Sustainability Metrics Explained: From Energy Bills to Business Reports
An electricity bill seems straightforward until someone asks for the carbon emissions behind it. Then come the questions: Which year? Which locations? Which calculation? Can we see the records?
This is where sustainability reporting starts to become interesting. A familiar business expense turns into information about energy, emissions and how a company operates. Put several years together and we can begin to see what changed. Look closely enough and we may discover that a promising percentage leaves out half the story.
A company can use 20% less electricity for each order while using more electricity overall. A business can divert 70% of its waste from disposal while recycling 40%. Both statements can be accurate. Understanding the difference helps us read a report and ask better questions.
We will follow those numbers through a fictional neighbourhood café, then look at what current reporting rules in the European Union, Australia and California ask larger businesses to disclose. We will also see why a smaller supplier might receive a sustainability questionnaire even when it falls outside a reporting law.
The café’s figures are invented to make the calculations easy to follow. The reporting examples come from official rules and guidance checked on 13 November 2026.
The first surprise: two very different answers can both be true
Imagine the café uses 1,000 kWh of electricity to serve 10,000 orders in one month.
The following month is much busier. It uses 1,200 kWh to serve 15,000 orders.
Here is the total change:
(1,200 − 1,000) ÷ 1,000 × 100 = 20% more electricity
Now look at each order:
Month 1: 1,000 ÷ 10,000 = 0.10 kWh per order
Month 2: 1,200 ÷ 15,000 = 0.08 kWh per order
Electricity per order fell by 20%.
Both results belong on the dashboard. Each order took less electricity on average, while the busier month used more electricity in total. The first figure helps the café understand its efficiency. The second shows how much electricity it actually needed.
This one example contains an important lesson: a percentage can be perfectly accurate and still leave out the number we most need to see.
A quick translation of the words around the numbers
Before we calculate anything else, a few terms deserve a simple introduction.
ESG stands for environmental, social and governance. Think of it as three folders.
Environmental: energy, greenhouse gas emissions, water, materials and waste.
Social: working conditions, injuries, turnover, training and effects on communities.
Governance: who is responsible, how decisions are checked, how concerns are handled and how reliable the reported information is.
ESG organises many subjects. Each one still needs its own definition, measurement and evidence.
A metric is something measured. Electricity use in kWh is a metric.
A KPI, or key performance indicator, is a metric chosen because it helps guide a decision. If the café wants to improve energy efficiency, kWh per order could be one of its KPIs.
An LCA, or life cycle assessment, is a method for studying a product across selected stages of its life, such as raw materials, manufacturing, transport, use and end of life. Its result depends on the boundary and data used.
An ESG rating is an assessment produced under a rating provider's own method. Providers may choose different topics, data and weights. That is why the same company can receive two different ratings without anyone making a simple arithmetic error.
Energy: what did we actually use?
A kilowatt-hour, written as kWh, measures energy.
A one-kilowatt appliance running for one hour uses:
1 kW × 1 hour = 1 kWh
The electricity bill can tell the café how many kWh it used. It cannot tell us the climate impact by itself because electricity is produced in different ways in different places and years.
That brings us to the next number.
Carbon: how energy becomes CO₂e
To estimate the greenhouse gas emissions connected with electricity, a business multiplies its electricity use by an emission factor.
The factor estimates the emissions associated with one unit of activity. In this case, the unit is one kWh.
Imagine the café used 12,000 kWh in a year. For this teaching example, we will use a deliberately round factor of 0.40 kg CO₂e per kWh.
12,000 kWh × 0.40 kg CO₂e/kWh = 4,800 kg CO₂e
4,800 kg = 4.8 tonnes CO₂e
CO₂e means carbon dioxide equivalent. Carbon dioxide, methane and other greenhouse gases warm the atmosphere by different amounts. CO₂e converts them into one shared unit so they can be added and compared.
The 4.8-tonne result covers purchased electricity in this example. Gas, ingredients, packaging, deliveries and waste would need their own data and calculations.
The 0.40 factor is only a teaching value. A real report needs a verified factor that matches the place, year, electricity source and accounting method. Without those labels, a very tidy carbon number can become surprisingly slippery.
Scope 1, 2 and 3: where do the emissions sit?
The word scope sounds technical. Here it simply helps place emissions in relation to the reporting business.
For our café:
Scope 1 covers direct emissions from sources the café owns or controls. Fuel burned in its own gas oven or delivery van would usually sit here.
Scope 2 covers emissions from producing electricity, heating, cooling or steam that the café buys and uses. Purchased electricity sits here.
Scope 3 covers other indirect emissions across the value chain. Ingredients, packaging, third-party deliveries, employee commuting and waste treatment may sit here when they are relevant to the business.
The scopes help us connect emissions to the café’s own sources, the energy it buys and the wider chain of suppliers and services. We still need the records and calculations to work out the amount.
Scope 3 often takes more work because the information may live with suppliers, delivery companies, customers and waste contractors. Some values will be measured. Others may be calculated or estimated. A useful report says which is which.
Water: what came in, what went back and where?
Water reports often use three words that look similar.
Withdrawal is water brought into the business from a municipal supply, surface water, groundwater or another source.
Discharge is water the business releases to surface water, groundwater, seawater or another party when it has no further use for it.
Consumption is withdrawn water that is no longer available to an ecosystem or local community during the reporting period. It may have evaporated, gone into a product, been stored or become unusable.
Suppose the café records:
10,000 litres withdrawn
8,000 litres discharged
When consumption has to be calculated, withdrawal and discharge need the same boundary and time period:
10,000 L − 8,000 L = 2,000 L consumed
At first glance, 2,000 litres may sound enormous or modest. Place changes the meaning. The source of the water, the season and local water stress all matter.
This is why “water used” is too vague for a useful dashboard. “Two thousand litres consumed at this site in this month” gives us something we can understand and investigate.
Waste: one pile, several different percentages
Now let us give the café 1,000 kg of waste for the month.
Its treatment records show:
300 kg prepared for reuse
400 kg recycled
300 kg disposed
Waste diverted from disposal includes the material prepared for reuse and the material recycled:
300 kg + 400 kg = 700 kg diverted
The diversion rate is:
700 ÷ 1,000 × 100 = 70%
The recycling rate is:
400 ÷ 1,000 × 100 = 40%
Both percentages describe the same pile. They answer different questions.
In this example, the diversion rate asks how much was prepared for reuse or recycled. If another verified recovery route is included, the report should name it. The recycling rate asks how much was actually recycled.
A recycling bin shows where material was sorted. A treatment record provides stronger evidence of what happened after collection and how much was actually recycled.
People: the number can point to the conversation
The “S” in ESG brings people onto the dashboard.
For this teaching example, we will divide departures by the average number of employees during the year. Imagine four employees left and the café’s average employee count was 20.
4 ÷ 20 × 100 = 20% employee turnover
Turnover methods vary, so a real report should state who is counted and how the denominator was calculated.
The percentage can reveal a pattern over time. The reasons stay outside the percentage. The café would need to examine the actual evidence, such as exit conversations, schedule records or anonymous staff feedback.
The metric points to the conversation. Listening helps us understand it.
A rate can contain a decimal even when the events were counted in whole numbers. Imagine the business records three work-related injuries across 80,000 hours worked. For this example, all three meet the reporting definition for a recordable injury. Using one common comparison base of 200,000 hours:
3 ÷ 80,000 × 200,000 = 7.5 recordable work-related injuries per 200,000 hours
The standardized rate is 7.5, while the actual count remains three. The shared base helps compare periods or workforces of different sizes. The rate describes recorded harm, one part of the wider safety picture. A responsible report keeps the injury count, hours worked and calculation base beside the rate.
Governance: can we follow the number back to its source?
Governance becomes very practical when a business starts collecting sustainability data.
Who decides what “waste recycled” means? Who checks the contractor record? Who notices that one site is missing? Who records a change in the method?
Suppose the café asks 60 suppliers for information and 45 provide the required data.
45 ÷ 60 × 100 = 75% supplier response rate
That 75% is coverage by supplier count. The suppliers’ share of the café’s environmental impact is a separate question. One large supplier may matter much more to the total than several small ones.
The missing 25% deserves to stay visible. It may lead to better supplier follow-up, a more careful estimate or a clear limit on what the final result can say.
This is the quiet work behind a trustworthy dashboard: shared definitions, named owners, source documents, consistent periods and visible gaps.
When someone asks for the report
Imagine our café starts supplying pastries to a hotel group. Along with the usual questions about prices and deliveries, a form arrives asking about electricity, fuel, packaging and waste.
The café already has some of the answers. They are sitting in bills, purchase records and contractor statements. The challenge is bringing them together for the right period, checking the calculation and showing where each figure came from.
That is the connection between our examples and business reporting. Larger companies may have a legal duty to disclose sustainability information. Their suppliers can receive related questions because purchased goods and services form part of the larger company’s operations and emissions.
One distinction makes the rules easier to follow:
The law decides who has to report.
The reporting standard describes what goes into the report.
Assurance means an independent practitioner checks some or all of the reported information.
The reports differ by jurisdiction. These three current examples show what the request can look like in practice.
European Union: looking in two directions
The European Union’s reporting rules ask a covered company to look in two directions. It explains how sustainability issues could affect the business financially, and how the business affects people and the environment. The formal name for this is double materiality.
The 2026 revision focuses the central mandatory scope on companies that exceed both 1,000 employees and €450 million in net turnover, subject to the full legal conditions for the company or group. The revised European Sustainability Reporting Standards entered into force on 10 November 2026 and apply to financial years beginning on or after 1 January 2027. Companies already reporting can choose to use them early for 2026.
What does the report expect? A covered company connects the sustainability subjects that matter to:
who is responsible at board and management level
its main impacts, risks and opportunities
policies, actions, resources and targets
measured progress, including relevant energy, emissions, water, waste, workforce and business-conduct figures
methods, assumptions, estimates and data sources
missing value-chain information and the work being done to obtain it
For a café group, the trail could begin with electricity and gas bills, ingredient purchases, packaging records, delivery data, waste treatment records and workforce information. The exact subjects depend on what is material to that company.
The EU also introduced the Voluntary Standard for sustainability reporting by businesses outside the mandatory scope, intended mainly for companies with no more than 1,000 employees. It does not create a duty to publish a report. It gives smaller businesses a common structure for information that banks, investors and larger customers may request.
Its basic module covers the reporting boundary, sustainability policies and plans, energy and greenhouse gas emissions, pollution, biodiversity, water, materials and waste, workforce characteristics, health and safety, pay and training, and convictions or fines for corruption and bribery. From 2027, a defined value-chain cap also lets protected smaller suppliers decline certain requests that go beyond specified EU datapoints when the request is made for a customer’s mandatory EU report.
California: putting annual emissions on the record
California’s first reporting deadline under SB 253 arrived on 10 November 2026, the same date the revised EU standards entered into force.
The law covers US business entities with more than US$1 billion in annual revenue that do business in California. Their first filing covered Scope 1 and Scope 2 emissions for the previous financial year.
A credible total needs more than one final number. California’s first-year guidance asks for the organisational boundary, annual emissions totals, the measurement method, activity data, sources, emission factors, global warming potential values, assumptions and estimates.
For our café example, fuel burned in its own van or gas oven would sit in Scope 1. Purchased electricity would sit in Scope 2. Ingredients, packaging, third-party transport and waste may contribute to Scope 3.
Scope 3 reporting is scheduled to begin in 2027. California is still developing the detailed rules for 2027 and later, including future methods, timing and assurance. The flexible arrangements used for the first 2026 filing should not be treated as the permanent system.
Australia: what a changing climate could mean for the company
Australia has placed mandatory climate information inside the annual reporting process and is phasing it in by company size and other tests.
The second reporting group began with financial years starting on or after 1 July 2026. Under the ordinary company-size route, it includes companies that already have the relevant financial-reporting obligation and meet at least two of these three thresholds: A$200 million in revenue, A$500 million in assets or 250 employees.
The sustainability report includes climate statements, any required notes and a directors’ declaration. It asks for:
material climate-related financial risks and opportunities
governance, strategy and risk management
metrics and targets, including Scope 1, Scope 2 and Scope 3 emissions
an assessment of the company’s resilience under at least a 1.5°C future and another future well above 2°C
That last requirement is called climate scenario analysis. The exercise explores how costs, locations, supply chains, assets and strategy could change under different climate futures.
The evidence trail matters too. Reporting entities must keep the records behind the sustainability report for seven years. ASIC gives examples such as emissions inventories, internal analysis, source documents, working papers, assumptions and related financial records. Assurance is also being phased in.
Why a smaller business may receive the same questions
The law may apply to the customer while the data request arrives at the supplier.
If our café supplies the hotel group, the form might ask for:
annual electricity use in kWh, with the reporting period and bills behind it
fuel use and any refrigerant records
the weight and material of packaging, including recycled content if known
delivery distances or transport information
waste amounts and the treatment records behind recycling claims
workforce and safety information where it is relevant to the customer’s report
Receiving that form does not automatically make the café a legally regulated reporting company. It means its information may sit inside a customer’s value chain. Banks, investors and public tenders can also ask related questions.
Once we know what a report is asking, the smaller details begin to matter. A total without a year is hard to use. A percentage without its starting figure is hard to judge. A number without a source is hard to check.
These six labels help us read a published report and prepare a useful answer of our own.
The six labels that make a sustainability number useful
The next time you see “20% lower,” “70% circular” or “4.8 tonnes CO₂e,” look for six labels:
What: What exactly was measured?
Unit: kWh, litres, kilograms, tonnes CO₂e, hours or percent?
Boundary: Which site, activity, people or part of the value chain was included?
Denominator: Is it a total, or a figure per order, product, employee, square metre or unit of revenue?
Time: Which month or year, and what is the comparison period?
Source: Did it come from a bill, meter, supplier record or treatment record?
Then add one more note: was it measured, calculated or estimated?
Keep the six labels nearby; the acronyms can wait. A reader can use them to understand a claim. A business can use them to decide what to improve, measure again and explain clearly.
A useful first step is to take one figure from a bill or report and explain it in a sentence you would actually say out loud. “We used more electricity this month, while using less for each order” tells us much more than a green arrow.
From scattered files to information we can use
Most businesses already have the beginnings of these answers. They are scattered across electricity bills, HR spreadsheets, supplier files, waste invoices and old reports. The difficult part is finding the right record, checking that it belongs to the right year and company, and understanding why two documents may tell different stories.
That is the wider purpose of EcoSense, which we are developing at MyHerb. EcoSense is being built as a private sustainability evidence workspace. Its core Document Review workspace keeps reports and supporting files together by client, company and reporting period, then connects the figures, sources and human review in one record.
A business or consultant will be able to bring related reports, spreadsheets, policies and supporting files into one case and review them as one connected set. EcoSense is designed to link figures and claims to the exact page, paragraph or spreadsheet cell where they were found. It keeps missing records and conflicting figures visible, preserves corrections and review decisions, and lets people ask questions using the selected evidence.
Reviewed information can then be exported as a clear memo, workbook or structured data file and reused in later reports and questionnaires. A reviewed electricity figure should not need to be rediscovered in three folders every time another spreadsheet arrives.
We are now adding the VS Evidence Pack as a new reporting path built on that same reviewed evidence. It will organise approved information around the European Voluntary Standard and help prepare it for sustainability reports and recurring requests from customers, banks or tenders. EcoSense remains centred on organising sustainability documents, reviewing their evidence and keeping useful information ready for the next question.
While EcoSense is in development, MyHerb can already help small and medium-sized businesses organise documents and data, choose useful metrics, analyse trends and turn the results into dashboards, insights and reports.
If your sustainability information is spread across folders, or the same questions keep returning in different formats, talk to us. We can begin with one real question and the records you already have.
Talk to us about your sustainability data
Comments