The Sustainability Index: How to Tell if You're Getting Greener

Every few years it gets more complicated to run an organization. It used to be if you had a solid financial result, that was enough to be considered successful. About 30 years ago, new types of metrics started creeping in that were used to assess different aspects of organizational health. Product quality metrics become big in the 1980s, followed quickly by measures of customer satisfaction.

Next, organizations realized that much of their work was done by employees, so measures of factors such as employee satisfaction/engagement, safety and employee health become part of the corporate dashboard. Other measures of supply chain management, processes and even ethics began to find their way onto what Harvard Business School professors Robert Kaplan and David Norton came to call the "Balanced Scorecard."

In the last five years or so, another way to measure the health of an enterprise has emerged: sustainability, or the degree to which an organization is environmentally responsible. This kind of thing was originally only considered important by a few tree-hugging companies run by hippies, but it has now become a mainstream concern. It may surprise you to learn that one of the leading companies in measuring and managing sustainability is Walmart.

Although I'm sure predictable companies like Patagonia or Whole Foods have good sustainability metrics, Walmart is clearly one of the leaders of this effort to measure and focus on sustainability as a key performance factor. The challenge is that sustainability often costs money, and there is no indication that Walmart will be paying vendors more for their sustainable products and practices. By balancing a focus on price, value and sustainability, Walmart will be putting pressure on its 60,000 vendors to have products and processes that are less demanding on the environment. A recent article suggests that it is getting harder to hate Walmart.