By Jayne Flannery
Leveraging shareholder value from sustainable development can be a complex and bewildering challenge. Mark A. Serwinowski, founder and CEO of corporate sustainability investment specialist, MetaVu, talks about the need for clear diagnostics, structured frameworks and quantitative benchmarking to build a better business case.
Global supply chain forces, economic pressures, the rise of the responsible consumer and shareholder expectations are leading executives to focus on corporate social responsibility and sustainability as a lever for value creation, competitive advantage and risk management. We are told that sustainable practice impacts every link of the business value chain. But making linkages between CSR activities on the ground, which can be intangible and difficult to measure, and their impact on balance sheets and shareholder value is no straightforward task. How can success be measured and how can long-term sustainable planning be aligned to the dynamic evolution of non-financial reporting, organisational behaviour and technological innovation?
These are some of the questions MetaVu has set out to answer on behalf of leading companies such as Chevron, GlaxoSmithKline, Duke Energy, Shaw Industries and Georgia Pacific.
In a different career, sustainable investment expert Mark Serwinowski might have achieved critical acclaim as a mathematician, physicist or statistician. MetaVu, the company he founded 10 years ago, has little affinity with furthering the “feel-good” facet of CSR for its own sake. Rather he has focused on developing a highly structured, diagnostic approach to identifying and wedding opportunity to capability and then measuring and quantifying the outcomes.
The qualitative understanding of value is acknowledged, but not when it stands in isolation, which Serwinowski feels is too often the case in the advisory industry. “In my experience, qualitative intangible data is validated once it has been linked to structural areas of the business model and the balance sheet of the company. You have to put in place a measurable, quantifiable base for forecasting decisions, sensitivity analysis and business case investments,” he states.
“MetaVu’s diagnostic approach begins with a clear definition, understood and shared by all stakeholders on what sustainable development actually means in relation to that company, industry and marketplace. Once this framework has been established, we go on to measure environmental and social performance impact and value from the operational perspective; at the business model and product level,” he says.
According to Serwinowski, it is critical to establish proper baselines of value and performance in order to make informed decisions on risk and on opportunity. “Our diagnostic tools enable us to translate qualitative data into quantitative tangibles to identify leading indicators and the predictive analytics that are needed to enable better strategic planning in terms of measurement and ROI,” he adds.
The diagnostic tools used by MetaVu are proprietary, but have been developed from existing standards and models. “We take these external frameworks and then link them back to key internal indicators such as organizational maturity, i.e., a company´s ability to translate its intentions into practice and financial performance. Too often we see companies getting stuck because their success metrics and execution capabilities simply do not coincide. It is the combination of leading and lagging indicators that link operational and financial indicators to shareholder value, such as how CSR performance is contributing to growth,” he explains.
He says he wants to empower executives to choose sustainability investment strategies that are right for their business, not which serve the agenda of the moment. “When you position sustainability as an investment strategy, it provides a framework to view the environmental and social performance of a business model and product, throughout the value chain and supply chain. The resulting analysis empowers executives to make informed decisions and create long-term plans to marshal their talent and resources on a clear path for innovation. However, there is no silver bullet – leveraging sustainability for value creation requires investment in a broad range of interdependent areas, touching everything from energy, water and materials, to supply chain, distribution channels, people, processes and culture. Organizationally, this type of approach enables CSR managers and their Sustainability, EHS and Operations colleagues to have an impact in the near-term while creating measurable, long-term value,” he concludes.
MetaVu simplifies the complexity of investing in sustainability and empowers executives to choose investment strategies best for their business. A recognized leader in sustainable development, MetaVu’s advisory services and subscription products help companies innovate their business model and products leveraging sustainability as a strategy for value creation. This includes the Sustainable Development (SD) Tool Suite™ designed to measure environmental and social performance impact.
MetaVu has successfully collaborated with leading companies across multiple sectors including global energy development in extractives, to renewables and electricity distribution in the “smart grid,” to companies that produce the medicines we take, the food we eat, the clothes we wear, the cars we drive and the technology we use. To learn more about MetaVu, go to www.metavu.com. To learn more about sustainability reporting trends or to attend the next Sustainability Analyst Call, please visit www.thechangingESGlandscape.com.