One of the most pervasive sources of information to better understand how sustainable a company is, are certificates. There are literally thousands of sustainability certifications, and like with any information source, several problems with it. As we’re sharing our different learnings from building Responsibly, we wanted to discuss one specific problem with certificates: their binary nature.
Certified sustainable does not mean sustainable
If we’re being critical, there are very few, if any, truly sustainable companies in the world, and in all likelihood, the current technological, commercial, and regulatory environment doesn’t make it feasible to be fully sustainable yet. We’re on a journey towards this goal - and although that journey is extremely urgent, it’s important to recognize that it’s a journey and not a destination that we’ve already achieved. Since it’s unlikely any company is fully sustainable, when a company is certified to be ‘sustainable’ it means that some achievable (in some cases still quite difficult) criteria have passed an arbitrary threshold, and the company has now been awarded the certificate.
Certificates are meant to make it easy for both consumers and b2b customers to know which companies are doing the right thing. So if you are a company with a certification and/or a positive evaluation, you are now officially doing good for the world, while companies without them are not, right? Unfortunately, it's not that simple.
The problem: sustainability certificates have to be obtainable to be relevant
Let’s first address the elephant in the room. A certification process has in many cases a commercial agenda, and even in the most admirable altruistic cases, it still needs to be achievable for a wide enough audience to be relevant. Set the bar too high, and it’s an impossible target that we can only dream of. Too low, and it loses meaning. Our problem is not necessarily with where the bar is set, some certifiers do a great job here, however, the mere fact that that bar is the only judge of the company’s performance.
Binary certificates obstruct the market forces
How do you encourage companies to move beyond the bar, when there is no recognition for it? How do you communicate that actually this company is not sustainable, it just meets an acceptable bar? How do you keep challenging how high that bar is set, and encourage companies to continuously improve and move further on the journey to be fully sustainable? Most importantly in our perspective: how do you unlock the true potential of market power, competition, by having buying parties award more business to more sustainable companies when the definition of sustainability is binary?
Moving beyond binary to quantify sustaianbility
he answer is quite simple. We need to move beyond binary evaluations, and into the messy nature of quantifying performance. Not giving something a yes or a no, but a grade. A point. Something that can be improved upon. Something that can give more fine-grained information for evaluation, and thus competition, than simply dividing companies into two camps. A final "stamp" looks definitive, while a score feels improvable, and as we said, sustainability is a journey.
There are many ‘certifiers’ that do this already. Take BCorp, a sustainability certifications program. To get a BCorp certificate, you need to pass a threshold(80 points in this case), so the binary nature is still there. However, any BCorp certificate holder is scored across different topics and factors such as Environmental(Water, Air& Climate, and more), Customer Stewardship, Community(Supply Chain Management, Civic Engagement, and Giving, Diversity, Equity, Inclusion), etc. and is given individual grading in each topic. The system may not be perfect, but it provides a more refined approach for evaluating companies and distinguishing the true sustainability leaders.
Breakdown of the B Impact Score. Source: BCorp
Another example is CDP (formerly known as the Carbon Disclosure Project). Here there’s no threshold per se, everybody can disclose and gets awarded the bottom grade for simply disclosing. You can then move up the ladder using a letter system from F to A, and different evaluations are made for different topics like Climate, Forests, or Water. Again, not perfect, but better than a binary evaluation that verifies whether or not you manage “sustainability” according to some standard.
3M's Carbon Disclosure Project scores. Source: CDP
Basing a process on quantified data is good, but a quantified approach to sustainability performance of course opens up a lot of problems as well. How do we make the calculation fair and accurate? How do we keep raising the bar? How do you make the reader, e.g. the consumer or corporate purchaser, actually understand what the scores of the dozens or hundreds of programs their suppliers use actually mean?
Content of the Fair For Life social and fair trade program. Source: Fair For Life
We try to address some of these problems at Responsibly, and they’re not easy, but we believe that moving from binary to quantified is the only way we can unlock the powerful forces of competition, and focus our impactful capital system on solving the most important problem in the world: sustainability.
Thomas Buch Andersson