Revision as of 10:55, 6 May 2023

Abstract

As organizations strive to align with the Sustainable Development Goals (SDGs), project managers must find ways to ensure that their projects contribute to a more sustainable future. This article explores the role of impact assessment in sustainability projects and how project, program, and portfolio management methodologies can be adapted to prioritize sustainability.

One key aspect of assessing impact is the use of sustainable indicators. Indicators can provide valuable insights into the effectiveness of sustainability projects and help to track progress towards achieving SDGs ^[1].

However, the usage of sustainability into project management methodologies requires a significant shift in mindset and priorities. Project managers must consider the long-term impact of their projects, not just the immediate benefits and deliverables ^[2]. At the portfolio level, organizations can identify areas where they can have the greatest impact and prioritize projects that contribute to their sustainability goals ^[3].

The challenge is not only to measure indicators in a way that impacts can be communicated clear and concise, but also what methodologies can be used to have a full picture of the impacts and how to scale up these methodologies at a level organizations can standardize their process in assessing them.

The article emphasizes the need for project managers to consider the impact of their projects on sustainability goals. This requires a collaborative effort from all stakeholders involved in the project, but the benefits can be significant, both for the organization and for the planet.

Big Idea

Since the publication of the Brundtland Report in 1987, there has been a constant interest in the development of indicators to measure and/or evaluate aspects of sustainable development. This growing interest received a major boost after the Earth Summit in 1992 where Agenda 21 specified the need to develop indicators of sustainable development for use at the national, regional, and global levels (United Nations, 1992). The United Nations Sustainable Development Goals (SDGs) provide a comprehensive framework for measuring progress towards sustainable development, and include a range of indicators for tracking progress on specific goals ^[4].

Sustainable development consists of three dimensions: the environmental, the social, and the economic areas. The field of project sustainability measurement and reporting is constantly evolving, as organizations seek to more accurately and comprehensively understand, measure and be informed about the impact of their sustainability projects. Latest developments in the state of the art for measuring the impact of sustainability projects using sustainable indicators are:

Integrated Reporting - Integrated reporting is a framework that seeks to provide a comprehensive view of an organization's value creation over time, by integrating financial and non-financial indicators of performance. By including sustainability indicators in their reporting, organizations can better communicate their impact on the environment and society, as well as their financial performance. The International Integrated Reporting Council (IIRC) provides guidelines on how to implement an integrated reporting approach.

Social Return on Investment (SROI)- SROI is an approach for measuring the social, environmental, and economic value created by a project. It is based on identifying and valuing the outcomes that result from the project, and assessing the costs associated with achieving those outcomes. SROI can be a useful tool for demonstrating the long-term benefits of sustainability projects, as well as for understanding and prioritizing investments that will have the greatest impact. The SROI Network provides guidelines on how to implement an SROI analysis.

Life Cycle Assessment (LCA) - LCA is a framework for quantifying the environmental impacts of a product, service, or process over its entire life cycle, from raw material extraction to disposal. LCA can help companies to identify areas where they can reduce their environmental impact, and prioritize sustainability improvements. The International Organization for Standardization (ISO) provides standards for conducting LCA studies.

Sustainable Development Goals (SGDs)

The Sustainable Development Goals are a comprehensive and transformative framework for sustainable development. They provide a shared vision for a sustainable future and a roadmap for action. The SDGs are a set of 17 goals that were adopted by the United Nations (UN) in 2015. They are part of the 2030 Agenda for Sustainable Development, which is a global plan of action for people, the planet, and prosperity. The goals aim to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity by 2030. The SDGs are an improvement on the Millennium Development Goals (MDGs), which were established in 2000, but only focused on developing countries. In contrast, the SDGs are universal and apply to all countries, regardless of their level of development ^[5].

The SDGs are interconnected and interdependent, meaning that they are mutually reinforcing and should be achieved as a whole. They were developed through a consultative process that involved governments, civil society organizations, and the private sector. The process included consultations with over 8 million people from around the world, including marginalized communities and people living in poverty. The resulting goals are meant to be ambitious, transformative, and inclusive, and are guided by the principles of universality, leaving no one behind, and a focus on the most vulnerable.

The SDGs are meant to be achieved by all countries, and they require a comprehensive and integrated approach to development. Achieving the SDGs will require a concerted effort by all actors, including governments, civil society organizations, the private sector, and individuals. The SDGs provide a framework for action, but they are not legally binding. However, countries are expected to integrate the SDGs into their national development plans and to report on their progress towards achieving the goals.

The SDGs have been widely endorsed by governments, civil society organizations, and the private sector. They represent a shared vision for a sustainable future and provide a roadmap for action.

SGDs indicators

The SDGs have 232 indicators, which provide a framework for measuring progress towards achieving the goals. The indicators cover a range of issues, including poverty, health, education, gender equality, water and sanitation, energy, economic growth, climate change, and peace and justice. The SDG indicators are designed to be globally applicable, and they provide a standardized framework for monitoring progress towards the goals.

The SDG indicators are organized into three tiers depending on level of importance. Tier 1 indicators are considered the most important, as they are essential for monitoring progress towards the SDGs. Tier 2 and Tier 3 indicators are less critical, but they provide additional information that can help in understanding the progress towards the SDGs^[6].

The SDGs also aim to address the challenge of climate change, which threatens the planet's ecosystems and human well-being. Energy consumption and carbon dioxide (CO2) emissions are key indicators that measure progress in addressing climate change.

CO2 emissions are a critical factor in global warming and climate change. One of the Tier 1 indicators related to climate change is the total greenhouse gas emissions per capita. The SDGs aim to reduce greenhouse gas emissions and limit global warming to well below 2°C above pre-industrial levels. Reducing greenhouse gas emissions is essential to slow the pace of global warming and prevent the worst impacts of climate change.

The SDGs also include broader indicators related to sustainable development and environmental protection. For example, the SDGs include indicators related to sustainable agriculture, biodiversity conservation, and the protection of ecosystems and natural resources. These indicators reflect the interconnectedness of environmental, social, and economic factors and the need for an integrated approach to sustainable development.

The SDG indicators provide a valuable framework for monitoring progress towards the SDGs. The indicators provide a standardized framework for measuring progress, which enables comparisons across countries and regions. By tracking progress towards the SDGs, policymakers can identify areas where action is needed and ensure that actions are effective in achieving the SDGs.

Integrated Reporting

Integrated reporting is a framework to reporting on organizational performance that seeks to provide a more comprehensive view of an organization's value creation over time by integrating financial and non-financial indicators of performance. It shows that an organization's ability to create value is not only determined by its financial performance, but also by its impact on the environment, society and stakeholders.

One aspect of integrated reporting to always keep in mind is project management. Organizations often undertake sustainability projects to improve their social and environmental performance, but measuring the impact of these projects can be challenging. Despite many indicators for the sustainable goals are nowadays in usage, often it becomes difficult to implement projects in line with them. Integrated reporting can help organizations to better manage sustainability projects by providing an approach for tracking and reporting on progress towards sustainability goals.

Integrated reporting enables organizations to communicate the links between their strategy, governance, and sustainability performance in a more holistic way, helping them to demonstrate their commitment to sustainability and long-term value creation, which is often forgotten in projects but it plays a crucial role when it comes to sustainability. It also provides stakeholders with a more complete picture of an organization's value creation, enabling them to have a clear view and take actions about their interactions with the organization.

The International Integrated Reporting Council (IIRC) has provided guidance on how to implement an integrated reporting approach. The IIRC Framework defines integrated reporting as "a concise communication about how an organization's strategy, governance, performance, and prospects lead to the creation of value over the short, medium, and long term." The framework includes six guiding principles for integrated reporting, which are:

1.Strategic focus and future orientation

2.Connectivity of information

3.Stakeholder engagement

4.Materiality

5.Conciseness

6.Reliability and completeness

By following the six principles, organizations can ensure that their integrated reporting is relevant, credible, and transparent, and provides a clear and comprehensive view of their value creation.

In terms of project management, integrated reporting can help organizations to better track and report on progress towards sustainability goals by providing a structured approach to measuring and reporting on sustainability performance. This can include setting sustainability deliverables, tracking progress towards them, and reporting on the results of sustainability projects.

Many studies have been addressed regarding this topic, especially for a framework that has been already used in past and it's now edited with sustainable indicators. For example ^[7] analyzes the challenges and the benefits of implementing sustainability reporting in universities, often involved with organization in sustainable projects.

Another worth to mention literature regarding this topic is ^[8] where different practices are analyzed in companies and their ways of sustainability reporting.

Social Return on Investment (SROI)

Social Return on Investment (SROI) is a methodology used to measure the social, environmental, and economic impact of a project. It seeks to quantify the social value generated by a project by measuring outcomes against resources invested.

In the context of sustainability projects program and portfolio management, SROI can be a useful tool for project managers to measure the impact of their projects and demonstrate the value created for society and the environment. This is particularly important given the growing interest in sustainable development goals (SDGs) and the need to demonstrate progress towards achieving them.

SROI takes a holistic approach to measuring impact, considering the social, environmental, and economic outcomes of a project. This makes it a great and suited tool for measuring the impact of sustainability projects, which typically aim to achieve multiple goals across different dimensions of sustainability.

Project managers can use the SROI methodology to identify the most significant impacts of their projects and prioritize resources accordingly. For example, a sustainability project aimed at reducing greenhouse gas emissions could use SROI to measure the social, environmental, and economic benefits of different interventions, such as energy efficiency improvements, renewable energy installations, and behavior change programs, utilizing sustainable indicators as a basis for the reporting. By comparing the costs and benefits of each intervention, project managers can identify the most effective strategies for achieving their sustainability goals.

SROI can also help project managers when it comes to stakeholder engagement to communicate the impact of their projects. By providing a clear and quantifiable measure of social value, SROI can help to build trust and legitimacy with stakeholders, including funders, regulators, and community members.

In terms of project management, SROI requires careful planning, data collection, and analysis to ensure that the results are credible and useful. Project managers need to consider the social and environmental impacts of their projects from the outset, and work together with all stakeholders to identify the most relevant and meaningful outcomes. Some resources on SROI and its connection to project management and sustainable development goals include:

The Guide to Social Return on Investment ^[9] provides an introduction to SROI and guidance on how to conduct an SROI analysis, including stakeholder engagement, impact mapping, and valuation methods.

The United Nations Development Programme's report on Social Return on Investment for Sustainable Development ^[10] explores the use of SROI as a tool for measuring the social impact of sustainable development projects and provides case studies of SROI analysis in different contexts.

The SDG Impact Standards for Enterprises ^[11] is a framework that provides guidance on how enterprises can measure and report on their impact towards the SDGs, including the use of SROI as a methodology for measuring social value.

Life Cycle Assessment (LCA)

Life Cycle Assessment (LCA) is a comprehensive methodology for assessing the environmental impacts of a product, process, or service throughout its life cycle, from the extraction of raw materials through to the final disposal or recycling of the product. LCA is a systematic approach that takes into account the environmental impacts associated with all stages of a product's life cycle, including the extraction of raw materials, processing, manufacturing, distribution, use, and end-of-life disposal or recycling. LCA is based on a standardized framework of principles and guidelines, such as those outlined in the ISO 14040 ^[12] and ISO 14044 standards ^[13] The LCA methodology typically involves four stages:

Goal and scope definition: During this stage, the purpose and scope of the assessment are established, including the functional unit of the product or service, the system boundaries, and the environmental impact categories to be considered. The functional unit defines the unit of measurement for the environmental performance of the product or service, such as per unit of weight or per unit of energy produced. The system boundaries define the physical and geographical limits of the product or service, including the upstream and downstream processes that are included or excluded from the analysis. The environmental impact categories are the types of environmental impacts that are considered, such as global warming potential, acidification, eutrophication, and human toxicity.

Life cycle inventory: During this stage, data is collected on the inputs and outputs of each stage of the product's life cycle, such as energy and material inputs, emissions to air, water, and soil, and waste generation. This data is typically collected using a combination of primary data from the project itself and secondary data from databases and literature.

Impact assessment: During this stage, the data collected in the life cycle inventory stage is analyzed to determine the potential environmental impacts of the product, process, or service across a range of environmental impact categories. This stage involves the use of models and indicators to quantify the environmental impacts, such as carbon footprint, water footprint, and ecological footprint.

Interpretation: During this stage, the results of the impact assessment are interpreted and presented in a way that is meaningful and relevant to stakeholders, such as through the use of Environmental Product Declarations (EPDs) or Environmental Impact Assessments (EIAs). This stage involves identifying the key environmental hotspots and trade-offs of the product, process, or service, as well as identifying opportunities for improvement and communicating the results to stakeholders.

Annotated bibliography

1. ↑ Ahi, P., Searcy, C., & Kramar, R. (2021). Sustainability performance measurement and reporting: A systematic review. Journal of Cleaner Production, 295, 126389
2. ↑ Kerzner, H. (2021). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons
3. ↑ Buggenhout, J., Colpaert, P., & Vanhoucke, M. (2021). An optimization approach for portfolio selection in project management under sustainability constraints. Journal of Cleaner Production, 290, 125631
4. ↑ https://sdgs.un.org/goals
5. ↑ United Nations Development Programme (UNDP). (2020). Sustainable Development Goals
6. ↑ United Nations (2017). Tier Classification for Global SDG Indicators
7. ↑ Adams, C. A., & Simnett, R. (2011). Sustainability reporting and performance management in universities: Challenges and benefits. Australian Accounting Review, 21(3), 207-220. This article discusses the challenges and benefits of implementing sustainability reporting in universities, including the role of performance management and project management in sustainability reporting
8. ↑ Hartmann, F., & Perego, P. (2014). Sustainability reporting: An exploratory study of Italian companies. Journal of Cleaner Production, 85, 172-184. This article examines sustainability reporting practices in Italian companies and discusses the role of project management in sustainability reporting.
9. ↑ The Guide to Social Return on Investment. Social Value UK (2021)
10. ↑ Social Return on Investment for Sustainable Development: A Guide. United Nations Development Programme (2017)
11. ↑ SDG Impact Standards for Enterprises. Sustainable Development Solutions Network. (2021)
12. ↑ ISO 14040:2006. Environmental management – Life cycle assessment – Principles and framework. International Organization for Standardization
13. ↑ ISO 14044:2006. Environmental management – Life cycle assessment – Requirements and guidelines. International Organization for Standardization