), please get in touch. A central part of our mission here at Brightest is enabling better data-driven decision-making (not to mention actions and communication) for good.