Widely-recognised leaders worldwide share a key trait: they know how to track performance using relevant metrics.
As the economy evolves, businesses must expand their focus beyond traditional financial and operational metrics to include sustainability and purpose.
This shift is essential for informed decision-making and long-term success.
A prime example is Indra Nooyi, the former CEO of PepsiCo, who championed "Performance with Purpose." She emphasised that companies should pursue financial success while also taking accountability for their societal impact. Nooyi's approach highlighted the connection between performance and purpose, demonstrating that relevant metrics are crucial for sustainable growth.
KPI is short for Key Performance Indicators, which are metrics used by companies to measure performance on important matters, such as revenue, customer retention, and employee turnover. Sustainability KPIs, on the other hand, focus on metrics to evaluate ESG performance, such as:
An extensive list of sustainability KPIs in the Cheat Sheet is available here.
KPIs selection and monitoring are fundamental to building a thorough sustainability strategy, as well as meeting compliance requirements. For example, the CSRD requires your company to track and report on material topics.
For both purposes, you must understand:
Keep on reading the article and download the free guide to find out all you need to know about KPIs selection.
A valuable way to identify relevant issues is by conducting a (double) materiality analysis.
Through a (double) materiality assessment, businesses will understand what sustainability topics are most important for the business and its stakeholders, as well as the relevant sustainability impacts, risks, and opportunities.
Take a look at our materiality template if you are looking for support.
From there, the identified impacts, risks and opportunities will help inform the development of a sustainability strategy, aiming to ultimately eliminate or mitigate negative impacts and risks, and enhance positive impacts and opportunities.
The term KPI stands for Key Performance Indicator – therefore, make sure to not exaggerate. Instead, you should select the indicators that are required and/or truly connect with where the company aims to get to, as KPIs are meant to generate insights for decision-making.
You can reflect on your business’s priorities by answering the following questions:
Additionally, the characteristics that define your company, such as size and industry, will also affect how you select and define the indicators.
As mentioned earlier, KPIs allow for informed decision-making about the current results and performance prediction. That is why you should use KPIs to establish sustainability targets and measure progress towards them over time. In doing so, you put your business on the path towards continuous sustainability improvement.
However, monitoring KPIs can become a daunting task. To save time and increase accuracy, we recommend using a proper KPI monitoring system. Other than centralising all indicators in one single space, it also offers strong data protection, support from experts and customisation according to the company’s specific needs.
For example, our partner Position Green aids companies to collect, analyse and transparently report multiple fronts of sustainability data. It also supports companies that fall under the CSRD, which can be especially helpful.
Smaller organisations can also opt for easier alternatives, such as a KPI dashboard on Excel or other tools. While there are multiple templates available online, Nexio Projects can also support.
The process of identifying the right KPIs can be difficult. However, KPIs are essential to monitor progress on sustainability goals, increase your organisation’s positive impact, and maintain strong stakeholder engagement. When done correctly, you will be in a stronger position to measure and improve sustainability performance over time.
Therefore, the logical process should be the following: