In a world where consumers and governments want to support businesses that positively impact the environment and society, corporations have to find ways to tell these stakeholders how sustainable they are. However, communicating sustainability is difficult for most companies to do alone as there are many heavy technical elements. There is also the risk of greenwashing or overstating your environmental-friendliness that can end up damaging your brand, even if unintentional.
Sustainability certifications help resolve these issues to varying degrees by validating and giving an impartial view of one’s ESG activities. They may give credit for things you already do as a company or may be used as a sign that your business is taking steps to address ESG issues. They can also be used to track and improve your company’s performance, alleviating administrative burden.
What is a certification? Why would you invest in getting one?
Certifications are created and monitored by independent companies, meaning that any validation they provide is seen as more impartial and can thus help ward-off greenwashing. Moreover, a trusted certification that helps integrate sustainability into your business will help achieve increased trust and loyalty from your stakeholders such as customers, community members, employees, and suppliers1.
In addition to using certifications to validate any sustainability marketing, they can also be a means to gain insight into your performance. Better awareness of how you measure up on ESG metrics can enable you to make strategic decisions about what issues to improve on, when, and how2.
Obtaining a certification: Options and Considerations
Sustainability certification is a full-fledged industry with almost endless options. There are close to no regulations on certifications, meaning that the market controls which ones are the most valid and valuable. It is crucial to highlight that whatever the market values most may not align with what is the most sustainable. However, market value is also a signifier that your certification will resonate with your stakeholders and help build benefits from it.
Each of these certifications has its benefits and limitations, so whichever you choose to pursue will have implications for your business. Therefore, before you undertake, consider the following aspects of each option:
1. Product Offering
Certification bodies will typically offer a suite of varied services to their clients. It is critical to be clear on what your company is looking to get out of a certification, as this will matter greatly to your choice.
Some certifications offer validation that your company complies with very high standards on ESG topics. Examples include the ISO family or B Corp which provide standards for corporate policies for companies seeking sustainability in areas such as emissions, stakeholder relations, and governance structure. These programs usually have an internal scoring method to confirm or deny your company’s compliance with their standards. However, certifications like these have very high consumer trust, and simply being certified (regardless of actual score performance) is often enough to produce benefits.
Other programs like Bloomberg ESG, CDP, and the S&P CSA offer disclosure or transparency, often with the target audience of investors. They require self and/or third-party reporting to verify your performance across a range of sustainability indicators. Performance is then reflected in a single score (or a range of scores) on a scorecard that is publicly disclosed. This is used to benchmark your company against others in your industry.
Another set of certification bodies also offer transparency, but they combine it with support programming to help improve the sustainability of your company. EcoVadis and GBB, for example, will provide scorecards of performance that can be used both externally by stakeholders and internally to instruct management and employees. The scores are accompanied by administrative support programs to help your company identify specific areas for improvement, facilitate goal-setting, and carry out initiatives in a systematic way.
Cost is always a crucial factor in business decisions and certifications are no exception. Consider what kind of services you want, the value they would create, and how that might fit into your budget. Most certification bodies will tier their pricing by company size (as counted by the number of employees) and service packages.
It is also important to consider the time frame of your investment in certification. Some bodies accept one-time payments for a certification that is only valid in one given year. Others are subscription models that span one year or multiple years, with pricing matched accordingly.
3. Administrative Burden
There is also the matter of how much work it will take to obtain and keep up with the demands of certification. Some programs are very intensive and require a lot of effort to meet the requirements due to the need to report significant amounts of relevant information for self-reporting purposes on a regular basis. Tasks like this can require a lot of dedicated employee time for both data collection and aggregation, as well as significant coordination between different departments.
Often, the administrative burden of certification can be prohibitive for companies with a tighter budget or less flexibility in their existing labour force. However, some certifications like EcoVadis and GBB are designed to ease the burden by offering online tools and best practices to help collect and aggregate your data.
4. Target Audience
Finally, consider what is being measured by a certification and how it fits within your company and sustainability goals. Some are more relevant to one industry, one size of company, or one type of company over others. As you look into what is being measured, ask if these metrics apply to the size of your business, your industry, your ownership structure, etc.
For instance, S&P CSA and Bloomberg ESG focus only on metrics that are “financially material”. This is crucial for a publicly-traded company where investors are ultimately looking for financial return but less so for a private firm or smaller company. Others, like ISO14001 and CDP, may emphasize issues like emissions, waste, and water that would be very relevant to a manufacturer, but not so much to an office-based organization.
The Bottom Line
Certifications are powerful tools that can help your company get more out of its sustainability efforts. When used correctly, they can help improve profitability, your impact on society and the environment, and brand perception.
Sustainability certifications have distinct nuances that are important to consider before one is undertaken. You have to consider your sustainability and strategic goals, your resource constraints (including your budget), and your company’s needs when pursuing sustainability. These factors will impact which is the most suitable certification for your organization.