A perennial question in the world of corporate sustainability reporting is 'What is the theoretical basis behind it?' What does it mean to say that a company, or its operations, are sustainable – environmentally sustainable, socially sustainable, or what have you? Sustainable relative to what? And even when we have answers to these questions that satisfy us, how do we operationalize them in the form of practice? Exactly how should organizations go about measuring and reporting their social, environmental and economic sustainability performance?
At CSO, we contend that the first set of questions have been largely answered to the satisfaction of most sustainability theorists. From Herman Daly, to Donella Meadows, to Amory Lovins, to Robert Costanza, to Jonathon Porritt, and many others, the sustainability of a human population, or organization, is a function of its impact on one or more types of vital capital. This is the capital-based theory of sustainability, and we subscribe to it.
Not including financial capital, the social and environmental capitals of interest are natural capital, human capital, social capital, and constructed (or built) capital – i.e., ‘vital’ capitals. The sustainability of a population, or an organization, then, is simply a measure of the impact of its behaviors on the carrying capacities of vital capitals, which people rely on for their well-being.
Our contribution to all of this has been to codify this concept in the form of an equation that makes it possible for sustainability managers to operationalize the idea in organizational settings: S = A/N. Translation? The sustainability performance (S) of an organization is a measure of its actual impacts (A) on the carrying capacities of vital capitals, relative to its normative impacts (N) on the carrying capacities of the same capitals. Thus, for the first time, we now have a quantitative formula for numerically scoring the bottom-line, non-financial sustainability performance of an organization!
This general specification for sustainability metrics lies at the heart of everything we do at CSO, including the Social Footprint Method. Moreover, it is the inspiration we rely on in our attempts to fill the 'context void' that most mainstream corporate sustainability reporting schemes suffer from, including the Global Reporting Initiative. For us, this simple equation is the definitive standard for how to measure the true social and/or environmental sustainability of an organization. We call it The Sustainability Quotient!