Measuring Sustainability Jonathan Estes Partner, Strategic Measures, Inc Author, Smart Green: How to

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Measuring SustainabilityJonathan EstesPartner,
Strategic Measures, IncAuthor, Smart Green How
to Implement Sustainable Business Practices in
Any Industry And Make Money (2009)Aaron
NelsonExecutive Director, Foundation for a
Sustainable CommunityPresident and CEO, Chapel
Hill-Carrboro Chamber of Commerce

• Alliance for Regional Stewardship
• Pittsburgh, Pennsylvania
• July 30, 2008

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A Mega-Trend
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In recent business news
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Old Model
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New Model
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Green and Sustainable

• A Definition of Sustainable
• Triple Bottom line
• Environmental Stewardship, Social Responsibility,
  and Economic Prosperity (Foundation for a
  Sustainable Community)
• 3 Ps - People, Planet and Prosperity
  (Performance)
• 3 Es - Environment, Equity, Economy
• Future Oriented
• Meeting the needs of the present without
  compromising the ability of future generations to
  meet their own needs (World Commission of
  Environment and Development)

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But How Do you Measure it?
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So How do We Measure and Benchmark

• Using Metrics
• Individual Level
• Community Level
• Organizational Level
• Using Analytics
• Focus on Organizations and Systems
• Focus on Choices and ROI

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Measuring Community Sustainability

• Focus on more than one thing at the same time

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The Community

• Benchmarking
• Benchmarking against yourself over time
• Benchmarking against yourself and who you admire

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Available Indicators

• Economic
• Population growth
• Retail sales
• Tax base breakdown
• Per capita personal income
• Median family income
• Unemployment
• Welfare Recipients
• Housing costs
• Visitor spending
• Agriculture income

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Available Indicators

• Environmental
• Air Quality Ozone exceedances
• Water Consumption Demand/Capita and Total Demand
• GreenSpaceResidents/Acre of Protected Natural
  Areas
• Consumption Tons/Capita of Waste and Recyclables
• Consumption from local electric company
• Redevelopment versus greenfield development
• Modal split (transportation modes)
• Multi-modal availability
• Hazardous material inventory and spills

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Available Indicators

• Social
• Graduation rate (4-year high school)
• Student/teacher ratio
• Operating expenditure per high school student
• All suicide rate
• Deaths from heart disease
• Deaths from all cancers
• Percentage of population with health insurance
• Percent meeting daily physical activity
  requirements
• Syphilis rate
• AIDS rate
• Homeownership rate
• Average commute time
• Child maltreatment reports substantiated
• Percentage of smokers
• Population density
• Violent crime rate
• Property crime rate
• Percent choosing transit over personal vehicle

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Annual Ozone Daily Exceedances
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Organizational Sustainability

• Goal Improve the way that individuals and
  organizations engage their community and their
  environment and make them more successful for it
  (Foundation for a Sustainable Community and the
  Institute for Sustainable Development)

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Institute for Sustainable Development

• A program of the Foundation for a Sustainable
  Community
• Unique Public Private Partnership
• Connect University Research to the People and
  Institutions of our Community
• Connect the Global and the Local
• Inject sustainability into the teaching of the
  university
• Create and deploy a tool for small employers

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Rolling out the Metric

• Fall 2008 - Business Plan (UNC Kenan-Flagler
  Business Schools Center for Sustainable
  Enterprise)
• Summer 2008 - Beta Test with 150 businesses
• Fall 2008 - Regional and Multi-State Roll Out
• Spring 2009 National Launch

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Elements of the Tool
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The Business Model
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Up and Coming Soon

• www.SmartGreenInc.com
• www.StrategicMeasuresInc.com
• www.SustainableFoundation.org
• www.GoGreenPlus.org
• www.MovingBeyondGreen.org

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Measuring the Business Impact of Sustainability

• Jonathan M. Estes
• Strategic Measures, Inc.

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CURRENT MEASUREMENT APPROACHES

• Budget Analysis
• Metric Change from last years budget
• Customer Satisfaction
• Metric Surveys, Trouble-tickets
• Process Improvement
• Metric Time-on-Task, Cost reductions
• Benchmarking
• Metric Best practice comparisons

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MISTAKEN IDENTITY SOI VS. ROI
Requirements for Value Analytics Intervention
and Control Groups using three basic
variablesParticipants, Metrics, and
Interventions. Resulting reports include a
Payback Period, Cost/Benefit Ratio, and an ROI.
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ROI Formula
The basic Business Value formula is deceptively
simple ROI (benefits / costs) x 100
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Value Analytics Variables
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New Metrics

• Measurable Outputs Employee Performance
• Employee productivity End-users satisfaction
• Error rates Supports their needs
• Absentee rates Fewer complaints
• Tenant retention Reduced sick building syndrome
• Perception of safety Reduced workplace injuries
• Innovation Lowering health insurance costs
• Easy access for learning End-users morale
• and collaborating Distraction-free
  work

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New Metrics

• Sustainability and the Triple Bottom Line

Revenue growth Productivity Profit margin Return
on Investment Cost of capital Risk
Management Valuation of enterprise Appeal to
investors
Energy, Water Materials, Emissions and Waste,
Operational and Design Efficiencies, New Project,
Service Opportunities, Life Systems Impact
Community and Social impact Health and
safety Fair compensation Equality opportunity
education Recognition
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Re-Lamping Project

• Problem
• Lowering overall cost of lighting on office
  floors with the potential improvement of overall
  productivity.
• SOI Model
• Choosing the best lighting solution at the lowest
  cost with little or no impact to workers during
  the relamping process
• ROI Model
• Deploying two new lamps on different floors and
  monitoring productivity metrics on 3 floors over
  three months.

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Re-Lamping Project

• Analytics Study Variables
• PARTICIPANTS
• employee ID, tenure, title
• PERFORMANCE METRICS
• sick leave, health claims, attrition, no. of
  calls, amount of sales, previous year
  productivity, speed of ramp-up
• PROJECT
• Installation of daylight bulbs on two floors
  one in the ceiling, the other with desk lamps. A
  third floor is the control group.

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Re-lamping project
ROI Analysis Effect of Re-lamping on overall
productivity  
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Re-lamping Project
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Re-lamping Project
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Bottom-line

• Cost Savings to the organization over 3 years
  1.2M
• No impact to productivity during changing of
  bulbs.
• ROI on daylight bulbs 95
• Optimization 400 ROI for new and lower
  achievers.
• Recommendation Daylight desklamps for new and
  lower achievers.

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Take Aways

• Look beyond cost savings for value
• Calculate business impact as an ROI
• Explore new metrics beyond under budget to
  performance outcomes

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Lessons Learned from Talking to Others

• What Companies are saying
• Is this for real?

• Intersection of Interest
• Is this a movement?

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SAMPLE STATE OF COMMUN ITY REPORT
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Water Quality

• Percentage of Water Quality Samples
• that Exceed State Standards Fecal Coliform

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Gallons of Water Used Per Day Per Household
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Ozone Exceedance Days in the Triangle
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Traffic Counts Along Key Chapel Hill Roads
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Modes of Transportation
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Chapel Hill Residents Commuting Patters
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Percent of Orange County Residents Overweight and
Obese
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Percent of Non-Residential Tax Base
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Non-Residential Tax Base
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Percent Non-Residential Tax Base Increase Over
Previous Year
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Orange County Sales Tax (article 39) Collections
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Dropout Event Rate Grades 9-12
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Percent of Children Receiving Free/Reduced Lunch
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Violent Crime Incedents
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Property Crime Incidents
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Resident Teen Pregnancies (ages 15-19)
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Percentage of Resident Live Births Classified as
Low Birthweight (5lbs 8ozs or less)
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Age-adjusted Breast Cancer Incident Rate
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Population by Race
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Median Age Over Time
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Food Stamp Recipients in Orange County
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Public Employers

• University of North Carolina 11036
• UNC Hospital 6475
• CHC Schools 2618
• Orange County Schools 1253
• Orange County 740
• Town of Chapel Hill 692
• Other local government 300

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Private Employers

• Blue Cross/Blue Shield of NC 1373
• General Electric Company, Inc. 525
• Harris Teeter, Inc. 522
• Sports Endeavors, Inc. 434
• Wal-Mart Stores, Inc. 426
• Aramark Services 380
• PHE, Inc. 369
• A Southern Season 341
• Magnolia Gardens 300

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Single-family Detached Housing Permits
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Average, Median Sales Price by Type in Chapel Hill
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Average Housing Costs 2006
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UNC Chapel Hill Private Company Creation
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Triangle Area In-Migration Across Submarkets 2006