Absolute data is actionable data

‘Absolute measures’ refer to quantifications of environmental impacts, such as total carbon dioxide emissions or water usage over a specific period. In contrast, relative measures express this information in relation to other metrics like total revenue, production volume, or assets under management (AUM).

The insufficiency of relative measures in a world of absolute boundaries

Including ‘absolute’ information in environmental performance measures is beneficial for two reasons.

First, it reflects the absolute scale of a company’s activities and associated impacts, such as the total water used annually or the land required for production. This helps companies better understand their total environmental impact, which in turn allows them to more accurately assess risks that arise as a result of it, and helps them prioritize actions to reduce it and thus seizing opportunities. Efforts to reduce impacts can thus also drive innovation. Absolute data is therefore actionable data.

However, currently, businesses often use relative measures or intensity measures (e.g., CO2 per revenue) to assess or report their environmental performance. While dividing total impact by revenue or production volume allows for valuable comparison of environmental performance across companies regardless of size, scale, or location, relative measures can be misleading. For example, a company might reduce its carbon intensity, i.e. how much CO2 it emits per produced unit, and thus be more efficient. But if the same company continues to grow and produce more, their total (absolute) emissions will nonetheless increase over time. While relative measures will always have a role to play in comparing across companies and sectors, they are not well suited to estimate how much companies and investments contribute to the crossing of planetary boundaries.

A second reason for Including ‘absolute’ information is that effective sustainability strategies depend on clear and measurable targets. The reliability of these targets depends on good estimates of total aggregate global environmental impact, which in turn relies on improved assessment of the absolute environmental impact of human activities, to which companies contribute a large share. Making the disclosure of absolute environmental impacts common practice paves the way for more accurate assessments of both impacts and risks – particularly the physical systemic risks that ensue from crossing planetary limits. It also ensures that targets are developed based on reasonably
comprehensive impact assessments.

Aiming to further the corporate and financial sustainability agenda without absolute measures will be like flying without instruments, leaving us unable to gauge our proximity to the Earth’s surface or to dangerous obstacles.