Chapter 7: Toward a Next Generation of Corporate Sustainability Metrics

Daniel C. Esty and David A. Lubin


Marketplace evidence suggests that a significant number of mainstream value investors want to understand which companies are positioned not just to navigate sustainability issues—including climate change, air and water pollution, racial injustice, workplace diversity, structural inequality, privacy, corporate integrity, and good governance—but which will thrive and gain competitive advantage as a result of the emerging sustainability imperative. As they did with prior business megatrends, such as the rise of information technologies and globalization, these investors want insights on the strategies developed by management teams to transition their business models for success under profoundly changed societal and market demands. This perspective requires a next generation of high-resolution ESG metrics based on granular, enterprise-wide asset-, process-, and product-level data that illuminate the critical dimensions of corporate performance required to deliver financial success in the face of the sustainability imperative.