Eco-accounting

The tricky part to arriving at Sustainability Score is aggregating all of the various environmental factors and weighting them in a way that’s generally accepted. Today, we only have a superficial understanding of the effects of human activity on the environment – and that understanding is not necessarily based on mature science. As a result, it should be expected that the weights will have to change over time, as new environmental effects are discovered and others are discarded.

This is no more challenging than tracking a multinational’s assets with dozens of currencies that fluctuate daily. In fact, accounting practices for multiple currencies are particularly well-suited for weighting environmental factors.

Each environmental factor can be measured using appropriate units such as tons, as when measuring CO2 emissions. Or it could be defined in square kilometers, as when measuring land use or deforestation -- or joules when measuring energy consumption. If each of these units is treated as a separate currency, then it’s a matter of doing a straight-ahead currency conversion to arrive at a weighted index, such as the Sustainability Score.

Unlike the conversion rates for currencies, which are typically set by supply and demand, the conversion rates for environmental factors need to be defined periodically. The Metrics Project proposes to form a Consortium which will meet yearly to establish the proper conversion rates.