Companies are increasingly including sustainability as a core focus of their businesses. In 2017, 85% of S&P 500 companies issued sustainability reports, up from just under 20% in 2011 (Governance & Accountability Institute, Inc., 2018). While many groups have focused on developing metrics to report out on these objectives (e.g., Global Reporting Initiative, Dow Jones Sustainability Index, and United Nations Global Compact), far less focus has been given to developing tools for companies to use to help them make more sustainable decisions in their daily operations.
To fully achieve this stated goal of sustainability, companies will need to shift how business decisions are made. Traditionally, a company’s capital and investment decisions are made based on standard financial and accounting procedures, using pre-determined cost categories and interest rates. Lack of information on the ecosystem service impacts, or failure to include this information in decision-making, will potentially lead to sub-optimal investment in ecosystem service driven projects. To correct this market failure, science-based tools are needed to help companies understand and measure the environmental impacts of their investments and operations more broadly.
In this presentation, we focus on a tool developed within one company’s sustainability journey, The Dow Chemical Company (Dow). Dow needed a tool that could stand beside its traditional financial metrics for evaluating project performance, e.g., return on investment and internal rate of return, that would represent a project’s expected ecosystem service value to the company. This paper reviews the process of developing such a tool, referred to as the Nature Scorecard.
Results/Conclusions
We will present the process that Dow, The Nature Conservancy, and the Natural Capital Project used to develop the Nature Scorecard. Specifically, we will present how the scorecard incorporates data based on two principles of economic decision-making; the concept that the value of a change depends on both the magnitude of the change and the starting point. To that end, we will present how the scorecard incorporates state-of-the-art spatial mapping capabilities and datasets to measure the baseline ecosystem services in and around Dow’s manufacturing sites, and the value of proposed changes to these services. We will then present how this technical expertise is synthesized into a simple framework so that it can be easily understood and used by Dow project managers. Finally, we will present results from the use of scorecard on actual projects within Dow, and how its use may affect project decision-making.