Sustainability Analytics: Gaining a 3D View of Your Value Chain
By Chris Park
How past, present, and future insights can help build a more resilient enterprise
Many companies have established analytics capabilities to assess and guide their sustainability programs and initiatives. They are collecting and evaluating data on factors such as energy and resource use, emissions, employee travel, and supply chain efficiency and then using the resulting insights to guide sustainability-related initiatives and reporting.
Business leaders recognize the importance of sustainability awareness, analysis, and action. So much so, in fact, that they are expecting more — much more — from these efforts. Having seen the contribution that sustainability can make to reducing costs, as well as its positive impact on corporate image and stakeholder relations, they are eager to further unlock the potential of such initiatives.
Several key factors are compelling businesses to increase their focus even more on sustainability requirements, risks, and opportunities. In addressing these issues, companies need to use predictive analytics to build on historical and current sustainability data and develop a three-dimensional view that considers future sustainability risks as well. In doing so, they can be better equipped to address today’s requirements wisely and efficiently, and more resilient when future challenges inevitably arise.
"Determining which sustainability decisions, actions, and investments are actually achieving their intended goals can help guide future emphasis and resource allocation."
The recent, explosive growth in analysis tools, coupled with massive, ever-expanding data sources, has increased the ability to measure and assess everything from air quality to website traffic. As capabilities have expanded, so have expectations. Organizations want the ability to manage and decipher “big data,” the large, complex data sets now growing to petabyte size and beyond. Along with being able to handle big data, businesses seek speed. They want analytical insights within days, rather than weeks or months as in the past.
Businesses also want to look ahead as well as behind. Currently, the metrics and key performance indicators of sustainability analytics are largely backward looking, or perhaps reflect current activities. While the future can’t be predicted, a view of factors influencing it is becoming increasingly critical.
Organizational leaders have good reasons to want more from sustainability analytics, including:
- Addressing cost shocks and other disruptions. The news media reports showing the price of gasoline on service station signs during an oil-price spike provide a vivid example of how sustainability-related issues can affect business health. Analytics can help businesses gain greater insight into a variety of issues relating to the environment, social responsibility, and brand value and perception and lead to potential avenues for addressing those issues.
- Keeping ahead of competitors. Businesses are increasingly concerned about the company they keep when it comes to sustainability, so they are taking a closer look at suppliers and partners throughout their value chains. A supplier could face the real risk of a customer replacing it for lack of forthrightness about its sustainability footprint, with a potentially devastating impact on revenue. Almost any business today has potential risk associated with its competitors' superior use of and reporting on sustainability data.
- Understanding emerging risks. Companies can apply predictive analytics to assess conditions regarding resource use, environmental impact, labor practices, and other issues, both within their organization and across their value chains. Assessing potential emerging internal and external exposures is a critical first step in managing and mitigating them, rather than watching them blow up on a blog.
As business analytics tools and techniques have improved, organizations have continually expanded their ability to mine historical and current data and analyze sustainability performance both internally and across their value chains. These capabilities have merely whetted their appetites, however. Now, organizations want a 3D view of sustainability — one that considers possible future opportunities and risks. Such an approach should leverage the power of analytics to:
Continue to improve historical-performance analysis, reporting, and transparency. Even in today’s real-time world, analyzing past performance can produce invaluable insights. It may be helpful to consider which operational performance metrics are being measured, and whether they have been affected by baseline changes in requirements. Determining which sustainability decisions, actions, and investments are actually achieving their intended goals can help guide future emphasis and resource allocation. Signals may also appear, however faint, of sustainability-related concerns hidden in the masses of data.
Gain clearer insight into current sustainability performance. Increasingly powerful tools are available to monitor, measure, and report performance in real or near real time. Among considerations are whether sustainability reporting is adequately automated; whether fundamental data governance and data management capabilities are in place to effectively maintain and use sustainability-related data; and whether the organization is taking advantage of available analytics capabilities, dashboards, and real-time data.
Model potential future sustainability landscapes. Companies can now use analytics to evaluate potential sustainability opportunities and risks throughout their product and service value chains. For example, there is often a lack of detail regarding value and supply chain interdependencies with respect to natural resource consumption and operational impacts. There are also issues associated with chain-of-custody requirements and across-sector supply chain activity. Modeling and scenario analysis can aid in understanding the interplay of economic, social, and environmental factors associated with the value chain. The perspectives of multiple stakeholders can be factored in as the company anticipates the nature and potential impact of internal initiatives and changes in external sustainability conditions.
Analytics can help businesses understand the performance, impact, and cost of their sustainability initiatives, as well as anticipate future conditions and requirements. By analyzing their sustainability profile in 3D and making the improvements and modifications revealed through that analysis, companies can help unlock value within the organization and build a more resilient enterprise. Such resilience should better equip businesses to meet current and future expectations for corporate sustainability performance and behavior.
Chris Park is the U.S. Sustainability Consulting Leader for Deloitte Consulting LLP, and Kyle Tanger is a Director in the Sustainability Services practice for Deloitte Consulting LLP.
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