Our current sustainability metrics for businesses are not relative. They are not measured relative to, or in context to the limits of the natural systems that are necessary to sustain life on earth, and provide the multitude of natural resources that serve as the raw materials for every product. More on why we think context-based sustainability represents the leading edge of business sustainability in this blog.

For this post we want to take a look at the ideas that shape our belief that context-based sustainability represents the future for ethical business. There are a number of scientific concepts that underpin a context-based approach. We think having a familiarity with them can be helpful and make an investment in adopting the approach more compelling. This is true for both sustainability professionals as well as executives responsible for leading ethical businesses.

A quick reminder about the fundamental problem were trying to solve through a context-based approach to sustainability: To accurately understand how sustainable your business is performing, we need to measure that performance relative to the planetary systems and natural resources that sustain the business, as well as all other businesses (and life on earth).

Here's our summary of the key concepts that we think are worth highlighting as you build your knowledge foundation on the topic. These include a number of scientific theories about how we think earth functions a meta level, or as a complex system composed of other interconnected systems.  

Planetary boundaries

These are “do-not-exceed” limits or thresholds of resource use beyond which natural systems start to collapse. They currently include 9 interconnected systems that allow the earth to function in ways that allow humans to safely live and thrive over time. For a company to be authentically sustainable, it must operate in ways that respect these and reflect a fair allocation of resources.

Vital Capitals

Resources that are important for the health and wellbeing of people and our planet, and are made up of stocks and flows. These may but do not always include traditional kinds of capital, like financial and manufactured capital. Vital capitals are created and destroyed by companies through their operations. The idea of “value creation” by companies should include maintaining these capitals at levels that ensure the health and wellbeing of people and our planet.

Carrying Capacity

Often used to reflect the population size that an environment (or planet) can support without compromising the long-term ability of the system(s) to sustain that population at a consistent level of resource use. Importantly, this concept can also be interpreted as the size of different kinds of vital capitals required to support a population. This interpretation is useful because vital capitals also include those that are created by humans, as well as other kinds of non-financial capitals like natural.

Fair Allocation

Ethically justifiable and proportionate shares of the resources and effort required to respect planetary boundaries and resource use thresholds. Once scientifically sound estimates of planetary boundaries are established, allocations or “shares” of related resources can be assigned to organizations like companies. Allocations can be considered as goals or targets and used to measure the extent to  which a company is operating in a truly sustainable way with respect to that particular resource or vital capital.

Sustainability Quotient

A quantitative measure of the performance of an organization. It is expressed in terms of the organization’s impacts on vital capitals relative to what the standards or sustainability norms must be to ensure the well-being of stakeholders. Actual impacts divided by normative impacts provide a measure of sustainability.

Sustainability Performance = Actual Impacts / Normative Impacts (S=A/N)

Actual Impacts = Actual impacts on carrying capacities of vital capitals

Normative Impacts = Normative impacts on carrying capacities of vital capital

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Source:

McElroy, Mark. 2008. “Social Footprints: Measuring the Social Sustainability Performance

of Organizations.” PhD Thesis, University of Groningen.

https://www.rug.nl/research/portal/files/13147569/DISSERTATION-2.pdf

The following organizations, people, and publications helped inform our understanding of context-based sustainability and this blog. We encourage readers to go deeper with the help of these resources, and to support the people and organizations responsible for their creation and publication.

Sustainability Quotient

McElroy, M., Jorna, R., and van Englen, J. 2007. Sustainability Quotient and the Social Footprint. Corporate Social Responsibility and Environmental Management.

https://www.sustainableorganizations.org/sustainability-quotients-social-footprint.pdf

Context-Based Sustainability Measurement & Reporting

Center for Sustainable Organizations.

https://www.sustainableorganizations.org

r3.0

https://www.r3-0.org

United Nations Research Institute for Social Development (UNRISD).

https://sdpi.unrisd.org

Ilcheong Yi, Samuel Bruelisauer, Peter Utting, Mark McElroy, Marguerite Mendell, Sonja Novkovic and Zhen Lee. 2022. Authentic Sustainability Assessment: A User Manual for the Sustainable Development Performance Indicators. Geneva, UNRISD.

https://cdn.unrisd.org/assets/library/reports/2022/manual-sdpi-2022.pdf

Planetary Boundaries

Stockholm Resilience Center, Stockholm University. https://www.stockholmresilience.org/research/planetary-boundaries.html

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