Posted by Tom Fitz
Tom Fitz
Tom utilizes over eighteen years of manufacturing experience to help companies c
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on Wednesday, 18 January 2012
in Insights

Normalized vs. Absolute

Being Transparent and Truthful With Sustainability Results

I’ve never liked how companies report their progress either as a normalized or absolute result depending on the spin they can put on the numbers. Why not report both?  Too often companies skew the underlying cause of how certain environmental goals were attained to paint a positive picture for the consumer, when in fact, they might have been neutral or actually increased their impact. This often contributes to consumers believing companies are “green washing” to increase sales.

The Danger With Normalized Results Reporting

Let’s analyze a simple example to further support my recommendation of dual reporting. Suppose Fortune 500 company XYZ had net sales of $10 MM in 2010 while using 3 million MWh of electricity. In 2011, they surpassed expectations and did $14 MM in sales while using 3.7 million MWh of electricity. From a normalized reporting basis, the company can claim they reduced electricity use per sales dollar by almost 12% and be completely accurate. The problem is their actual GHG (Green House Gas) footprint grew by almost 23%. So here lies the dilemma.

The Danger With Absolute Results Reporting

Reporting only absolute results could have the same consequence. Suppose the converse was true in the previous example. Company XYZ did $14 MM in sales in 2010 and $10 MM in 2011. If they were reporting only absolute values they could report their GHG emissions were reduced by almost 20%. The issue now is the underlying circumstances to support the decrease are not shared. It’s not because the company implemented a reduction plan and attained the goal, but because the company didn’t have to produce as many finished goods as the prior year, hence their use of electricity was correspondingly lower.

Complete Transparency is the Way Forward

Complete transparency is the key to reporting environmental results. This will allow the consumer to fully understand if companies are investing resources to reducing their overall environmental impact, or sales volatility is influencing the results. I’ve read through so many articles in Environmental Leader this past year of companies achieving GHG reductions on a normalized basis. This leaves me questioning if the reductions stem from following an extensive, mapped-out action plan, or because they're twisting the results for their own benefit.

I implore them to also report absolute numbers so we, the consumers, can determine for ourselves if companies are making progress or not. Enough with the public relations and marketing ploys to paint a false picture, to make progress one actually has to build a sustainability plan into the overall business plan – not by altering end of year results in ones favor.


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