Corporate benchmarking can drive a race to the top
In August we announced we had joined the World Benchmarking Alliance (WBA). In this Insight piece, Liesl Truscott, Strategic Director, Nature Strategies at The Biodiversity Consultancy set outs the role corporate benchmarking will play in the transition to a nature positive future.
Business depends on nature for tradable products and services. There is no business on a dead planet. We are well into the Decisive Decade for delivering the Sustainable Development Goals and associated goals for climate and biodiversity. The private sector has a crucial role to play in advancing the SDGs, and making its real-world impact measured and accountable. Motivating and enabling the private sector to play that role is WBA’s mission.
We are now at a critical moment in time where the destiny of humanity depends on the choices we make today; no one can win unless everybody does. Some say that the generations on the planet right now are gifted with the enormous opportunity – and responsibility – to change the direction in which we have been travelling for the past century or more. We must course-correct from a path of dependency on fossil fuels, continued ecological breakdown and eventual collapse of our climate and the natural world to a path of increased climate stabilization and regeneration. There will be no winners if we do not transition. Sooner or later, we will all lose.
All parts of society need to be part of the transition to a climate- and nature-positive world. At The Biodiversity Consultancy, we see nature positive as an evolution in sustainability, ushering in a new mindset that is pro-active and transformative. To achieve long-term stability in supply chains and production bases, businesses and financial institutions must reorient sustainability strategies in ways that contribute to the regeneration and recovery of nature.
The way corporates act – produce goods and serve society – will play a massive role. Why? Because what we value and, subsequently, what we are willing to pay for, will contribute to the recovery. Put simply, climate- and nature-positive aligned behaviour should be incentivized and activities that cause damage and destruction penalized. This rebalance of priorities and resources is aligned with the Kunming-Montreal Global Biodiversity Framework agreed at COP 15 in Montreal by almost 200 member states in December last year.
The transition starts with enough of society knowing we need to change, but it will require concrete and just transition plans incorporating nature as well as a science-aligned climate pathway, to take companies from where they are now to where they must be. Like every journey, care must be taken to mitigate the risk of unintended consequences along the way. Time is not on our side, but taking the time to prepare and incorporate the views stakeholders who are potentially impacted will save time and money in the long run. The best way for companies to prepare, reduce risk and translate opportunities into transition plans is to incorporate dialogue with important stakeholders such as employees, upstream, downstream, and local communities, including Indigenous People, who may be impacted along the way.
What does corporate benchmarking have to do with carving out a just transition?
- Set the pace. It is not possible to know how well you are doing without some form of yardstick. Even companies that have already broadened their definition of success to include social and planetary benefits need to keep asking themselves “Are we improving?”, “Are we moving fast enough?” and “What should we be doing next?” Creating a ‘reference point’ from which to measure enables companies to compare themselves regularly against: (1) a baseline, (2) their previous performance, and (3) each other. Peer-to-peer comparison can drive competition, but it also opens the door for knowledge exchange and collaboration. Modern day competition should permit multiple winners.
- Travel together. Not only is collaboration important for success, but system-wide transformation will not happen without it. This way of thinking requires going beyond fabricated silos (sectors, supply chains, etc) that tend to focus on single commodity-related outcomes, to thinking about outcomes that are broader ‘place-based’ or landscape level. The WBA benchmarks help here by recognizing how businesses currently organize, while keeping an eye on the need for whole systems change. This is where transition plans are critical and force companies to consider stakeholders who are directly or indirectly affected. Business will only succeed if outcomes for communities and ecosystems are baked into strategies.
- Keep to the right path. All systems, natural or fabricated, require checks and balances. Healthy ecosystems in nature are excellent at self-regulating, constantly striving for balance. When it comes to business, innovation and creativity are key success factors, but success cannot come at the expense of others, or it will eventually implode. For everybody’s benefit, including the company itself, there need to be rules. Regulations must proactively provide guardrails but also penalise any company that steps over lines. Benchmarks can be a societal mirror for companies to self-reflect and self-regulate. Ideally, ahead of enforcers needing to step in.
There are many more advantages and opportunities to benchmarking, and these three aspects are merely thought starters. The WBA has produced an excellent account of reasons why benchmarks work. Worth a read or a refresh.
Going forward, how can benchmarking be an even more powerful tool for companies?
Good benchmarks are developed through open consultation, their methodologies are transparent, and results are used to constructively measure, help course-correct where necessary, and hopefully, celebrate progress and accountability. The best benchmarks are invaluable barometers of corporate health.
Like everything, it is what a company puts in and gets out of benchmarking that matters. If a benchmark is not seen to hold value or is used as a box ticking exercise by the company, and/or poorly designed by the benchmark administrator, it will not be worth the time or resources it takes to take part or to run it.
Importantly, a benchmark cannot be static, it must evolve and improve just as the company taking part must. The power of the benchmark often sits at the intersection of the organization running it, the companies taking part, and the associated beneficiaries/stakeholders (such as financial institutions or rating agencies).
Where do benchmarks fit into reporting frameworks?
Corporate reporting is seen as an essential measure of accountability and benchmarking can help, or it can hinder. We need frameworks for disclosure, but we also need to reduce duplication by consolidating or harmonising processes, wherever possible. Benchmarks can harmonize on indicators, centralize data collection, and satisfy stakeholder needs for accountability.
There is good work going on by the International Sustainability Standards Board (ISSB) and the Taskforce for Nature-related Financial Disclosures (TNFD) among others to ensure companies have aligned and complementary reporting frameworks. Nature benchmarking must be part of the same family. When The Biodiversity Consultancy worked with Textile Exchange on its Biodiversity Benchmark and supported The Fashion Pact in meeting their commitments, our priority was to work in sync with the emerging Science Based Targets for Nature Initial Guidance for Business and the WBA Nature Benchmark. This commitment to alignment is an important job for the WBA and its Alliance.
Yes, benchmarking is extremely helpful for tracking progress towards societal goals, and potentially for shaping a just transition, but it is a means to an end not an end in itself. As someone once said at a WBA meeting I attended one year at Davos:
A sustainability report must reflect what’s going on in the real world. If a company’s report shows all green ticks against their own set of indicators, but nothing is changing, or worse, things are deteriorating, we have drastically missed the point.
This is where good, independent benchmarking plays a key role, not just as a progress tracker but as an accountability partner.
To summarize, the transition to a climate- and nature-positive world has started. Now is the time for concrete and just transition planning to get us from ambition to on-the-ground action that brings all of society along. Will we get there in time? The role of benchmarking is to prove companies are course-correcting and doing their bit to getting to the world we want. It is an important job.
As an ally of the WBA, The Biodiversity Consultancy is looking forward to taking an active part in benchmark development and presenting benchmarking as a potent driver of change to the companies we work with. Our community of client companies should set the pace, travel together, and keep to the right path, and through our membership of the WBA we are ideally placed to assist in all three.
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