Global Corporate Consultancy

April 2012

SUSTAINABILITY MEASURES
Five Essentials for Effective Data Collection
Anna Blitz, Global Corporate Consultancy, AnteaGroup

Collection Protocols

Data Definitions

Built in Validation

Routine Audits

Managing Change

2012 Global Corporate Consultancy l AnteaGroup USA, Inc.

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Sustainability Measures: Five Essentials for Effective Data Collection

Globalization, unprecedented financial failures and unsettling predictions about the future have many contemplating what changes are necessary for societys core institutions to grow, prosper and flourish over the long term. Some would argue that part of the solution is to rethink and redefine value, integrating both environmental and social dimensions to the traditional financial calculus that defines success.

Today, many companies seem to agree with this notion and are in fact diligently working to characterize their social and environmental performance. While there may be differences of opinion as to precisely which sustainability measures are most material or best at delineating value, there is little debate on the essentials of good data collection, especially among those disclosing and using these new metrics and indicators in ways similar to that of traditional financial measures. This white paper shares the fundamental aspects of what we have learned in managing sustainability data for numerous corporations around the globe. While it is impossible to include all our experience in this brief, we have condensed those learnings considered most important into the Five Essentials for effective sustainability data collection. Our hope is that these thoughts will serve as practical aids in the design and implementation of systems to better characterize and quantify the value social and environmental progress measures can bring.

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Sustainability Measures: Five Essentials for Effective Data Collection

THE FIVE ESSENTIAL ELEMENTS

At first glance, collecting sustainability data may appear to be a relatively straightforward process. Consider something as simple as gathering and compiling the total volume of water consumed at any given location. Oftentimes, local personnel quickly review a facilitys monthly water utility bill, determine the volume purchased, and report a value to those interested in compiling this data. Sounds simple - but what if it then became apparent that water from a nearby river had been supplying the plants cooling and irrigation processes for years? Suddenly results (thought to be correct) are deemed inaccurate by 25-30%, month after month. Multiply similar omissions or errors across a wide variety of social and environmental parameters, then again by tens or even hundreds of facilities or products, and it becomes readily apparent why clear data collection practices are essential. This is especially true when companies plan to use such metrics and/or indicators in manners similar to traditional financial measures (e.g. to demonstrate progress, or in support of significant corporate performance decisions). To minimize the potential for such problems, leading organizations adopt complete systems and processes designed to ensure data collection is as comprehensive and as reliable as possible to support their key decisions. Our experience indicates that the most advanced approaches have at least Five Essential elements or practices in common. These include: 1. 2. Clear Data Definitions & Boundaries specifying the scope, purpose, exceptions and limits associated with the data being collected. Defined Data Collection Protocols serving as a definitive description of how information is to be gathered and compiled, explaining methods, frequency, automation and documenting other important aspects in ways that simplify and assist those responsible for collecting this data. Built-In Validation integrating discrete data quality checks into collection processes, verifying completeness, accuracy and plausibility at logical points along the way. Capabilities To Anticipate & Effectively Manage Change improving when innovations reveal better data collection methods or adapting when changes at a company warrant modification to current practices/processes. Routine Auditing & Assurance designed to assure transparency and validate the data collection methods as well as the quantitative results of such efforts.

Leading organizations adopt complete systems and processes designed to ensure data collection is as comprehensive and reliable as possible to support their key decisions.

3.

4.

5.

More details on each of these Essentials, along with illustrative examples, are provided in the following sections.

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Sustainability Measures: Five Essentials for Effective Data Collection

1. CLEAR DATA DEFINITIONS & BOUNDARIES

Those companies most effective in collecting sustainability data have established clear and concise definitions and boundaries for the information they want to gather. While seemingly obvious, our experience has shown that many organizations neglect or even ignore this important aspect of data collection until only after costly errors or omissions occur. To avoid such pitfalls, ensure that, for each parameter to be tracked: The scope of the collection effort is clearly defined; The purpose of data collection is articulated to all those who will collect or utilize the information; and Any exceptions are clearly noted, minimizing initial effort and subsequent rework of the data.

Illustrative Example:
Clear data definitions and boundaries have a scope, purpose, and noted exceptions

Scope:
Defining the scope establishes the data collection boundary the information that should be included as part of the collection process for this specific measure, as well as those locations that are required to collect it (e.g. setting operational scope boundaries to include all owned manufacturing operations and distribution centers versus all operation system sites, including leased locations). When including information beyond the four walls of your company, defining the scope to include the specific components of the value chain is also necessary (e.g. emissions associated with packaging and ingredients from first tier suppliers).

SCOPE 3 EMISSIONS - EMISSIONS FROM INGREDIENTS

SCOPE: Emissions associated with ingredients used in our products shall be collected from first-tier suppliers. Ingredient suppliers included in this request are: grains, sugars, fruits, and oils. First tier suppliers are those that provide materials directly to our company for inclusion in our products. Emissions associated with the product our company purchases shall be compiled by our supplier (pro-rated based on revenue) and delivered to the Director of Sustainability for inclusion in our emissions database. PURPOSE: This information is collected as part of an ongoing effort to capture the full impact of our operations from farm to consumer. Ingredient emissions for grains, sugars, fruits, and oils represent the largest emissions sources from our first tier suppliers. This information will be used to drive performance improvements and emissions reductions throughout the companys value chain.

Purpose:
Defining the purpose denotes why data should be collected and reported on a particular measure and how the information will be utilized by the company. This component of the definition details context and company expectations, thereby encouraging those supplying information to ensure every submittal is correct, accurate and complete. A purpose that is tied to performance or benchmarking against particular goals or targets will incent consistent reporting more than a purpose that is perceived to have no value to either those supplying the information or staff using the outputs once compiled.

Exceptions:
Describing what is not included in the scope (i.e. exceptions) is just as important as identifying what is included. By identifying and describing exceptions at the onset, companies can minimize over or under estimations, as well as other errors that could result in significant rework (and additional cost) down the line. Exceptions are typically related to the boundary conditions of data to be reported, by including
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EXCEPTIONS: Ingredients other than grains, sugars, fruits, and oils, along with second- and third-tier suppliers (our suppliers suppliers) will not be considered at this time. Additional ingredients and suppliers will be considered if deemed material to reporting efforts.

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Sustainability Measures: Five Essentials for Effective Data Collection

or excluding specific operations (e.g. manufacturing, offices, or the like), or by addressing unique situations that arise during data collection that may be out of an organizations control (e.g. utilities included as a lease agreement). By taking this first step and setting clear and concise definitions from the outside, companies will have a well-defined foundation for their data collection process. Evaluating the scope, purpose and exceptions during the continuous improvement of the organizations sustainability program will result in more accurate results and ensure a proactive, flexible approach that anticipates and accounts for variables, rather than reacting to data issues down the road that could result in costly rework. Leading companies, however, dont just stop there our experience shows that, to ensure effective results, the best company systems carry this proactive mindset throughout the data collection process, paying just as much attention to setting forth expectations of how to collect the data and where to report it.

2. DEFINED DATA COLLECTION PROTOCOLS

Developing data collection protocols is often where most companies begin their information collection processes. Successful companies have established clear and straightforward data collection protocols that function both as a how-to guide and as a basis to audit or assure the quality of information provided (as further discussed below). The protocol should include the following: The methodology for gathering and reporting measures, as well as calculating any metrics or indicators (as applicable), including conversions and, when necessary, specifying appropriate compilation/consolidation methods for multiple data sources (e.g. multiple metering devices, multiple facilities, collections of products, etc.); Frequency of reporting; Where and for how long data should be retained; and If necessary, any documentation required to support the information reported.

Successful companies have established clear and straightforward data collection protocols that function both as a how-to guide and as a basis to assure the quality of information

Methodology:
The methodology builds on data definitions previously specified during the first essential collection step, describing how to gather the data to report any measures requested, as well as detailing the calculations performed as part of the collection and reporting process. In some cases, calculation may be required at the facility prior to supplying information (in a database, spreadsheet, etc.) to those requesting the data. For example, a facility may need to convert the collected data into a
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Sustainability Measures: Five Essentials for Effective Data Collection

specific unit of measure prior to data entry into a web-based system. Instructions for how to enter the information should also be included as part of the methodology for a particular measure. Once the data is gathered, the methodology should describe how to deliver and possibly retain measurements, calculations or any other required supporting information related to collection, as well as the documentation required for noting any limitations to data collection when data cannot be gathered per the previously established definitions.

Illustrative Example:
Data Collection Protocols ensure flexibility and clear parameters for quality information
Total water usage data should be collected by all facilities monthly and TOTAL WATER USAGE submitted to the online database.

Frequency:
To assure your company has the flexibility needed to adapt to results from data collected, the frequency of data collection must be defined for each measure: Some measures may be best monitored daily and then compiled for reporting on a monthly or quarterly basis (e.g. production, energy consumption, water usage, safety incidents, etc.). Some measures are better suited for monthly monitoring when invoices are received (e.g. waste, employees, training, compliance, customer satisfaction). Yet, other measures may be more suited for infrequent or ad-hoc reporting (e.g. refrigerant replacement, community investment initiatives, employee satisfaction).

By collecting and analyzing data more frequently, a company can utilize the data to manage sustainability efforts more effectively, accelerating impact to goals and targets by identifying and implementing best practices from locations with positive trends, and adapting or correcting practices at under-performing locations.

Gather the meter readings for all sources of water present at your facility pursuant to the previously defined scope. Municipal Utility: water provided by a local utility. Well/Borehole: An onsite water source pumping water from a local aquifer. This water will may be treated prior to use on site. Surface waters: include rivers, streams, lakes and other surface water sources. This water may be treated prior to use on site. Collected rainwater: Water collected as part of a storm water collection system. This water may only be used for irrigation.

Collection System:
The data collection system utilized can be as simple as an excel spreadsheet requiring manual input to a complex web-based tool with automated data entry and reporting functions. Utilizing a spreadsheet program may be sufficient for discrete tracking, and it is very useful to provide a back-up during auditing; however, this system naturally introduces the potential for human error. A web-based tool may ease data entry and reporting requirements, reduce the potential for human error and provide a platform to solicit information per the definitions as well as preliminary validation during data entry to catch the easy to correct errors immediately. A partially automated collection system is the next step in data collection processes, and, in many locales, will connect an organizations on-site utility metering directly to the collection system - further reducing the level of effort required and mitigating the potential for errors.
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All entries shall be in either gallons or kiloliters. If the meter at your property reads data in a different unit of measure, please refer to the unit of measure guide to convert your data to one of the accepted units prior to entry.

Monthly invoices from the water utility should be attached to your submission

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Sustainability Measures: Five Essentials for Effective Data Collection

Documentation:
The documentation component of the data collection protocol is to ensure back-up of the information is maintained, both during initial data entry and when/if subsequent changes are made. Many data collection systems are developed with the functionality to attach utility bills and manifests to document the values reported. In the course of our work, we have found that clients who have made the time investment to establish a clearly defined data collection system, detailing the howto for data gathering and submission, tend to have fewer errors in their dataset because they ensured that their system has the flexibility and efficiency needed to change course mid-stream as necessary and maximize time investments. Successful companies have a clear, concise methodology that takes a proactive approach toward calculating the value of their sustainability efforts. To further reduce errors in the data set, and to minimize time wasted on reviewing and correcting data however, forward-thinking companies invest in a built-in verification process during data entry - the third Essential for Effective Data Collection.

3. BUILT-IN VALIDATION
We have found that a built-in validation process, activated when data is first entered into a spreadsheet or an online system, improves efficiency by triggering any necessary corrections at the time of initial data entry and by the individual who is supplying (and best understands) the information. Data confidence is built on a thorough review of the data, and leading companies have established automatic protocols in their collection systems to evaluate completeness, accuracy and plausibility of the reported data. All three processes are interconnected, but their individual purposes are unique.

Data confidence is built on a thorough review of the data

Completeness:
Completeness is one of the first validation checks routinely noted in highly effective data collection methods/systems. This is a simple, but critical check to verify that all required measures have been collected/supplied for the specified reporting period. Missing data will bias results, and if omissions are significant enough, results may need to be restated at a future date. Restating results often triggers a variety of additional concerns, especially if such information has been included in external disclosures or reports. To prevent omissions, superior data collection/management systems often automatically identify and alert personnel of potentially missing information, allowing evaluation and correction early on and thereby pre-empting any question as to the datas integrity.

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Sustainability Measures: Five Essentials for Effective Data Collection

Plausibility:
Plausibility checks are also common in highly effective data collection processes. This, too, is typically a simple process for most measures that evaluates whether the data supplied seems plausible or realistic. Plausibility checks are typically established as thresholds where values beyond certain limits are considered suspect, requiring review prior to proceeding in data collection or analysis processes.

Illustrative Example:
Data Review Checklist

EMISSIONS RATIO
Complete (all periods have an associated emissions ratio) Plausible (emissions ratio is between 5.0 and 10.0 grams CO2/kilogram product) Accurate (emissions ratio is +/- 15% from the same period last year) Requires Review Please review to correct or comment. OK to Save Please save.

Accuracy:
Accuracy checks are also common in effective collection systems. These checks are typically conducted by assessing the degree of difference between data submitted and that which was previously accepted. Specifically, the most common types of accuracy checks are: Current period compared to prior period (e.g. March compared to February), and Current period compared to same period prior year (e.g. March 2012 compared to March 2011).

A threshold established for reasonable changes is usually established (e.g. a change in productions of +/- 15%), which requires additional review of measures that fail. This check generally identifies issues related to units of measure or significant changes in production and usage, and/or human error during data entry. A data collection system is an effective tool for making management decisions, but only if the data within is correct. A built-in data validation process encompassing a review for completeness, plausibility and accuracy is an important component for effective data collection, and triggers corrections immediately upon data entry not allowing perceived inaccuracies to skew the dataset and devalue the companys reported social and environmental progress.

4. CAPABILITY TO ANTICIPATE & EFFECTIVELY MANAGE CHANGE

One challenge that every organization must face is change. Designing a data collection approach that anticipates and effectively manages change can be tricky, but investing in a flexible system is essential for a companys reporting efforts to remain viable over the long term. Two very common changes that impact data collection processes are: The need to establish new goals and data collection measures that support these targets; and Changes to the operational boundary of an organization.

One challenge that every organization must face is change. Designing a data collection approach that anticipates and effectively manages change can be tricky, but investing in a flexible system is essential for a company's reporting efforts to remain viable over the long term.
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Sustainability Measures: Five Essentials for Effective Data Collection

Changes to goals and targets require flexibility within any data collection system, enabling the addition of new measures or refining how certain existing metrics or indicators are managed. For example, when beginning data collection for the first time, a company may have designed its collection system to collect a total wastewater discharge volume. In the years subsequent, the company has adopted a gray water reuse system for landscaping, and would like to track how much wastewater is diverted. The data collection system must be able to accept two kinds of wastewater discharge values: reuse and discharge to a treatment system. Adaptable systems, such as in this example, will allow for the creation of the two new wastewater discharge values as well as permit a total wastewater value to become a calculated measure. Changes to an organizations operational boundaries are also common. Consequently, highly effective data collection systems must be able to adapt to changes such as acquisitions of new operations, divestitures, product changes and a host of others factors which are relevant and important in maintaining an accurate and complete baseline, from which a company can assess and report on progress. Since change is constant and adapting to change is a perpetual challenge, our fourth Essential for Effective Data Collection builds a reasonable level of foresight into company data collection processes, allowing sufficient adaptability and flexibility to reduce resource constraints that inevitably occur when redesigning collection systems.

5. ROUTINE AUDITING & ASSURANCE

Simply proclaiming data collection programs are complete, accurate and representative is sometimes not enough for certain stakeholders or disclosure advocates. These forces are asking companies to do more including implementation of routine and independent audits to assure sustainability data is transparent and genuinely reflective of a programs scope and progress. In general, the most effective data auditing and assurance programs have both internal and external components. These include defined data collection auditing protocols, which are used to verify that the collection process is followed as required. Regular auditing allows for early identification of uncertainty and improvement opportunities in definitions, discrepancies in processes and training opportunities and allows organizations to have confidence in and defensible processes for data collection, verification and review. Assurance is more commonly viewed as an audit by a third party, namely an assurance provider, and based on an accepted industry protocol (e.g. ISAE 3000 and AA1000AS) or reporting framework (e.g. GRI). There are many different protocols and levels of assurance, but for leading companies disclosing their data publicly, either in sustainability/integrated reporting or through other disclosure venues

The element of auditing and assurance is the vital piece adding confidence and ensuring integrity to any data collection program

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Sustainability Measures: Five Essentials for Effective Data Collection

(e.g. the Carbon Disclosure Project), third party assurance is often considered mandatory by most companies to clearly demonstrate the data disclosed can be considered accurate and unbiased. While the first four Essentials will address effective data collection for a company, the element of auditing and assurance is the vital piece adding confidence and ensuring integrity to any program. Regular reviews, internally and by a third party, will assure data collection processes have been implemented as designed, delivering data that is accurate, unbiased and reliable to use in decision-making as well as in assessing and reporting on the organizations sustainability progress.

CONCLUSIONS: EFFECTIVE DATA & THE VALUE OF PROGRESS

To flourish and achieve meaningful results amidst societys ever changing demands, leading organizations adopt complete systems and processes designed to assure data collection is as comprehensive and as reliable as possible through clearly defined data boundaries, data collection protocols, built-in validation systems, capability to anticipate and manage change, and utilization of routine auditing and assurance. Companies are also most successful when they craft systems that build in flexibility and promote a proactive approach to data gleaned during the collection process. Managing data measures for sustainability is rife with challenges, but implementing these 5 Essentials will ease the process, allowing companies to accelerate toward their social and environmental goals at an efficient, cost-effective pace. Establishing proper data collection processes is only half the battle of course; in our experience, when companies initiate the process of establishing a data collection protocol with definitions of required reporting measures, many find the usefulness of that data lacking since it is historical, warehoused data - rather than the most upto-date information (which is best for management decision-making). When companies are ready to take their data collection programs to the next step through the implementation of these 5 Essentials, we have the expertise and practical experience necessary to help clients use their data to manage and enhance their programs, rather than merely collecting it to disclose. By implementing these essentials for an effective data collection system, companies will see the value of their social and environmental initiatives not only through resulting better business, but also a better world.

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ABOUT THE AUTHOR

Anna Blitz (anna.blitz@anteagroup.com), a Consultant with the Global Corporate Consultancy of Antea Group, is dedicated to partnering with clients as they develop environmental metrics processes and integrate key performance indicators into their overall sustainability strategy. With more than 12 years of experience in sustainability and environmental consulting, Anna specializes in corporate sustainability programs, including development of environmental metrics and key performance indicators as well as preparation of sustainability reports and public disclosure documents. Anna has a proven track record of exceeding client expectations and is known for her efficiency, accuracy and attention to detail. Companies like Mandarin Oriental Hotel Group and The Coca-Cola Company, along with the Beverage Industry Environmental Roundtable (BIER) - a consortium of 16 leading beverage companies - rely on Annas expertise. Her current work ranges from managing environmental performance metrics databases for risks and opportunities related to environmental, occupational safety & health, and fleet metrics, to developing internal and external company sustainability reports describing trends and progress to goals, as well as industry benchmarking report initiatives.

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Sustainability Measures: Five Essentials for Effective Data Collection

ABOUT THE GLOBAL CORPORATE CONSULTANCY

For sustainability initiatives that deliver results from strategy through implementation, leading organizations around the world trust the expertise of AnteaGroups Global Corporate Consultancy (GCC), a management consulting firm that specializes in sustainability. Believing the best programs integrate sustainability into core business practices, the GCC team helps clients identify and act on business-relevant social and environmental opportunities. Our sustainability consultants offer a comprehensive approach that creates value at the intersection of business, environment and society. By sharing knowledge and expertise in sustainability initiatives, we help companies set priorities and accelerate their sustainability efforts through relevant and practical solutions. The GCCs demonstrated methods and tools move the sustainability business case from the anecdotal to the tangible. We listen. We take time to understand our clients business and culture. We answer by delivering fit-for-purpose solutions unique to each organization. Through our innovative solutions, clients benefit from reduced business risk, new opportunities and long-term competitive advantage. The GCC is a business of AnteaGroup, an international engineering and environmental consulting firm specializing in full-service solutions in the fields of environment, infrastructure, urban planning and water. By combining strategic thinking and multidisciplinary perspectives with technical expertise and pragmatic action, we do more than effectively solve client challenges; we deliver sustainable results for a better future. By understanding today, we are improving tomorrow. With access to more than 3,000 employees in over 100 offices and experience on six continents, we serve clients ranging from global energy companies and manufacturers to national governments and local municipalities. Our partnership in the Inogen Environmental Alliance provides us the diversity, strength and enhanced global capacity of 4,800 consultants in 165 offices around the world.

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Global Corporate Consultancy

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2012 Global Corporate Consultancy l AnteaGroup USA, Inc.

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