UNRISD Ushers in a New Era of Authentic Sustainability Assessment with the Release of its Sustainable Development Performance Indicators

By Bill Baue & Ralph Thurm

The title that the United Nations Research Institute for Social Development (UNRISD) chose for the User Manual for Sustainable Development Performance Indicators (SDPIs) that it releases today — Authentic Sustainability Assessment — signals a phase shift to a new era that has been a long time coming.

UNRISD characterizes this new sustainability assessment paradigm as authentic, which Wiktionary defines as “conforming to reality and therefore worthy of trust, reliance, or belief.”

By contrast, UNRISD’s labeling infers that the sunsetting era is inauthentic, precisely because incumbent “sustainability” assessment mechanisms have, for the past two decades, predominantly ignored the reality of the ecological and social thresholds that define sustainability — and hence the status quo is unworthy of trust, reliance, or belief. More on that below.

But first, what makes the new Sustainable Development Performance Indicators (SDPIs) authentic? Two key elements:

• Thresholds: First and foremost, the SDPIs explicitly integrate ecological, social, and economic thresholds, such as the Planetary Boundaries and the Ecological Ceilings and Social Foundations of the Doughnut, and thus measure organizational performance against real-world indicators of societal sustainability.
• Transformation: Additionally, in recognition of the utter insufficiency of business-as-usual “sustainability” assessment mechanisms, the SDPIs integrate indicators that illuminate blind spots in current practice in need of filling in order to trigger necessary transformations. (For a deep dive on UNRISD’s take on transformation, see here for the background paper by Peter Utting and Kelly O’Neill.)

Historical Context

The seeds for the SDPI development were planted exactly two decades ago, when the Global Reporting Initiative (GRI) put a stake in the ground by establishing the Sustainability Context Principle. Introduced in 2002 in GRI’s Second Generation (G2) of Sustainability Reporting Guidelines, the Susty Context Principle called for measuring

“the performance of the organisation in the context of the limits and demands placed on economic, environmental, or social resources at a macro-level.”

Unfortunately, GRI has been derelict in its duty of providing detailed guidance on how to enact the Sustainability Context Principle, despite the fact that we at r3.0 repeatedly engaged GRI to encourage and support such work. r3.0 Managing Director Ralph Thurm, who championed the Sustainability Context Principle as GRI’s Chief Operating Officer and Director of the Principles Workstream at the time, says:

“While I lament GRI’s predatory delay in failing to provide the sorely needed guidance on implementing Sustainability Context, I now celebrate that companies large and small finally have the guidance needed to readily fulfill the Sustainability Context Principle, two decades after its inception, thanks to the UNRISD Sustainable Development Performance Indicators.”

Sustainability Context & the Sustainability Quotient

The Sustainability Context Principle provides a foundation for the SDPI project, which it enacted by integrating the Sustainability Quotient into the indicators. The Sustainability Quotient, conceived by Center for Sustainable Organizations (CSO) Executive Director (and SDPI Expert Advisory Group Member) Mark McElroy in his dissertation in 2008, holds that sustainability (S) equals the actual impacts (A) on the carrying capacities of vital capital resources, compared to normative impacts (N) on the carrying capacities of vital capital resources. Many of the SDPIs integrate the Sustainability Quotient.

In his Keynote address at UNRISD’s Conference unveiling the SDPIs in 2019, GRI Co-Founder Allen White riffed on the numerator (actual impacts) and denominator (normative impacts) of the Sustainability Quotient to assert the necessity of implementing Context-Based Sustainability:

“Sustainability requires contextualization within thresholds. That’s what sustainability is all about. We need to move beyond incrementalist ‘numeration’ indicators & add ‘denomination’ indicators tied to upper (ecological ceilings) & lower (social foundations) thresholds. Sustainability measurement without this context is simply not sustainability measurement.”

White added the following on the significance of the release of the SDPI Manual:

“The release of the UNRISD Sustainable Development Performance Indicators marks a seminal moment in mainstreaming contextualization. It represents the first, comprehensive guidance to embedding thresholds in sustainability reporting, the culmination of years of research and advocacy in support of a new generation of disclosure. A decade from now, historians will view the release of the SDPIs as a Brundtland moment in the urgent journey toward a just and thriving planet.”

SDPI Background

The genesis of the SDPI project dates back four year, to 2018, when UNRISD approached r3.0 to partner on this four-year project, due to our leadership in advocating for Context-Based Sustainability (CBS) and Thresholds & Allocations. In 2019, our Senior Director Bill Baue authored the Concept Paper — entitled Compared to What? — that laid out the typology distinguishing between existing incrementalist indicators, on the one hand, and bona fide sustainability indicators that address thresholds and transformation, on the other hand.

Also in 2019, UNRISD published a Working Paper by Mark McElroy entitled Making Materiality Determinations: A Context-Based Approach, which is significant for establishing the most robust approach to materiality. Specifically, two approaches to materiality now dominate the field — so Context-Based Materiality provides an alternative that transcends both:

• Single Materiality, which assesses outside-in risks and impacts of the external world on the enterprise, particularly as they affect enterprise value;
• Double Materiality, which assesses both outside-in and also inside-out risks and impacts that the enterprise externalizes onto the world; and
• Triple Materiality, which assesses outside-in and inside-out risks and impacts in the context of the carrying capacity thresholds of the multiple capitals (ie natural, social, human, built, and financial capitals, among others). (See here for a discussion on Triple Materiality.)

The next year, r3.0 provided background support to the SDPI Expert Advisory Group as it developed a set of draft indicators. In 2021, r3.0 recruited about two dozen organizations to pilot test the draft indicators. The pilot testing project, which r3.0 managed, encompassed a diversity of organizations, including:

• Large For Profit Enterprises (FPEs) such as Anglo American and Manulife;
• Smaller Social & Solidarity Economy Organizations & Enterprises (SSEOEs) such as two Mondragon cooperatives in Spain, Cabot Creamery Cooperative in the US, Vancity in Canada, and Grameena Vikas Kendram (GVK) Society in India (among many others); and
• Intermediaries such as the World Bank, Impact Management Project, and World Benchmarking Alliance.

Earlier this year, UNRISD released the Synthesis Report (see here and here) that r3.0 prepared, summarizing and analyzing results from the pilot testing project. This publication was met with universal praise, including the following:

“A major inflection point…” Jonathan Morris, Business for Social Responsibility

“Sustainability history in the making…” Kees Klomp, THRIVE Institute

“An enormously consequential development…” Jon Shanahan, Radley Yeldar

Based on the feedback from the pilot testing organizations, UNRISD engaged its Expert Advisory Group to finalize the SDPIs for release.

SDPIs: An Alternative to GRI, I?SB, EFRAG, and SBTi

GRI is not alone in erecting obstacles to integrating thresholds and Sustainability Context — it is joined by the International Sustainability Standards Board (which we at r3.0 acronymize as “I?SB” due to its inauthentic handling of sustainability) and the European Financial Reporting Advisory Group (EFRAG) in similarly blocking the implementation of thresholds-based sustainability assessment (see here and here for r3.0’s Public Comment Letters to I?SB and EFRAG, respectively.)

The predatory delay of GRI, I?SB, and EFRAG have hampered the enactment of authentic sustainability assessment — until now, thanks to the advent of the UNRISD SDPIs, which offer an alternative to the insufficient standards from GRI, I?SB, and EFRAG.

The SDPI’s also offer an alternative to the Science Based Targets initiative (SBTi), which takes a thresholds-based approach to setting greenhouse gas emissions targets predicated on climate science, but has been hampered by conflicts of interest and self-bias in blocking the most robust SBT methods, according to scientific analysis. r3.0 Senior Director, who served as an original instigator of SBTi in 2012, has submitted a Formal Complaint and Formal Memorandum to the SBTi Executive Board urging the de facto standard setter to lift its barring of the most robust SBT method — to no avail yet.

The UNRISD SDPIs resolve this problem by establishing a set of 5 universal criteria for qualifying SBT methods, and recommend the Center for Sustainable Organizations (CSO) method, which established the practice of science-based target setting in the first place at Unilever subsidiary Ben & Jerry’s in 2006. According to the Manual:

“There have been two comprehensive scientific studies on science-based climate target-setting methods, Bjorn et al 2021 and Rekker et al 2022, and both found the CSO method to be the strongest.” (1)

According to Baue:

“The SDPI Manual provides a better alternative than the Science Based Targets initiative, seeing as UNRISD took a ‘universal principles’ approach and appealed to scientific evidence of the best science-based target-setting method for greenhouse gas emissions. This example further illustrates how SDPI’s authentic approach to sustainability assessment transcends the path dependency of what’s available from incumbent frameworks and standards. The SDPIs thus usher in a new generation of bona fide sustainability assessment.”

Footnote:

(1) “The CSO method, followed by the SDA method, has the overall lowest emission imbalance across all scenarios… our results indicate that concerns over emission imbalance should favour the CSO and SDA methods, rather than ACA and SDA.” Bjørn, A., Lloyd, S., and Matthews, D. 2021. From the Paris Agreement to corporate climate commitments: evaluation of seven methods for setting ‘science-based’ emission targets. Environmental Research Letters, Volume 16, Number 5. 22 April 2021. https://iopscience.iop.org/article/10.1088/1748-9326/abe57b

“[W]e find that the SDA and Context-based Carbon Metric by the CSO are the only two methods that meet our two conditions, whilst the CSO also meets the desirable condition of differentiated responsibilities, with companies in developed countries required to decarbonise much faster than those in developing countries.” Rekker, S., Ives, M.C., Wade, B. et al. 2022. Measuring corporate Paris Compliance using a strict science-based approach. Nature Communications, 13, 4441. 10 August 2022. https://doi.org/10.1038/s41467-022-31143-4