Although the spotlight has generally been on environmental impact in discussions about sustainability – and rightly so, in light of the various issues in this area generated by the production, use and disposal of plastics – awareness is growing that there are other aspects that also affect a company’s sustainability performance. Sustainability insights platform Higg offers a way for the industry to measure performance across carbon, water, waste, and now, also, working conditions.
While data-driven solutions can help steer decisions regarding sustainability goals, accurately measuring the environmental and social impact of a given product is a challenge. Consumers, however, are increasingly demanding more sustainable choices. In response, therefore, Higg has added new social and labour performance benchmarks to its technology platform.
Higg is an integrated software platform that offers complete performance measurement for manufacturing facilities across carbon, water, waste, and since recently, working conditions as well. It claims to be the first sustainability insights platform that helps businesses take responsibility for their entire impact. The platform aims to enable accurate measurement and full visibility into a product’s impact, as a means to foster sustainable transformation in industry.
The platform, which launched in 2019 as a public-benefit corporation, allows users to build Environmental, Social, and Corporate Governance, or ESG, programmes using data from their facilities, enabling, for example, low-performing areas to be identified and improvement plans to be developed - and, ultimately, progress to be measured.
"We're innovating for a world where everything is made with the lowest environmental impact and greatest social benefit possible. To do this, businesses must understand the impacts across their value chain. Choosing only one or two areas to invest in won't move us to where we need to be. Benchmarking is an important part of solving this problem. Comparing against industry peers and identifying specific areas that need action gives businesses the information they need to speed up their progress," explained Higg CEO Jason Kibbey in a recent statement announcing the launch of Higg’s social benchmarking capability.
The importance of ESG
So why would a company wish to engage in ESG analysis and reporting. Why is it important?Cash East, director of Analytics at Higg, first explained in more detail what ESG is.
“ESG stands for environmental, social, and governance,” he said. “These are the factors in measuring the sustainability of an investment. Investors and stakeholders interested in ESG care about how companies are impacting the environment and how they serve their employees and society. ESG is becoming increasingly important to all stakeholders – not just investors – so companies need to measure, manage, and share their impact today and how they plan to improve continuously. Governance refers to corporate governance and how it's organised to support both environmental and social sustainability and to promote inclusion and diversity within leadership.”
According to Wikipedia, (ESG) is an evaluation of a firm’s collective conscientiousness for social and environmental factors. It is typically a score that is compiled from data collected surrounding specific metrics related to intangible assets within the enterprise. Research shows that such intangible assets comprise an increasing percentage of future enterprise value, while investors incorporate ESG data into the investment process to gain a fuller understanding of the companies in which they invest. ESG reporting helps investors avoid companies that pose a financial risk due to their environmental, social or governance practices. In fact, ESG ratings, were applied to companies representing around 80% of market capitalisation in 2020.
In short, ESG analysis provides a framework for evaluating companies – one that has become an increasingly important part of the investment process.
However, while the demand for ESG reporting may have risen strongly in the past two to three years, many companies find it difficult to supply the information investors are looking for. This has given rise to the development of software, such as the Higg platform, designed to provide support with data management tools for companies to help organise their performance and impact data.
A platform with a difference
Asked why the Higg platform was such an innovative development, Cash East started by pointing to the holistic view the technology provided of environmental and social impacts, ‘enabling companies to inform strategic decisions to meet sustainability goals’.
“To have a clear picture of sustainability impact, it’s essential to take a comprehensive and holistic approach and understand how improvements in one area may impact another area. For example, a facility that turns off its air conditioning may conserve energy, but potentially at the expense of worker well-being. Looking at social and environmental impacts in unison allows for informed and strategic decision-making. Higg is the first sustainability platform to provide a social benchmarking solution that enables businesses to examine their sustainability impacts compared to other similar production facilities,” he said.
This will give companies a new perspective on their performance and inform strategic decisions to meet sustainability goals. The resulting information helps identify low-performing areas and develop improvement plans. Businesses can then measure progress as changes are made. Additionally, filtering of manufacturing facilities is available using attributes such as industry or country to help brands manage factory compliance based on country-specific labour requirements.
Higg also recently added a new capability to help companies benchmark their social and labour performance across all factories. But what exactly is social benchmarking and how does it work?
East: “While measuring social impact has been part of the Higg platform from the beginning, the ability to benchmark is new. Social benchmarking is a new feature on the Higg platform that enables brands and manufacturers to brands to compare their facilities with other like facilities.
Examples of key social areas for measurement would include health and safety, wages, and working hours. Through analytics and intelligence available in Higg, businesses gain a new perspective on their performance which informs their strategic decisions to make improvements and meet social impact goals.”
Higg in the plastics industry?
According to East, the plastics industry can work with Higg in a variety of ways.
“First, many plastics producers, such as Toray Industries, complete the Facility Environmental Module (FEM) assessment for their manufacturing facilities. This informs manufacturers, brands, and retailers about the environmental performance of their facilities, empowering them to scale sustainability improvements. The assessment provides facilities with a clear picture of their environmental impacts and helps them identify and prioritise opportunities for performance improvements.
Secondly, plastics companies can submit their various materials into the Higg Materials Sustainability Index (MSI) database so brand designers can understand the impacts of their materials choices. The Higg MSI is the apparel and footwear industry’s most trusted tool to measure and score the environmental impacts of materials. Apparel, footwear, and textile industry designers and product developers can use the Higg MSI to assess and compare the cradle-to-gate impacts of different materials, such as cotton, polyester, and leather, to produce more sustainable products. The Higg MSI uses industry and life cycle assessment databases data to calculate environmental impacts and translate them into comparable Higg MSI scores. The Higg MSI can calculate the effects of millions of possible material manufacturing variations. By inputting their materials into the MSI, plastics companies can both quantify the environmental impacts of their products as well as market their products to designers for consideration when creating new products. They can use the Higg MSI to promote their most sustainable products. “
When it comes to the cost of using the platform, he noted that there is a nominal cost to plastics companies to get their materials into the MSI, which a third party then reviews. Higg also offers subscriptions to a variety of manufacturing facility assessments and other tools and services for consumers goods businesses and their suppliers.
All paths to improvement begin with measurement
Businesses today are facing increased expectations to do more on climate, while at the same time confronting challenges in their supply chains and raw materials resourcing. Technology can help, said East.
“Access to better data about environmental and social impacts of industrial production is one of the first steps toward making improvements. Higg provides sustainability data for consumer goods industries, where plastic materials are widely used and brands are increasingly being required to disclose product and supply chain data. Digitalisation of data about materials helps product designers make better informed choices and creates opportunities for brands to aggregate, interpret and share both manufacturing and product level data internally and externally. “
Higg’s 2021 Impact Report phrased it as follows: ‘All paths to improvement begin with measurement - but they don’t end there. It is only through accurate measurement that a business can understand where they really are today, determine where they should be, and chart a path to get there. However, data collection should never be an end in and of itself. Simply put, measurement is not impact reduction.
Impact happens in the steps after, when a product designer can confidently choose a material that uses less water; when a manufacturer earns a new contract because they’ve documented their transition to renewable energy sources; and when a brand expands investments in their low-impact product line, because it’s proven to appeal to new customers. Ultimately, impact reduction comes from businesses being rewarded by their sustainable choices’.
This article first appeared in the March/April edition of Sustainable Plastics. Regrettably, in our print edition, we misstated the name of the director of Analytics at Higg, for which we sincerely apologise. It is Cash East, not Cash Eastman.