How to develop a framework for measuring corporate sustainability

Our research project began in 2021, when several companies in the wood/furniture sector decided they needed to see how their sustainability profiles measured up to other Italian and international organizations. In response to their request, SDA Bocconi’s Sustainability Lab proposed a research project aimed at promoting the adoption of more sustainable management models and evaluating the sustainability profiles of the companies themselves.

The underlying objective of the Furniture Pact, as the project was called, was to set up a network of companies that were serious about sustainability, asking them to pledge to tackle a series of concrete targets to reduce their environmental and social impacts. These targets were established as the result of an extensive effort to map existing guidelines, improvement programs, manifestos and commitments at a system level or in corporate groups, in light of the three dimensions of sustainability (social, environmental, and governance).

The first step in our project was to define a method of analysis for value creation processes, with the participation of a group of companies in the supply chain that had embarked on a path of assessment and improvement. We then extended our analysis to a panel of international and national companies to ensure that we could make a wide-ranging, fine-grained comparison. After publishing a Manifesto, we set down a set of criteria and specific commitments that the companies in the wood/furniture industry could adopt to improve their sustainability profiles.

So basically, the project involved deciding what criteria to use in the assessment and how to codify a comparison with competitors, delineating areas for improvement and identifying strategies that could be deployed to comply with international best practices.

The first phase was to compile a broad sample of national and international players in the sector. We then analyzed these companies indirectly by examining their financial statements, sustainability and database reports, as well as their public rankings. We were looking for best practices in terms of reporting tools, governance, certification, and collaboration.  In tandem, we ran a far more in-depth analysis of the companies that Monitor members using audits, surveys, plant inspections, and interviews with the departments that have a hand in sustainability.

This gave us seven categories of analysis that correspond to value creation processes:

• Strategy for the transition to sustainability
• Ethics, certifications, compliance
• Material footprint
• Relevant social aspects
• Design and innovation
• Community: shared values
• Initiatives and partnerships in the value chain

For each of these items, we came up with a series of KPIs and assigned a score; this allowed us to do exhaustive analysis of the performance of the company in question.  What’s more, thanks to the seven categories above, we can evaluate the sustainability profile of companies that do business in other sectors as well.

As far as the various aspects we investigated, the assessment framework we developed is applicable exclusively to the specific sector we were dealing with. In other words, we built a model that is inclusive, but detailed and specialized at the same time. With this resilient framework in hand, we can analyze companies that differ vastly, provided that they belong to the wood/furniture value chain.

Every year, the companies in the Monitor get an eyes-only report that shows them their positioning vis-à-vis their competitors and maps out possible paths to improvement. In the latest edition, for the comparison we analyzed as many as 4,000 companies in four segments: paper, panels, automation and furniture.

With more research and collaboration, we’ll be able to fine-tune our methodology even more, and broaden the field of application. Our framework could become a standard tool for measuring sustainability in the furniture sector and beyond.  Its adaptability, methodological rigor, and potential applications make our tool useful for companies that want to embark on the path to authentic, quantifiable sustainability.