It's a funny state of things: One where investors complain that ESG data is not standardised; where at the same time companies – and notably their boards – complain that investors do not ask for data in a standardised way. And where the very same companies and boards nonetheless prioritise proprietary measurement systems over any other one for their own supply chains and products.
It's a paradox. One that is not efficient, effective, or conducive to impact.
A call to leave politics to the side, focus in impact, and standardise, standardise, standardise.
Reporting on ESG / sustainability dimensions is an issue.
One for the executives in a company across all levels of responsibility.
And one for the board.
For the board indeed even on two accounts, namely:
The metric they require to be reported to; and the metric that eventually find their way into publicly disclosed information of some shape or other.
Unsurprisingly: How seriously a company takes the ESG issue can be inferred from the extent, poignancy, and quality of their reporting.
That again – equally unsurprisingly – says is all about how ESG-savvy their board most likely is. Or, indeed, is not.
If you’ve ever been part of a bigger discourse about how to scale out sustainability economically and globally, you’ll have been quick to notice that by and large you’ll be faced with representatives of four distinct camps of advocates:
The Grassrooters; the 'Setting the tone at the top' people; those in support of government regulation driven by civil society; and the 'Fiduciary Duty Advocates'.
But which camp owns the driving leadership role? Funnily enough, that role does get handed around as if it was a game of musical chairs ... or the proverbial hot potato.
Most boards are composed of former or present CEOs, CFO and other C-suite executives.
People, hence, with a long track record of ‘getting stuff’ done. A board’s role however is very different from that of an executive: digging deep by asking those overly simple questions that give interesting answers, digging deep into rationales, values, hopes, expectations, shut up doubts, and personal agendas. Which is what good coaches typically do. Are coaches the better board directors?
Regenerative' is really a re-packaging of traditional agro-ecological approaches, with an added notion of leaving the land better than it was found.
And yet - because lack of knowledge runs deep in companies, such lack is compensated by prescribing procedures rather than to focus on outcomes. It is a bit of a deja-vu indeed ...
Right now everyone, everything seems to talk about wanting to be come ‘carbon neutral’.
Don’t get me wrong: The goal itself – getting to a net zero carbon balance at the very least, and all that on nothing longer than a 2040 trajectory – is a must for every business.
But.
After Circularity and Regenerative, we’re seemingly right onto the next term in the game of buzzword bingo: Net Zero.
Net Zero should be every where indeed.
But not as a mere wave to ride in order to catch the next press release headline.
How does digitalisation impact and link to corporate responsibility? This is the question we look into in this post.
Combining the two disciplines results in a range of interesting questions. For example: If humans create non-human agents (e.g. in the shape of AI): For what, towards whom are these responsible? And: are they responsible at all - or is it their creator who is?
Corporate responsibility, business ethics, sustainability, ESG. Whatever the terminology there are three fundamental questions that underpin all decisions, actions, strategies in this regard. These questions are strategically relevant for any board of directors. Because they are the basis upon which fiduciary duty is constructed. And: they outline the framework within which the fiduciary duty of a board is bound to evolve over time.
One of the things usually approved at the constituent board meeting after every company AGM are the board of directors' ‘Rules of Procedure’. What looks, and is often perceived, as a formality though, at close looks carries not just formal weight, but indeed formulates – directly or between the lines – the duties of the board.
What do these rules typically enshrine - and what not?
How do you make ‘sustainability' tangible?
The usual answer is – unsurprisingly – a ‘well, it depends’.
Which it evidently does.
Unfortunately, good case studies are extremely rare to come across.
Hence, when I stumbled across such a gem in one of the primary Swiss news papers, I jumped at the opportunity to summarise it for this blog.
Collaborations toward a common goal, across organisations, can be one of the most gratifying things we ever may get to experience. Funny enough: Neither collaboration nor team work is something outrageously difficult in principle. If the common and mutually beneficial goal is front and centre. But this is exactly where the hitch is. Some thoughts about the hurdles of genuine collaboration and team work.
You can't manage what you can't measure. This often cited quote by Peter Drucker lies at the heart of many things: change management, quality management, staff diversity, environmental footprint, CO2 output … you know it. This is why many millions of dollars, and countless hours, have been invested in creating suitable measurement tools. It's just that: Measurement ≠ Data ≠ Information ≠ Knowledge ≠ Action.
Nearly a year ago I wrote about how the terminology we use abstracts from the fact that there are living and sentient human beings doing 'supply chain' work. Listening to a recent podcast it dawned on me that language can be just as useful to gloss over the seriousness and impact of scientific facts. And the resulting necessary actions. Climate Change vs Climate Emergency? Green energy vs renewable energy vs clean energy? Hence, some more thinking about the role of language.
Carbon – together with biodiversity – is one of THE most critical dimensions among the Planetary Boundaries. Because the already existing overshoot is putting our civilisation at risk. So far nothing new under the sun. The food and agri sector is - possibly together with the energy sector - one of the most important industries in this regard. Not only does it impact our living environment significantly - by how our food is grown - but also they play a key role to feed our global population. The big elephant in the room is of course: How well or badly do agri food companies perform right now in terms of their carbon footprint? And: Do they have at the least commitments to work on a Paris Agreement trajectory? I look into these questions. Spoiler Alert: There is not much to cheer about. Not at all.
Knowledge and data are two interesting entities: essential for decisions at any one time. And yet evolving with time. And with that, decisions taken some time ago, possibly decades earlier, may prove flawed – in hindsight.
But what if years down the road these insights are resurfaced and either proven to be partially or fully inaccurate? What if the nuggets are suddenly being used in a context that has shifted significantly since? What if our best intended and best-possible informed statements of the past are called out years, decades later?
A few thoughts on this dilemma.
Anger … a strong, passionate emotion. Sometimes conducive as it gives loads of strength to fight for what we see as a ‘better world and society’. But also sometimes a shot into our own foot.
In the sustainability world extemists views are common - on either side of the spectrum. Both sides advocating for fundamental change.
But as it the choice of words suggests: fundamental change is only possible if we change fundamentally. All of us.
Including the advocates and campaigners themselves.
The KISS Principle is a design principle that stems from the 1960.
It originated in engineering and its view point is that most systems work best if they are kept simple rather than made complicated; therefore, simplicity should be a key goal in design, and unnecessary complexity should be avoided.
But what about complex systems such as nature?
How simple can we go before oversimplification results in incomplete, or biased data? Before absence of consideration of relevant factors inherently lead to regrettable substitutions? And before we willingly accept that there will be collateral damages to a decision, without knowing (or wanting to know) of what nature and in what order of magnitude these may be?
One example that illustrates where this challenge may rear what is its ugly head: upcoming Swiss political referenda on agricultural practices.
Reducing humanity’s footprint on this planet is a journey of decisions.
Some of them tough, some of them very clear. And some of them – let’s just say: with very limited available data.
The journey we’re on, is the proverbial Designer’s Paradox. More scientifically speaking of course, we are faced with the ever lasting conundrum of Regrettable Substitutions.
So: Is there a best possible AND least bad option (combined) at this very moment?
It is quite astonishing: all the different contexts that the term ‘circularity’ or ‘circular economy’ is being used. They key point mostly is of course the waste reduction promises inherent in the term, and the subsequent lower dependency on finite resources.
But, in addition to reducing waste, carbon – or rather carbon footprint – is a key factor.
Unfortunately, the reality is sobering: taking fashion as example, at best between 3% and 6% of the industry's carbon footprint could be remedied that way.
And even worse: in order to realise the potential, three fundamental hurdles must be addressed. Some efforts are underway, of course, but a steep hill remains to climb.
The leadership team level at company X is not making the moves that might be expected and needed from a sustainability perspective. What to do? How to overcome the blockage? How to make progress without even mentioning the S-word in the discourse?
The answer: Compliance, Risk, and the Fear of Missing Out (FOMO).
Or in more tangible terms - start the conversation by focusing on legal compliance, Risk and Due Diligence, Efficiencies ... and good old benchmarking with the competition.
No S-word needed. Not a big step for humanity no doubt. But a door opener to many more interesting conversations.