Benchmarks allow an entity to evaluate its performance by comparing itself to its competitors in terms of parameters of interest, namely Key Performance Indicators (KPI).
Why use a Benchmark?
Benchmarks provide indicators and guidelines on how an entity can implement action plans to better itself and outshine competition.
Identifying the correct competitors is crucial when comparing oneself to others, keeping in mind that the goal is to identify one's potential improvements, one's shortcomings but also one's current good practices and strengths.
💡 For example, if a company wants to evaluate its economic performance in terms of revenue, it should be compared to companies in its activity sector and selling similar products. This is necessary to identify and elaborate feasible change strategies.
What about a Greenhouse Gas Emissions Benchmark?
When an entity seeks to compare its GHG emissions to those of rival entities, selecting relevant and reliable data to include in the benchmark can be challenging.
Identifying competitors: Even when only companies that operate in similar fields are included in a GHG benchmark, differences in the way companies carry out its business can make some comparisons irrelevant.
💡 For example, some companies rely on online sales of products (increasing emissions due to digital services), while others rely on in-store distribution of the same products (thus are likely to have lower emissions due to digital services).
Data quality: GHG emissions data, methodological frameworks and computations may vary from one company to another. For example, there can be huge differences whether a company carries out its own GHG inventory, whether a third party does it or whether the results are audited and certified or not.