• Alice Bodkin

KPI’s for the 21st Century - Measuring Environmental Impact

For a long time in the business world, KPI’s were a standard way to monitor and measure a company’s success. Often, this was reflective of GDP (Gross Domestic Product), which is a single monetary measure of all services and goods produced within a specific time period. In the turn of last decade, GDP became central to economic planning and the primary way to measure growth. Through GDP, countries form their priorities and plans as to how society should operate.

However this has had grave consequences on the environment as countries have neglected the environmental cost of capital markets. Thus, establishing GDP as the priority has started to come under criticism, notably under British Economist and Author of Doughnut Economics Kate Raworth who challenged economies that have centred all policy making to reflect this KPI.

Since the time she published her book (2017), the world is a very different place. We have lived through 18 months of a global pandemic and people are increasingly becoming aware of climate change and the impact of their purchasing habits. In the wake of this knowledge, we are seeing the rise of new KPI’s coming to light and stepping away from GDP to measure success.

China’s technology driven Shenzhen has coined the KPI Gross Ecosystem Product (GEP), which measures how the city’s productivity contributes to human wellbeing and nature. In France, the French Federation de la Haute Couture et de la Mode has announced the launch of two digital tools that will measure ecological impact ahead of Paris Fashion Week in September.

The first tool is set to help brands participating in the shows calculate upstream of the organisation of its event. Whether this is through the form of a runway show, showroom or life presentation, there is optimum choice of service providers to empower brands to enhance their social impact and reduce their environmental footprint.

The second tool empowers fashion houses to support the eco-design of the collections they show by measuring the entire social and environmental impact of their industrial supply chain. The news of the tools came on World Environmental Day (June 4th) and made Paris the first fashion capital to provide fashion houses with such a tool.

With technology and fashion leading the way for measuring the environmental and social impact of business, this is setting the precedent for other industries to follow suit.

On a path to reducing a business’ environmental impact, it is intrinsic to redefine KPI’s, so companies can stay on path towards reaching this goal. Companies can no longer afford to review their balance sheets solely in terms of financial gains, they must also create and work towards establishing an Environmental P&L with forecasts helping them achieve their sustainable goals.

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