Which KPIs to set for sustainability
By 2023 large companies in the UK will be required to show they have detailed public plans for moving towards a low-carbon future. This requirement is in line with the UK’s 2050 net-zero target.
If your business has not established the right key performance indicators (KPIs) for measuring your sustainability strategy, now is the time to do so. If you are a small company you may not come under the Government’s remit but this exercise is still very important. We are all responsible for looking after our planet and reducing our impact on it, after all.
Here are some of the sustainability KPIs you should consider tracking in 2022 and beyond.
Supply chain waste
This is a natural place to start for the supply chain and procurement sector! Alongside the environmental impact of production and internal operations, businesses need to factor in KPIs for supply chain miles. This includes identifying opportunities for reducing emissions and waste in logistics and investing in electric or alternatively-powered vehicles.
As part of your broader efforts to reduce the carbon footprint, you could also extend your goals to working with partners that are making meaningful efforts to reduce their own waste. If you feel your suppliers could be doing more to minimise their environmental impact, why not work with them to introduce and implement initiatives to reduce emissions and learn from one another’s experiences and best practices?
Carbon footprint
This is one of the most important KPIs for reporting your efforts. This is mainly because it is an objective that most people are aware of; so when you are communicating your performance to the general public, customers or stakeholders your carbon footprint measurements are likely to grab their attention.
Your KPIs need to be tracked across three scopes of greenhouse gases:
- Scope 1: Greenhouse gases that come directly from sources controlled or owned by the organisation. Company vehicles and facilities, for example.
- Scope 2: Greenhouse gases that come from indirect use. Examples include heating and cooling, and electricity.
- Scope 3: Greenhouse gases that come from purchased goods and services. This could include logistics and transportation, the end-of-life treatment of sold products, and waste generated in operations.
The aim here is to be at least net zero and, where possible, carbon negative. This means that the company removes more carbon than it emits.
Energy consumption
Tracking your energy consumption business-wide can reveal some very effective, actionable tactics for decreasing emissions and controlling costs. Monitoring energy consumption used to be a time-consuming resource-intensive activity, but access to digital tools has significantly improved the effectiveness and accuracy of tracking energy usage. The Industrial Internet of Things (IIoT), also known as Industry 4.0 uses smart sensors, actuators and real-time analytics to capture and analyse data. The data insights help businesses to respond to problems and identify inefficiencies and solutions.
Sectors such as manufacturing can benefit greatly from IIoT. For example, businesses will have far better visibility and control over product quality, energy management, asset tracking, supply chain traceability, and supply chain efficiency. I
IIoT and other machine learning and AI technologies all help business leaders to make better decisions and drive greater efficiencies which should impact positively on energy consumption and the wider sustainability program.
Load density
Monitoring load density helps to ensure you are optimising the transportation of products and services so you are moving the maximum amount of goods every time. If you find your load density tends to be at the lower end of the scale, you could consider sharing vehicle space with other companies. This approach should mean that you mitigate your impact on the environment and benefit from cost savings as well.
Water use
Tracking water usage is one of the many sustainability tasks that can be done better with IIoT. For example, you can install moisture sensors around buildings to detect leaks. Once the sensors have collected data and sent it back to the Cloud for analysis, a smart valve will automatically shut off the water. Another example is smart metering where businesses can remote program automatic commands to open and close water supply and mitigate the impact of floods and water waste.
We hope this article has given you some ideas about which sustainability KPIs you should track across your business. There are many others out there including social impact and recycling rates, both of which will also benefit from the use of emerging technologies such as AI, IIoT and Machine Learning.
To ensure you are optimising the use of these technologies you need to have the right talent on board. If you are interested in digitally transforming your business and want access to the top candidates in procurement and supply chain, get in touch. We would love to help.