The popularity of sustainability has surged in recent years, causing organizations to grapple with balancing short-term profits with long-term sustainable practices. This has led to concepts like shared value and corporate social responsibility, with companies aiming to create economic and social value while reducing their environmental impact. The movement has sparked active efforts, with social innovators, policymakers, investors, and academics all striving to measure sustainability.
In today’s world, companies must move beyond outdated economic metrics and adopt KPIs that consider the triple bottom line, including social, economic, and environmental aspects of their operations, all while promoting sustainable human well-being.
However, sustainability is a constantly evolving concept that adapts to context and cannot be measured with a single yardstick. The balance between social, economic, and environmental considerations is crucial to achieving sustainability. It is like walking on a tightrope, requiring constant adjustments to maintain equilibrium in a changing world. Each context requires a unique approach, with varying weights and measures for different factors. Customized solutions are needed that address stakeholder needs while maintaining long-term balance, as a one-size-fits-all formula won’t work.
About the Expert
• As a Managing Director, Teodora leads development initiatives to support and enhance the organization’s strategic plan and manages the development and growth of the MENA branch of The KPI Institute.
• An expert researcher, consultant and practitioner with six years of experience in the deployment and implementation of KPI Management Frameworks.
• Pursuing a PhD. in Management on the topic: Rethinking the Performance Management Systems to ensure organizational sustainability, Lucian Blaga University, Romania
• Postgraduate Program in Entrepreneurship and Venture Creation, ISCTE Business School Lisbon, Portugal
• Master’s Degree in Project Management, Romanian-German University, Romania
Companies can no longer afford to ignore sustainability. It is not just a trend but a major factor that drives where most businesses are headed. According to Globescan’s The State of Sustainable Business 2019, reputational risks, consumer demand, investor interest, operational risk, and employee engagement are some of the catalysts behind the sustainability efforts of most organizations.
Manufacturing is one of the industries that are pressured to realign their activities with the mounting call for sustainability practices. Sustainable manufacturing refers to developing products with minimal negative environmental impacts and maximum contribution to the conservation of natural resources. These products are expected to be economically sound and safe for employees, communities, and consumers.
Sustainable manufacturing aims to reduce the intensity of materials use, energy consumption, emissions, and unwanted byproducts while maintaining or improving the value provided for society and organizations.
Some relevant key performance indicators that are often considered when evaluating the sustainability of manufacturing companies are:
Environmental performance KPIs, such as: # Air emissions, % Energy utilization, % Hazardous waste etc.
Economic performance KPIs: % Product reliability, % Conformance to specifications, $ Material cost, % Labor cost etc.
Social performance KPIs: % Occupational health and safety, % Turnover rate, % Supplier commitment etc.
Sustainability standards are observed to ensure quality, transparency, compliance, and results in terms of making organizations accountable for their economic, environmental, and social performance.
The GRI Standards
Among the internationally renowned frameworks is the Global Reporting Initiative’s (GRI) Sustainability Reporting Standards. The GRI Standards consist of Universal Standards, which apply to all organizations and report on human rights and environmental due diligence, the new Sector Standards for sector-specific impacts, and the Topic Standards that come with the revised Universal Standards and relate to a particular topic.
Their vision is to create a sustainable future enabled by transparency and open dialogue about impacts. In this regard, they are a provider of the world’s most widely used sustainability disclosure standards.
With GRI Standards, companies can publicly present the outcomes of their activities in a structured way. This allows their stakeholders and interested parties to better see their status of how they are responding to calls for sustainability. GRI Standards can be used by any type of organization, whether large or small, public or private, or from any location or industry.
As cited in the report “A Short Introduction to the GRI Standards,” the Reporting Process for organizations using the GRI Standards involves determining impacts and their significance, identifying material topics, or topics that are relevant to the organization’s activities, and reporting disclosures. The final stages are reporting the organization’s most significant impacts on the economy, environment, and people and publishing information and GRI content index.
The GRI Standards comprise three series of Standards: The GRI Universal Standards can be applied to your reporting. The GRI Sector Standards are for sectors while the GRI Topic Standards are used to report specific information regarding material topics.
Daimler’s Sustainability Report
An example of a sustainability report that is developed based on the GRI Standards comes from Daimler, one of the biggest producers of premium cars and the world’s biggest manufacturer of commercial vehicles.
In 2006, Daimler joined the multi-stakeholder network of the Global Reporting Initiative (GRI), where it initially was an organizational stakeholder. It later became a Gold Community Member and is now a member of the GRI Community.
Their report is based on the Daimler Group’s sustainable business strategies. It contains two conceptual levels: “Spurwechsel” section, which refers to the external sustainability developments and trends into a context with the internal strategies and measures and “Reporting” section which provides a detailed description of the goals, due diligence approach, measures, and achievements.
The Reporting section focuses on six areas of action: climate protection and air quality, resource conservation, livable cities, traffic safety, data responsibility, and human rights as well as on three enabler topics, which are cross-sector themes that can influence areas of action. The enabler topics are Integrity, People, and Partnerships.
As part of the Climate protection & air quality area of action, the manufacturer frequently monitors the compliance with the internal and external environmental protection requirements. This way, they can take proactive actions to eliminate possible damage.
As a result, the reduction of air emissions is an important focus of their sense of responsibility for the environment (Figure 1).
They consider the consumption of resources in production as an important factor in the environmental compatibility of their vehicles. Thus, they are working to make production more efficient and more environmentally friendly by using less water, energy, and raw materials.
Daimler evaluates in a consistent and transparent way the economic, environmental, and social impact in order to find the best solutions to remain climate-neutral and sustainable in the future.
In addition to this, they maintain regular contact with representatives of business, government, and other interest groups that advocate for the same goal.
Daimler also plays an active role in upholding the UN Global Compact, a voluntary initiative that encourages companies to integrate sustainability practices into their activities. Daimler shares on their website that they are involved in the thematic and regional working groups and initiatives of the pact.
“In the reporting year, these included the action platforms “Reporting on the SDGs” and “Decent Work in Global Supply Chains” as well as the UN Global Compact Expert Network and the German Global Compact Network,” Daimler states.
As part of its obligation, Daimler reports its initiatives on areas like human rights, labor standards, and environmental protection in its Sustainability Report
Reporting sustainability key performance indicators constantly, in a clear and transparent manner, can provide a clear overview of the environmental, social, and economic impacts, and based on this, the organizations can take proactive actions to reduce the negative impact.
In this context, The GRI Standards offer a consistent structure for companies to report information in a way that covers the most significant impacts on the economy, environment, and people.
To learn more about KPIs, visit the world’s largest database of documented KPIs: smartkpis.com.
Editor’s Note: This article is originally published in the 22nd PERFORMANCE Magazine – Printed Edition. To get your own copy of the whole magazine, visit – TKI Marketplace – to download the digital copy and – Amazon – for an additional printed copy.
Key performance indicators (KPIs) are essential in assessing the performance of smart cities, which are emerging as the main drivers of economic development in several countries today. The Organization for Economic Co-operation and Development (OECD) defines smart cities as “cities that leverage digitalization and engage stakeholders to improve people’s well-being and build more inclusive, sustainable and resilient societies.”
According to the paper “Smart Cities Evaluation – A Survey of Performance and Sustainability Indicators,” more than 60% of the worldwide population lives in urban areas. However, the negative impact of urbanization on the environment is increasing. The United Nations’ Sustainable Development Goals (SDGs) encourage the increased use of technology to provide efficient services, high quality of life, and alternatives for strengthening environmental sustainability.
Analyzing smart city performance enables policymakers at both the national and local levels to set achievable targets, determine where cities stand on their goals, track progress, and adjust policies. The Institute for Management Development (IMD) in Lausanne, Switzerland, and the Singapore University of Technology and Design (SUTD) cooperate to generate the Smart City Index (SCI). The study rates 118 cities from all over the globe based on inhabitants’ judgments of how technology may enhance their lives, as well as economic and social data from the UN Human Development Index. In July 2021, the report polled 120 residents in each city, totaling roughly 15,000 people.
The first three top-rated cities by IMD according to the SCI 2021 are Singapore, Zurich, and Oslo. The main aspects analyzed through SCI 2021 include priority areas that are perceived by the citizens as priorities to be improved. The second importance is based on Structures and Technologies, which are key survey data collected and organized into five categories: health and safety, mobility, activities, opportunities, and governance. Each indicator under these categories displays the score for the city and a comparison with the top four.
There are five characteristics that are desirable to users based on a quality model for a smart city designed in the paper “Metrics and indicators to evaluate the degree of transformation to smart city of a city. An ad-hoc quality model:” business and energy, transport and traffic, public security, inclusion and security, education, and innovation and development.
All these areas could be optimized through a specially developed set of metrics that can be adapted accordingly to the specific region/country. Some examples refer to: # Wi-Fi antennas, % Solar panels, # Intelligent interrelated systems, #State drones or # Intelligent garbage containers.
The Holistic Key Performance Indicators (H-KPI) Framework was developed by the National Institute of Standards and Technology (NIST) to assist municipal managers and other stakeholders engaged in governance and social development that analyze the benefits of smart city technologies. It was created to serve as a foundation for the development of measuring methods that allow for integration, adaptation, and extension across three interconnected levels of analysis: technologies, infrastructure services, and community benefits.
Strategic planning, system design and assurance, and operations management are all applications of the H-KPI technique. According to Smart Cities Connect, five metrics are used in the H-KPI Framework: across districts and neighborhoods, KPIs are aligned with community priorities; assets that are in line with the needs of the community; effectiveness of investment; density of information flow; and infrastructure service quality and social programs. This involves a baseline assessment, a comparative study of technology options, system design, and project sequencing for strategic planning.
The U.S. Department of Commerce’ National Institute of Standards and Technology (NIST) elaborated on the data collection in the H-KPI method in a special publication. The NIST paper shows that the data collection goes through five phases: data source selection (define city data sources); data gathering (turning raw data into information); modeling (develop data sharing models for city data); characterization (listing smart city data and goals); and quantification (comprehensive analysis based of previous steps.
In conclusion, performance metrics play a key role in assessing the ability of cities and communities to deploy sophisticated technology efficiently and effectively as well as the reliability and efficacy of systems and strategies used in developing and running smart cities.
To level up your knowledge and understanding of performance metrics, The KPI Institute is continuously delivering quality content through online and face-to-face classes on Certified KPI Professional and Practitioner. Through this program’s intensive and organized approach to measuring performance, you will be provided with the required knowledge and training to advance your skills among other professionals. Visit The KPI Institute’s website for further information.
Compared to previous decades, the world has more innovative and safer cities that take better care of their citizens. A smart city represents an area that uses information and communication technology (ICT) to enhance administrative performance, disseminate information to the public, and boost the standard of services and the welfare of residents. A 2022 study reports that between 2000 and 2016, there was a global decline in the number of deaths from lower respiratory infections among children under the age of five, which fell by 54%, and roughly 13% overall.
Making a city smarter has been identified as the most effective method for enhancing residents’ quality of life and tackling urban challenges. According to a 2022 top from Ranking Royals, the smartest cities in the world have developed in the Nordic countries (namely Norway, Finland, and Denmark), Singapore, Switzerland, Taiwan, New Zealand, Spain, Austria, USA, and South Korea.
Boosting Sustainability and Citizens’ Wellness
While getting smarter, urban regions have implemented sustainable systems and tools that contribute to the Green Deal agreement. The EU Green Deal’s primary goal is to achieve climate neutrality as the first continent by 2050. That will lead to a cleaner environment, cheaper energy, smarter transportation, new jobs, and a better lifestyle. The strategies of smart cities aim to improve life quality for inhabitants by using innovative technologies and saving resources.
For example, in Graz, a smart city in Austria, energy efficiency is considered essential for future developments. In 2010, the “Smart City Graz” project, whose purpose was to transform the territory into a sustainable and energy-autonomous urban district, was launched.
Denmark demonstrates its strength and sustainability level by covering the needs for energy production without using foreign energy resources. It secures its place as the greenest country in the world by continuously practicing a sustainable economy. For instance, a 2020 case study presents one of the wealthiest areas in the world, a Danish island called Bornholm. Bornholm’s wealth comes from developing new energy market mechanisms to control energy networks with a high proportion of renewable energy resources.
To support sustainable initiatives and contribute to citizens’ welfare, Vitoria-Gasteiz city (Spain), the European Green Capital of 2012, launched a secure bicycle parking network called VGBiziz. It is a low-cost initiative comprising 9 parking sites for around 400 bikes (including electric and cargo bikes). In 2009, Valencia, Spain’s largest city, joined the Covenant of Mayors, and in 2010, it announced its first Sustainable Energy Action Plan (SEAP). The agreement should reduce GHG emissions by 40% by 2030 in accordance with the goals set forth by the Mayors’ Covenant on Climate and Energy Program. By using the VLCi Platform, a global platform for smart city management, Valencia moves forward with its Smart City Strategy.
In the 2022 Environmental Performance Index (EPI) rank, Denmark received the highest EPI score (77.90), with 14.90 points increase compared to last decade. The Environmental Performance Index is a tool for measuring the environmental performance of a state’s policies. The United Kingdom earned the second position with a very close score, 77.70. Finland occupied the third place with 76.50 points, followed by Malta (75.20), Sweden (72.70), and Luxembourg (72.30).
How to Monitor and Improve Citizens’ Wellness
Sustainability concerns not only the welfare of the planet, but also the well-being of its inhabitants. The environment can positively or negatively impact human health. People need good resources to evolve and stay healthy: fresh air, good food, and drinking water. But how can people know if they have all of these? To evaluate life quality, municipalities usually use publicly available and updated key performance indicators (KPIs), such as:
# Outdoor air pollution
# Air quality complaints
# Risk Management Index
# Environmental Sustainability Index (ESI)
% Households with a reliable supply of water
% Drinking water compliance rate
% Households with access to safe water
% Satisfaction with food quality
Since respiratory infections are influenced by air quality, specific KPIs for measuring the air level of pollution should be included in weather updates. Individuals that suffer from chronic respiratory conditions such as asthma and chronic obstructive pulmonary disease (COPD) are susceptible to the negative effects of air pollution. Asthma and COPD are aggravated and triggered by air pollution, raising respiratory morbidity and mortality. Also, cholera, diarrhea, dysentery, hepatitis A, typhoid, and polio are just a few of the illnesses that can spread due to contaminated water and poor sanitation. People are exposed to health risks when water and sanitation services are absent, unsatisfactory, or improperly managed.
Leaders can use key performance indicators to improve quality of life and make decisions based on the results. Some KPIs, which they can consider are:
# Initiatives to promote greater environmental responsibility
# Water recycled and reused
% Current projects that are environmentally friendly
% Waste reused, recovered, or recycled
By monitoring the energy-related KPIs, community leaders can see if they can satisfy the needs of citizens, using only renewable energy resources. Additionally, KPIs such as # Initiatives promoting greater environmental responsibility and % Current environmentally friendly projects help raise environmental protection awareness.
To advance your knowledge and skills among professionals in identifying most effective KPIs for your organization and its use in measuring performance, be a Certified KPI Professional and Practitioner. The certification in KPI Measurement courses of The KPI Institute are designed to help practitioners understand the KPI measurement challenges and ways to address them. Invite your colleagues and enroll now! For further information, visit kpiinstitute.org.
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