Greek to me

Is it a brand? Is it a management system? Is it a philosophy? The SIGMA Project (Sustainability: Integrated Guidelines for Management), set up in July 1999, is a collaboration between BSI, Forum for the Future and the Institute of Social and Ethical AccountAbility. SIGMA's aim is to develop the next generation of management systems and tools, designed to help integrate the environmental, social and economic aspects of business activity into business-decision-making. Endorsed and financed by the UK government's Departments of Trade and Industry (DTI) and of Environment, Transport and the Regions (DETR), the first SIGMA Roundtable Discussion took place at London Zoo last month. Can SIGMA offer more than the sum of its parts?

There has lately been a quiet revolution in the way that leading-edge organisations are managing, accounting for, and communicating their performance. Increasing pressure from customers, employees and investors is driving the need for effective responses to social and environmental issues. It is now widely recognised that improved social and environmental performance is an increasingly important driver in the long-term creation of value.

As a result, organisations are moving to establish strategic and operational management processes that will assist in:

  • identifying and learning about the impacts and risks of their activities and how to manage them;
  • continuously improving performance in relation to these impacts;
  • engaging stakeholders in decision-making processes;
  • using appropriate, practical and robust indicators;
  • integrating social, environmental and economic issues into strategic decision making and operations; and
  • competitive advantage through a defined stance on social, environmental and economic issues.
  • The SIGMA Project aims to build the capacity of organisations to meet their business and other institutional objectives by more effectively addressing social, environmental and economic dilemmas, threats and opportunities. The project hopes to achieve this by developing integrated guidelines for managing this “triple bottom line”.

    Main components

    Current thinking on the contents of the SIGMA Guidelines point to the following main components as being required to facilitate an integrated, strategic, values-based and performance-driven response to sustainability issues in organisations:

  • a “rules base” that helps an organisation to understand the parameters of sustainability;
  • a series of tools and approaches to facilitate the development of organisational strategy on sustainability issues; and
  • a sustainability management system that provides the management framework to drive sustainability thinking in the organisation.
  • The SIGMA Project takes as its starting point the concept of sustainable development – the process by which we move towards sustainability. “Sustainability” may best be defined as the “capacity for continuance into the long term future”. There have been many attempts to define sustainable development, the most widely used of which is the definition that first appeared in the Brundtland Report in 1987: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” The limitations of this definition are becoming more and more obvious. It fails to convey the idea that there are biophysical limits within which society must operate, if the ecological capital on which we depend is not to be eroded.

    Forum for the Future uses the following alternative: “Sustainable development is a dynamic process which enables all people to realise their potential and to improve their quality of life in ways which simultaneously protect and enhance the Earth’s life support systems.” This definition affirms sustainable development as a dynamic process and emphasises the importance of social justice and equity in that it is for all people. It also makes it clear that achieving sustainable development is not simply about manipulating the environment, while people continue to operate in a “business as usual” fashion. It is a social and economic project as much as an environmental project, and one with the wholly positive objective of optimising human well-being.

    Business as usual

    In a business context, one of the most popular ways of expressing sustainable development is in terms of the triple bottom line. This is the idea that companies derive their licence to operate not just by satisfying shareholders through improved profits and dividends (the economic bottom line), but by simultaneously satisfying other stakeholders in society (employees, communities, customers etc.) through improved performance against the social and environmental bottom lines. This concept now has a firm hold on the corporate imagination, and is proving to be a helpful conceptual tool. But it does have its limitations. Firstly, it seems to imply equal weighting between the three respective bottom lines. In fact, ecological sustainability over the long-term is in fact a pre-condition – i.e. without it, there would be no other bottom lines. Secondly, the “social bottom line” does not distinguish between individuals (where we are talking essentially about intellectual and creative capital) and society (where we are talking about organisational and institutional capital). Thirdly, there is much more to an organisation’s economic bottom line than its profitability, share price and dividend payments. For instance, what other economic multipliers is a company able to develop in its dealings with its host community or business partners? What is its overall contribution to the local economy? What is it doing to build entrepreneurial and professional skills?

    Building blocks

    These debates raise two key questions for the SIGMA Project: How can SIGMA incorporate the concept of sustainable development in management guidelines? What definition of sustainable development should be used?

    For the SIGMA Project to take the concept of sustainable development as its base means going beyond the vast majority of management systems, tools and standards in use today. Most do not set “baseline” targets for organisational behaviour against sustainable development. Where standards do specify performance targets, these are often “lowest common denominator” rather than “best practice” or necessary targets.

    SIGMA seeks to change this by incorporating elements from two existing management systems – the Natural Step (see IEM November 1998) and AA1000 (a new standard for corporate reporting launched by the Institute of Social and Ethical Accountability) – and building on these initiatives by commissioning fresh research into a number of aspects of sustainable management.

    The SIGMA Project does not aim to re-invent management systems per se. Rather the intent is to reinforce existing management systems by surrounding them with the SIGMA rules base; strengthening the interface with organisational strategy and decision-making; and expanding them to cover all of the aspects outlined above. Wherever possible the implementation of the SIGMA management system should build on management systems that are already in place within organisations, be they environmental, social, health and safety or quality-based. This should make implementing the SIGMA Guidelines simpler for organisations and more resource effective than it otherwise might be.

    The big change

    The big change will be the way in which the System Conditions of The Natural Step, the definition of sustainable development, the principles relating to the social and economic aspects of sustainability and the other parts of the rules base – accountability, innovation and integration – will be used to guide performance improvement and target setting in the management system and the organisation as a whole. The rules base will also ensure that those using the management system should take a balanced view on the reconciliation of sustainability trade-offs. Ultimately, SIGMA aims to build on existing best practice to enable organisations to move towards sustainability.

    Although still in its infancy, pilot SIGMA implementations are planned for the future. For more information contact Mark Barthel, BSI, on 020 8996 9001.

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