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Integral Thinking & True Materiality – Part 7/7: What Others Say About The New Impetus

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 7/7.

Time to let others speak! I am grateful to Allen White, Georg Kell, KoAnn Vikoren Skrzyniarz, Bill Baue and Robin Lincoln Wood for their appraisals of ‘Integral Thinking & True Materiality’. I guess the impetus stands the test of some of the top thinkers and past and existing leaders in sustainability. Time to test it further, pilot it and share the learning experience with others, through the various angles to do so: Reporting 3.0, GISR and the ThriveAbility Foundation.

Allen White (Co-Founder of GRI and Founder of GISR) 

Progress toward a thriving future requires a new lens for viewing corporate purpose, strategy and practice.  Ralph Thurm’s Integral Thinking & True Materiality framework provides such a lens, enabling business leaders to better understand the broader socio-ecological milieu in which they operate and to which they ultimately are accountable.  This kind of holistic thinking is a prerequisite to transforming organizations at the depth and speed a troubled world demands.  Indeed, anything less imperils the prospects for building a just and resilient global future.

Georg Kell (Vice Chairman of the Board, Arabesque Partners; former Executive Director of the UN Global Compact)

Ralph Thurm has always been on the forefront of sustainability, from his time at Siemens to joining GRI and later Deloitte. He now continues as A|HEAD|ahead, working on necessary structural enhancements in sustainability through the various affiliations of his work, eager to explore the next level of finding suitable criteria for clarified purpose, better understanding of success and ways to scale up what’s needed to overcome sustainability incrementalism. This reader is condensing some of his thinking into a new impetus, and it contrasts current thinking that often still tends to be a bit cautious and risk-averse into a wonderful tour de force that opens the mind and connects what belongs together. Enabling fresh thinking, Integral Thinking & True Materiality is at the same time inspiring and without doubt a precious resource for anybody who wants to build lasting and thriving organisations. Following this lead we may rethink if we have done enough to invigorate trust, innovation and scalability, the outcomes of the new impetus Ralph describes.

Dr. Robin Lincoln Wood (Founder, ThriveAbility Foundation)

How can the SDG’s be integrated into corporate reporting so as to move beyond a set of silo’ed goals for ‘zero negative impact’, to stimulate innovation, excitement and the breakthroughs we need to create a safe, just operating space in which humanity can thrive? Some of the answers to this question will be found, like clues in a detective novel, in Ralph Thurm’s short compendium of articles on Integral Thinking & True Materiality.

The first clue is to be found in the leading Diagram 1 in the compendium – „Trust“. In a world where trust in our institutions and the ‚system’ is at an all time low, who can you trust? The power of great brands, like good leaders, is that they inspire trust in their promises, and by delivering reliably on those promises, that trust grows. Many organizations are now learning just how critical and valuable trust is, especially those who have lost the trust of their key stakeholders at considerable financial cost.

Clue no 2 is that „Resilience“ and „Innovation“ are pre-conditions for products and services to deliver in the longer term on an organization’s promises. The big question is: How can we ensure that an organization is trustworthy, resilient and innovative? For that we need to go inside the triangle in Diagram 1 to find four enablers: integral thinking, success, purpose and scalability:

  • Integral thinking requires leaders to incorporate both negative and positive externalities into their business reporting within the context of planetary boundaries and social floors, to be genuinely sustainable. This results in „True Materiality“.
  • Success in the 21st century will not be measured purely in financial terms.Through the integration of the seven capitals, we can arrive at the True Future Value of any decision or investment, thereby providing a trustworthy indicator of where an organization should focus its efforts.
  • Purpose is needed to align organizational stakeholders toward a North Star that enables the web of stakeholders and their business ecosystems to realise their True Future Value creating potential as an interconnected system of mutually satisfying promises delivered and commitments met.
  • Scalability enables the fruits of True Future Value generating innovations to „cross the chasm“ from the early adopters to the mainstream markets to go truly global, resulting in world enhancing outcomes.

Reporting standards and the sustainable development goals have the power to shape the governance frameworks which determine how value is perceived and created in our economy. Business leaders, investors and consumers need to trust that their decisions are contrubuting to True Future Value, not just doing less or no harm. By being able to measure what „Doing well by doing good“ really means for all stakeholders in an organization, the ThriveAbility Governance Framework and Index offers us the opportunity to move rapidly to a regenerative inclusive economy- a world where promises are delivered in ways that rebuild our trust in ourselves, each other and the possibility of a thriving future.

KoAnn Vikoren Skrzyniarz (Founder/CEO Sustainable Life Media, producers of Sustainable Brands)

In 2006, Sustainable Brands launched out of a belief that the pathway to a flourishing future depends on our ability to successfully shift our businesses and the global economy beyond those models that enabled success during the industrial age and toward something new, and more evolved. We recognized that while the industrial age delivered significant improvements in prosperity around the globe through the design of business systems focused on driving efficiency from mechanistic models of operating and the development of silos of expertise, it also produced a raft of unintended consequences brought about largely by the loss of our up till then natural aptitude for being conscious and sensitive to the interconnectedness of things.

Today, we find ourselves faced with a compound set of crisis resulting from the unchecked exuberance of our construction of a consumer economy. Our highly efficient, take, make, waste based economic engine has left us with dangerously depleted natural resources, concerning levels of toxic waste, rising temperatures and sea levels, and a rampant decline in biodiversity — all of which have has put our very survival at risk. Perhaps even more insidious is the way we’ve slowly redefined the role of humanity, away from that of citizens tasked with being stewards of our common well-being, and toward being simply a cog in the economic machine, tasked only with buying and consuming more in order to feed what some would define as a somewhat cancerous economy which seems now to have become dependent on over consumption beyond the needs of health and happiness.

Now is the time to turn our ship back toward healthier modes of commerce and consumption based on a ressurgence and deepening of our ability to see and think in systems.  We have complex challenges to face, partly of our own creation.  At Sustainable Brands, however, four key beliefs, supported by mounting research and evidence, encourage us and give us hope for the future:

  1. We believe and see growing evidence that humans are actually wired for good, and that we generally desire to learn, solve problems and to leave the world a better place than we found it.
  2. We believe that business as an institution is uniquely equipped to innovate and create new forms of value in the world.  Once we recognize a problem, and can connect solutions to the potential for economic return, we are well equipped to act.
  3. We believe brands — which are essentially the promises made by business to their stakeholders about what they aim to deliver, are uniquely equipped to help shift our global aspirations back toward health.  We have it in our capacity to help nurture a shift back toward our now latent, but yearning to be reengaged higher selves, offering more systems conscious models that acknowledge our growing awareness of the interconnectedness of things.  And maybe most importantly,
  4. The available knowledge and growing set of models and tools to help us get where we need to go are exploding all around us.

Ralph’s booklet Integral Thinking & True Materiality – A New Impetus Embracing Purpose, Success and Scalability, published as an e-book together with Sustainable Brands is a perfect example of the 4 bullet points mentioned above. It asks for new focus on purpose, connecting to the truly material problems to which we all can make contributions to; on success, in which the pathway to a multi-capital success measurement as a litmus test for delivering the truly material issues becomes blatantly clear; and on scalability, in which education, collaboration and advocation are so essential. Sustainable Brands embraces these ideas through the events it organizes and the services it offers. Ralph’s work helps us to level up our approach to business, and deliver against a new desire to fully account for all externalities impacted by our business activities, and ultimately to deliver net positive good to the world. The work of Reporting 3.0, GISR and the ThriveAbility Foundation, the parts of Ralph’s portfolio to deliver on the new impetus, are also presented and showcased in Sustainable Brands conferences.

Sustainable Brands is a global community of the willing — influential leaders in and around business who are committed to breaking through to new models that can enable a thrivable, flourishing future. We are happy to call this team of integral thinkers part of our community and to support bringing visibility to their ideas as together we search for the best possible solutions for transforming our world for sustainability.

Bill Baue (Editor, Co-Founder Convetit & Sustainability Context Group)

It has been my pleasure to edit this tour-de-force 6-part series by my colleague Ralph Thurm in which he lays out his vision for how integral thinking and true materiality can catalyze a regenerative and inclusive economy, leveraging the work of the ThriveAbility Foundation, the Reporting 3.0 Platform, and the Global Initiative for Sustainability Ratings (GISR).

In editing this series, I recognized the genius of Ralph’s triangulated conception centered on true materiality and integral thinking, as it resolves the primary outside-in and inside-out dilemmas in current corporate architecture.

True Materiality reconciles what GISR Founder Allen White calls “the artificial distinctions between internal and external materiality.” Internal materiality prioritizes that which impacts of the organization and its ability to generate value – primarily for providers (and extractors) of financial capital. External materiality prioritizes that which impacts the organization and its stakeholders, including their mutual ability to maintain wellbeing through ongoing access to vital capitals shared in the commons.

Ralph’s notion of true materiality bridges this divide, integrating both the issues that determine the future value of companies expressed in financial capital (with consideration of the multiple capitals), and the issues that determine the true value of companies by assessing positive and negative impacts on the common capitals that are vital to stakeholder wellbeing in terms of ongoing viability of these capitals within the thresholds of their carrying capacities. True materiality dismantles White’s “artificial distinctions” and thereby serves as the linchpin for assessing what the ThriveAbility Foundation calls True Future Value.

Integral thinking takes up where integrated thinking leaves off – in particular, addressing the inside-out dynamic. The primary object of integrated thinking, as conceived and articulated by the IIRC, is the external structures in need of integration – primarily, the multiple capitals. While Ralph’s notion of integral thinking certainly includes this need to integrate the capitals, it also transcends this limited focus on external realities by integrating internal dynamics as well.

Most importantly, integral thinking calls for mindset shifts, and equips us with the tools to map the center of gravity of our mindsets in terms of psychological and cultural stages of development. This additional depth transforms the more mechanistic approach of integrated thinking into a more holistic approach that accounts for both internal and external perspectives, both individual and collective perceptions.

In approaching this 6-part series, I find it quite remarkable that Ralph manages to address such a broad swath – both the shortcomings and the solutions – before us. This series challenges us to acknowledge the existential crises we face, as a corporate community and as a society, and to rise to the occasion by tapping into our human genius and resilience through inspiration and aspiration toward true thriving.


 
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Posted by on May 11, 2016 in Thriveability

 

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Integral Thinking & True Materiality – Part 6/7: Defining Trust, Innovation and Resilience

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 6/7.

With this final part of our series, we examine the outcomes of the newly proposed reporting impetus and assess the interconnected effects of the three parts of the triangle we discussed in Part 3, Part 4 and Part 5, synthesizing the elements of trust, innovation, and resilience into what we call integral thinking & true materiality. As we believe that reporting can be a trigger of change, following the new impetus demands additional strategic, governance, educational, measurement and process changes within the organization to be able to come into fruition.

Readers are likely familiar with the notion of integrated thinking from the work of the IIRC, which we applaud for pointing our field in new and fruitful directions. However, we posit integral thinking as a further development that transcends and includes integrated thinking in two important ways (among others):

  • Integrated thinking considers how organizations create and diminish value inside and outside the organization, but falls short of assessing the true materiality of these positive and negative impacts in the context of sustainability thresholds;
  • Integrated thinking rightly promotes a holistic approach, but it focuses almost exclusively on structural systems, essentially ignoring the internal psychological integration needed at the individual and collective level to instigate the transformations necessary to scale up a green & inclusive, regenerative economy.

We believe that both of these aspects of integral thinking are necessary to scale up the achievement of sustainability (minimally) and even ThriveAbility (maximally) by focusing on purpose (and connectedness), success (and True Future Value determination) and scalability (and the size of impacts needed).

Collaborators in the Reporting 3.0 Platform and the ThriveAbility Foundation believe that reporting can trigger this change toward the ‚North Star’ of achieving a green & inclusive – and, indeed, regenerative – economy. To do so, reporting must transcend compliance with current sustainability and integrated reporting standards that typically set norms within our existing economic regime – which can lead reporters to hesitate or even choose not to act, even as our current economic structure threatens the very survival of the human race on this planet.

To explain how the elements described in the earlier parts of this series integrate the three sides of the triangle together to achieve the overarching goals of integral thinking and true materiality at the center, we will use the final part in this series to unpack the diagram below:

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Diagram 11: Desired outcomes of the new reporting impetus are the result of the logic combinations of the aspects of the triangle: Trust, Innovation and Resilience.

 Trust

To build Trust with internal and external stakeholders, organizations must combine an organizational purpose, describing the contribution the organization can make to achieving a green & inclusive economy, with the answer to the litmus test question of Part 4: ‚have we ensured not having built financial capital on the back of any other capital’. Take, for example, The Crown Estate’s Total Contribution methodology, pioneered in their integrated reports using a multi-capital model, which the company acknowledges isn’t yet perfect but functions well as decision-useful tool for internal leaders as well as for external stakeholder scrutiny and recognition. The approach provides a much better understanding of the world view of the organization, the value it puts on all the capitals, and how it assesses its activities from a holistic perspective on collateral damages and benefits.

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Diagram 12: Aspects of Total Contribution, taking into account various capitals, as examplified by the Crown Estate, UK, to reflect a decision-useful framework about how purpose is proven and success is built upon.

Examples like Puma, The Crown Estate and a variety of other companies on the Net-Positive pathway experiment with these models and can be useful validators of a more sophisticated approach including accountants and standard setters.

Innovation

To achieve success (according to a True Future Value determination) and scalability of solutions, organizations need to map and tap into innovation pathways, that align investment decisions on products, services, and collaborations with positive impacts on the multiple capitals. Given that the Chief Sustainability Officer carries primary responsibility for managing impacts (and optimizing opportunities to regenerate) the multiple capitals, we see the CSO as the key untapped potential for unlocking breakthrough innovation. Indeed, we foresee a future where the CSO combines with the Chief Innovation Officer to become the Chief ThriveAbility Officer.

This development would remedy the current state whereby sustainability focuses on treating symptoms by digging deeper to address root causes in ways that shift from „less bad“ incremental improvements through Net Positive trade-offs and counterbalancing to enter the realm of Gross Positive impacts that continually regenerate the multiple capitals.

Integral thinking catalyzes root-cause, multi-capital, context-based, holistic decision-making. Below is a highly simplified example of an investment assessment from a multi-capitals basis.

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Diagram 13: Preparation for an investment decision for the energy supply system for a plant, looking at 3 potential solutions from a multiple capital perspective.

The ThriveAbility Foundation has laid out comprehensive Innovation Pathways for organizations (‚Alpha Partners’) interested in closing the 3 Gaps (Sustainability, Organizational, and Mindset), and aims to work with experienced third parties (‚Delta Partners’) that can execute the program under a license agreement and quality control by the ThriveAbility Foundation. Working with up to 300 Alpha Partners in various industries, supported by the Delta Partners, will lead to working groups that will assist the development of a focused ThriveAbility Index for their cluster industry. It is aimed to roll out these Indexes by 2019, to be fully implemented by 2020.

Resilience

What constitutes resilience when it comes to building a green & inclusive, regenerative economy?

  • A (financial) market mechanism that serves the economy by respecting how money and goods/services are created and distributed through a balance between true costing, true pricing and true taxation;
  • Companies that aim to create Gross Positive benefit;
  • Customers that understand the accurate pricing of resources without triggering extra burden through lower taxation of labor;
  • National budgets that respect nature and the wellbeing of their citizens and immigrants.

Looking at such a world, reporting creates ‚the glue’ for how organizations communicate their successes internally and externally on a multi-capital and True Future Value basis. As we closely look at organizations in this series, governance is potentially the other resilience factor that needs to be in place to allow for the new impetus to come into fruition. So, how would a resilient company’s governance approach look like?

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Diagram 14: Organizing governance as part of a GSE Pull instead of the existing ESG Push.

Currently, ESG activists push companies to adopt governance structures that lead to social and environmental (and economic) sustainability because it’s necessary; a more resilient governance regime pulls companies toward social and environmental (and economic) ThriveAbility because it’s more attractive than business-as-usual.

In our view, governance is defined by authority, decision-making and accountability, and they are nicely linked to the new impetus as described here:

  • Authority stems from mindsets, built from value systems. This constitutes the will of an organization to discuss purpose vis-à-vis its contribution to a green & inclusive economy in a holistic system.
  • Decisionmaking is based on metrics that better describe impact – and create success by measuring (and generating) True Future Value.
  • Accountability, based on multi-capitalism, creates value. In a green & inclusive economy this value is dependent on the scalability of that value within a 1-planet footprint through an enlarged positive handprint.

In a GSE pull approach, organizations would look at these basic ingredients when defining objectives, committees, principles and processes for a resilient governance approach.

The grande finale

‚A better world is possible’ – this is one of the sentences that all of us in the sustainability community grew up with. But a reality check reminds us that the data still show the opposite, and future trajectories suggest that a better world is slipping further and further from our grasp. 40 years of pursuing CSR to retain a license to operate has failed to deliver sustainability. Clearly, a reset is in order.

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Diagram 15: The constituting parts of the journey towards becoming a resilient company in a green & inclusive economy.

ThriveAbility sets its sights higher than sustainability – in part to inspire greater excitement and innovation, and in part to give ourselves a greater margin for error as we re-engineer a new global economic operating system on the fly. Diagram 15 shows the building blocks of such a system, set on the foundation of respecting the carrying capacities of social and environmental systems to launch innovation that optimizes synergies between and amongst the multiple capitals to realize our future potential of a green & inclusive, regenerative economy. The Reporting 3.0 Platform, the ThriveAbility Foundation as well as GISR are three non-profit organizations that corporations can join and that are driving this journey, they link synergistically for the described outcome of this new impetus. Come take a seat and join us for the ride!

 
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Posted by on March 22, 2016 in Thriveability

 

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Integral Thinking & True Materiality – Part 5/7: Scalability Opportunities Define the Size of Impact

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 5/7.

Here in Part 5 of the series, we look at the lower-right third of the new impetus diagram that we introduced in Part 1. We have already built a great basis through the discussion about purpose of the organization, how that links to support a green & inclusive and/or regenerative economy concept (Part 3). We also have more clarity on how organizations calculate success through multi-capital accounting and assess True Future Value potential (Part 4). The tools used don’t have to be perfect already, as long as they are decision-useful and are good enough to prepare decision-making by the relevant bodies. Take, for example, Puma’s first e-p/l or The Crown Estate’s Total Contribution concept as good examples of decision-useful concepts that readily admitted their room to continue maturing.

So this Part will focus on activities needed to scale up a green and inclusive economy from within the organization and externally. And as the below diagram suggests, scalability ties directly into purpose and success.

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Diagram 8: Integral thinking and true materiality need a renewed focus on scalability and the necessary size of the impacts to be achieved for the green & inclusive economy we desire.

Overcoming the 3-gap problem internally

Internally, the challenge is to create the necessary socio-cultural leadership atmosphere that creates the understanding of the organizational transformation capacity that allows sustainability to be fully embedded, up to the potential ambition level of being a thrivable organization (as per the strategy continuum presented in Part 3, Diagram 4) and as presented through the 3-gap-problem in Diagram 2 in Part 2 of the series and the aligned ThriveAbility Index measurement as laid out in Part 4.

The ThriveAbility Foundation based its approach on a ThriveAbility Journey for organizations on the idea of stratification, recognising that people pass through developmental stages at different rate and that their worldview, values and needs vary considerably depending upon their developmental Center of Gravity i.e. where they are most comfortable and capable. This means that:

  • in our communications and interactions with others, we are most likely to be effective when we meet people where they are at;
  • when designing change and transformation initiatives, surveys of the developmental levels of people in the organisation are essential to map the alignment of individuals with the organisation and each other, as well as the changes proposed;
  • motivating people needs to take a stratified approach, while also identifying where the energy for change is coming from, and where the blockages to change arise*.

Various techniques advance this approach. At the ThriveAbility Foundation, we use CultureView and LeaderView assessments to build the basis for an organizational stratification approach**. This approach stems from more than 40 years of learning about Spiral Dynamics and Integral Theory, now also designed to fit the ThriveAbility strategy continuum. The below diagram shows a sample of a Masterclass of executives that was able to learn

  • the various levels of the emergence of human consciousness as it has been mapped by Integral Theory. It is the story of a dynamic interplay of human coping mechanisms that leave behind observable patterns in ‘bio-psycho-cultural-social systems’;
  • how the individual emergence level of the group participants is composed of;
  • how the sum of the individual levels constitute the governance, hierarchy and work processes of the organization;
  • how their present working state differs from their desired working state that allows organizational transformation and the necessary purpose and success discussions and decisions to become focus areas for the organization to prepare for that change.

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Diagram 9: Building organizational awareness about present and desired work arrangements through a cultural and leadership lens.

The group also learned about their readiness for change, their change patterns and their executive change intelligence, as well as their patterns of thinking, coping mechanisms, perception of organizational priorities and finally an overall cultural fit-factor. If a total change of mindset is necessary, it will need to happen here.

To measure progress toward ThriveAbility across the 3 Gaps, the ThriveAbility Foundation can utilize:

  • CultureView and LeaderView, which assess progress on the Socio-Cultural Leadership Axis;
  • The ThriveAbility Maturity Assessment, which covers about 90 specific criteria and related variables to measure scaling up on the Organizational Transformation Axis;
  • The Multi-Capital Scorecard (MCS), a context-based measurement tool successfully employed at Cabot Creamery Cooperative, Unilever subsidiary Ben & Jerry’s, and Procter & Gamble Subsidiary New Chapter to assess progress on closing the Sustainability Axis, as well as the Future Fit Business Benchmark (FFBB), which offers a set of 21 science-based indicators (to be published in spring 2016), employed e.g. at The Body Shop.

Combining all these tools will help to transform Kate Raworth’s 2-dimensional Doughnut, which defines the environmental ceilings and social floors to achieve a safe and just operating space for humankind, into a 3-dimensional change management tool that describes how companies can support the shift from suffering to struggling to thriving by activating innovation pathways. This would build the core roadmap design for an organization that attends to micro-macro connections while creating business benefit and measuring programs and activities in a multi-capital way. Building a connection to the SDGs now also makes more sense as they are seen in a seamless and clearly positioned manner. It would also lead to a strengthened role of governance, best described from moving from an ESG push to a GSE pull (as described in Part 3 already), a change of mindset of governance experts is needed.

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Diagram 10: Designing Innovation Pathways that helps organizations connect a clearer purpose, success definition and scalability potential to their ThriveAbility approaches (Source: ThriveAbility Foundation, based on Kate Raworth’s Doughnut).

In addition to these tools, scenario planning and business modeling are important tools, too. Building on Osterwalder’s Business Model Canvas, the Flourishing Business Model Canvas is a welcome broadening of Osterwalder’s model, but still in an experimentation phase.

While the stratification approach is mainly educational for designing and deciding on strategic priorities, the second main aspect to prepare for scalability is collaboration. While current conventional wisdom embraces Integrated Thinking, the ThriveAbility Foundation advocates the deeper approach of Integral Thinking, which embraces Integral Theory to dig deeper and combine all dimensions of the 3-gap-problem.

It is reassuring to see how organizations that deal with these three gaps at the same time develop the best potential to become thrivable organizations. A shining example is Interface, one of the leading carpet-tile companies, showcasing the success potential of becoming what they call a ‘restorative’ business. Over the last 22 years the company has worked on their ‘Mission Zero’, climbing ‘Mount Sustainability’ and developing business models like ‘NetWorks’ to succeed on an fully embedded Circular Economy approach and Biomimicry strategy by 2020, while building additional social value. ‘NetWorks’, developed with the Zoological Society of London (ZSL), stems from that thinking. Other organizations that come to mind that show potential in closing the 3 gaps simultaneously are Kingfisher, The Crown Estate, Natura, Unilever, BT, The Body Shop, Patagonia, with many other organizations still some steps away.

The problem, however, is that for those companies that still need to follow suite 22 years later, the path is way too long. So the work of Reporting 3.0, The ThriveAbility Foundation, and GISR are all essential pieces to get this enlightenment pathway down to 5-10 years, so scaling up successes through education and collaboration is essential.

Overcoming the 3-gap problem externally

Collaboration and education of course also have an external side. Programs could be envisaged for industry associations and specific networks that are playing an important role in issue-specific leverage on many fronts. They can use the same instruments as companies use internally, and can hugely benefit from them. Analyzing many of the existing networks from the 3-gap-problem perspective, most of them deal with one or two axis, hardly anyone pushes for all three. The above portfolio is an offering to learn and fill the blanks through education for such groups and additional stimulation for collaboration.

At this time it is crucial to insist on one specific point that also closes the circle to the discussion around purpose and success definition. We have already discussed the economic system aspect in the earlier Parts, especially around the ‚micro-macro-link’. To put it bluntly again: without a generic change in our economic system boundaries that define costing, pricing and taxing of resources and activities, there won’t be ThriveAbility, let alone sustainability. We will have to rely on the 5-10% of enlightened leaders that will help to make the remaining 90% become brave followers through a changed economic system with a level playing field that will need to demand playing by the changed rules. That means that advocation of existing leaders towards such a change in the economic system boundaries becomes a crucial aspect in scalability to turn our planetary ship around, or even more: it becomes a matter of survival.

We saw glimpses of that potential willingness for advocation in the cases of the SDGs and COP21, but we also see specific not-for-profit organizations ready to start for that advocation through their very own purpose, too. Ex’tax, a Dutch NGO, is specifically advocating for the taxation system to change to resource taxation instead of taxation on labour. The True Price Foundation advocates for a better inclusion of external costing in pricing structures. Other initiatives like Trucost, The Natural Capital Coalition, the Science-Based Targets Initiative (and many more), help define other parts of the advocation spectrum and link micro through meso to macro. These initiatives tackle the heart of economic system boundary change, they go further than just the SDGs that don’t imagine a changed economic system.

What to do in the short term?

Let’s imagine once more what a sustainability and/or integrated report could already report on for the scalability part of our new impetus. Innovation roadmaps, transformational change, stratification as laid out in this part of the series will take a while to become customized, fine-tuned and carried out. But here’s what could be reported on in this coming reporting cycle already:

Education (internal and external):

  • How far are the ‘World View’, the ambition level and the related strategy communicated within the organization, and how do education/training programs consider and support this?
  • Are all employees addressed and is this completely integrated in education and training on all levels of the organization?
  • Are there joint educational programs developed for the whole value cycle (in consequence: internally and externally) and does this support joint target-setting and implementation campaigns to achieve sustainability/ThriveAbility in these value cycles?

 Collaboration Capabilities:

  • In how far is the company engaged beyond its associations and interest lobbying? Which networks, cross-industry initiatives to create new sustainable business models for societal value added is the company part of? Do those need to be created still by a group of companies?
  • Do employees have time for societal engagement and are they positively stimulated to help find long-term solutions in order to avoid short-term conflict? Is there slack time to ‘think’ alone, in groups, on all three parts of this new impetus?
  • Is the company aware and busy with true sustainable innovation beyond existing rebound effects, e.g. in creating circular, sharing or collaborative service business models?
  • In which thematic research networks is the company active? Does it take part in award schemes on most sustainable solutions, alone or together with other partners?

 Advocation:

  • Is the company perceived as an active player in presenting their ‘World View’ and their potential scenarios around sustainability and/or ThriveAbility?
  • Is the leadership actively engaged in the promotion of a green & inclusive economy and the necessary changes in boundary setting, e.g. internalization of external costs, changes towards a more sustainable tax system, creating of level playing fields in international relations, e.g. trade agreements, international accounting rules, etc.)

With Parts 3, 4 and 5 we have now covered all three parts of the triangle that surround the idea of Integral Thinking and True Materiality. With the instruments in place, the processes to be adapted, and the people lined up towards purpose, success and scalability, the new impetus should create necessary outcomes to become a useful framework for designing a multi-year roadmap. By that, all current initiatives an organization carries out can be put in place, assessed and positioned.

In Part 6 we will look at the envisaged outcomes of the new impetus. It will be the closing Part of this series.

* Thanks go to Dr. Robin Lincoln Wood for crafting the ‚stratification’ definition for the purpose of achieving ThriveAbility.

** Culture View and Leadership View have been developed by 5Deep Ltd. and have been adapted to help closing the 3-gap-problem for ThriveAbility. These are standard instruments in masterclasses and corporate transformation projects for ThriveAbility.

 

 
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Posted by on March 20, 2016 in Thriveability

 

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Integral Thinking & True Materiality – Part 4/7: Success Definition For True Future Value Creation

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 4/7.

In this part of the series, we will focus on another very important aspect for the new reporting impetus that can serve the needs of a green & inclusive or regenerative economy – the question of how we define success. We are at this moment not able to truly claim when an organization is ‚sustainable’ (as laid out in stage 3 of the strategy continuum Diagram 4 in Part 3 of this series), and that just being ‚minimally good enough’ to indeed sustain the organization – and the real-world systems it operates within. Most reports aren’t giving a proper ‚world view’ or scenario context to their long-term targets.

Bildschirmfoto 2016-03-08 um 10.37.58

Diagram 5: Integral thinking and true materiality need a renewed focus on the definition of success to create True Future Value for the economy we want to live in.

Progress in defining ‚micro-macro’ links

Discussions in recent years show progress on defining ‚micro-macro’ links between companies’ impacts and the health of the broader systems they operate within. The elaborations about context-based reporting, science-based target setting, together with Kate Raworth’s Doughnut that defines environmental ceilings and social floors, has added vision and revealed depth as to the ‚devil in the details’ of measuring them in relation to the corporate context, and splitting them up into local, regional or global ‚allowances’, raising the profile of around thresholds and allocations.

Also, the link to the economic system thinking around the usefulness of GDP as the leading success factor has been called into question through the discussion around ‚Beyond GDP’, the Global Footprint Network, and the enhanced (yet mostly unconnected) indicator systems around National Sustainable Development Strategies of regions (like the EU). We see combinations of indices – e.g. country Ecological Footprints versus the Human Development Index – revealing the corridor in which countries should end up being sustainable. The problem here is that the ‚micro-macro’ link is not expressed at the corporate level, so companies take note of these data, but don’t know how to apply them in their specific case. The bigger and the more diversified a company is (crossing national borders), the more difficult it becomes.

The SDGs are an interim step to help fill that ‚micro-macro’ gap by dividing the global challenges into silo’ed aspects of problem articulation. There is merit to see the SDGs as a valuable attempt to induce companies to consider their contribution to a threshold through science-based goal-setting and context-based reporting. The problem is that, while the SDG areas are interconnected, the performance indicators aren’t. We already see companies start to think about picking and choosing some of the SDGs closest to them and define contributions they could make, without taking the step of developing a worldview (see Part 3 on purpose) that articulates responsibility for helping achieve the SDGs. We should not think that the SDGs will get us to any economic system transformation through voluntary contributions by the world’s millions and millions of companies. But without this transformation, there won’t be regeneration, let alone sustainability.

A stable solution for the next couple of hundred years?

We are in an experimentation phase, I fully admit, but I also claim that now is the time to not only set conventions for delivery indicators for the SDGs by 2030, but something that we can use for the next couple of hundred years, and that gets me to … accounting systems. Jane Gleeson-White already proclaimed the ‚third accounting revolution’ in her bestselling book Six Capitals, or can Accountants save the Planet?, cutting through double entry bookkeeping that was invented in the 15th century for the throughput economy, towards multi-capital bookkeeping. We now need an accounting system that prepares us for the green & inclusive economy.

The litmus test question of success that needs to be answered, both for each and every single SDG, and also as the basis to define what we will define below as ‘true future value’ simply is: does an organization have a license to grow by showing that it hasn’t built financial capital on the back of any other capital – or, quite the opposite, that it has built business models that regenerate all capitals? If yes, this would be sustainable, and possibly gross positive (ThriveAble) over time (stage 5 in the Strategy Continuum in Diagram 4 in Part 3).

In order to get there, though, we will need to renew our accounting system from double-entry to multi-capital-based. Why?

  • Simply because accounting is how economies and executives, boards and supervisory boards tick and answer questions: is my company successful? Where can I be more efficient? Do I deliver on my purpose? On my targets? On my benchmarks? Did my incentives work? What information does controlling need from accounting? What can I externally assure? Interesting how shy our community is to create this missing reporting link – also for the SDGs. We sorely need accountants to raise their voices on the need for multi-capital accounting!
  • A multi-capital accounting system aims to cover all sets of potential performance calculations: on SDGs, for context-based reporting, for science-based targeting, for value cycle efficiency. An outcome capital of the supplier can be an input capital for the next phase of such cycle, so it can serve as ‘docking station’ in a seamless review of value cycles – if all partners agree on the necessary convention on how to account and disclose in what the recently published UNEP Raising the Bar report calls “Collaborative Reporting”.
  • The structure of multi-capital accounting gives space to the necessary formulation of conventions (that’s what an accounting system mainly is, it’s not a 100% accurate discipline) and structuring of the discussions we need to have: what can be monetized? Is it necessary to monetize everything? How to link to local/regional/global thresholds? E.g., water has a different, more local or regional threshold basis than carbon emissions. How to implement threshold based and capital-absorbing indicators into corporate dashboards, into national statistics, into a ‘global pulse’ of how we are doing altogether.
  • Finally, the painful and often repeated mistake is that we think we can create indicators without proper data architecture in mind, where aggregation and disaggregation are possible and where slicing and dicing of information for multiple aspects is possible. A multi-capital based systematic approach can support that, like activity-based costing does in controlling for a long time.

Multi-capital accounting to create ‘True Future Value’

Multi-capital accounting shifts from measuring value to measuring ‘True Future Value’. The ThriveAbility Foundation adds a forward-looking focus on true future value, assessing not only the ongoing viability of the organization and the systems it operates in (science-based thresholds), but also its potential for breakthrough innovation to reduce (and ultimately eliminate) negative environmental footprints while maximizing and optimizing social handprint value creation. It uses 7 capitals, adding relational capital as a separate capital to the group of 6 capitals as proposed by the IIRC.

Bildschirmfoto 2016-03-11 um 09.22.40Diagram 6: High-level formula for deriving at ‘True Future Value’; a more detailed version with all variables can be sent by the author on request.

Here are some of the advantages of using a multi-capital basis to create ‘true future value’ (TFV) results:

  • CONTEXT SENSITIVITY – TFV is a context-sensitive methodology, which works on the basis of progressive approximation to arrive at a best-estimate based decision. The context of the decision/s being made is the very first factor taken into account when applying the equation;
  • TRUE BENEFIT/COST – TFV is a holistic equation that measures the ratio of the value created in any human activity through synergies between human, relational, social and knowledge capitals (or “anthrocapitals” that generate thriving and benefits), relative to the natural and manufactured capitals costs associated with that value creation activity;
  • THREE CORE VARIABLES – TFV includes three key terms – on the denominator we have Science Based Thresholds (social floors and environmental ceilings) divided by a Sustainable Innovation Factor (including, for example, circular economy/C2C, green chemistry, renewable energy, biomimicry and micro-biome based innovations); and on the numerator we have the Value Creation Capacity of the anthrocapitals that generate thriving;
  • ALL EXTERNALITIES INCLUDED – TFV includes both positive and negative externalities in terms of metrics that measure both impacts and value/thriving, in such a way that context based sustainability thresholds are honored;
  • THRIVEABLE DECISION BENCHMARKS – TFV provides a benchmark for decisions of all kinds through which a “thriveable” decision can be made, taking into account a full seven-capital, multi-stakeholder analysis of the true costs and true benefits of a particular investment, program or action.

True Future Value as the Basis for a ThriveAbility Index

Going a step further, the ThriveAbility Foundation has designed the ThriveAbility Index model in which the components of the TFV are embedded (see Diagram 7).

This model picks up on the idea of the three gap model in Part 2 of this series, and measures the gap closure in all three dimensions, and by that explaining where an organization stands in the continuum from surviving to thriving. It represents a different way to assess and report on the overall fitness of an organization. This is a completely new quality in helping to define the profile and positioning of an organization in a three-dimensional fitness space and probably represents the most holistic performance measurement. The argument that ‘sustainability’ or ‘thriveability’ can’t be summarized in one indicator, something the sustainability community has always declared impossible (and by that has kept the interest of multiple financial market players on a low simmer), can be overcome. This high level fitness indicator, to be developed for 10 cluster industries through the ThriveAbility Foundation by 2017 to 2019 (with the aim the have it ready to use in 2020), can be disaggregated into its three components, used for True Future Value Creation of any contextual area of interest (such as the SDGs) and offers high potential for a new quality of corporate, city, country or global performance dashboards. It can be used by Rating Organizations to produce a new generation of sustainability or ThriveAbility fitness ratings. It can be used by regions (e.g. counties) or national statistics offices as a meta- performance structure.

Bildschirmfoto 2016-03-08 um 10.39.04

Diagram 7: Three axis model of the ThriveAbility Index model that corresponds with the three gap model assessing progress in all the gap areas (Source: A Leader’s Guide to ThriveAbility, page 38).

Will we get there?

We may need new and different networks to build what’s needed. I fear the existing standard setters alone won’t cut it, the UN system alone won’t succeed, the governments alone won’t deliver, the accounting standard setters need support, IT companies needs an architecture meta-structure to work in consortiums and open source (liberated data), and the majority of corporations in the mainstream will anyway only respond to legal requirements or ‘cookbooks’ that give them a step-by-step delivery template.

Reporting 3.0, mentioned in Part 1, a networked community of several hundred interested individuals has recently proposed a set of blueprints to recommend the necessary ‘glue’ between those defining a green & inclusive economy and those in reporting, accounting, IT and new business models.

The ThriveAbility Foundation offers masterclasses, pilot projects and a multi-year business plan to deliver on TFV and the ThriveAbility Index and invites partners into the Index development.

GISR offers principles and an accreditation scheme to align with the principles, many of them in support to ingredients mentioned here for reporting and accounting. The Labs, one of the components of their CORE program, offer space for joint creation of the basics for thriveable ratings.

 What to do in the short term?

 So, let’s again imagine a sustainability and/or integrated report that showcases a reporting organization’s contribution through a success measurement involving a multi-capital accounting approach (e.g. as showcased by The Crown Estate, UK, in their integrated reports on Total Contribution). What would a reader expect to see answered? Here are examples of what I would find substantial in that area, taking into account that it still takes time to report back in a complete and structured manner as described above.

Measurement:

  • To what degree does the company inventory shows its impacts from the different levels of its value cycles (instead of value chain, reflecting the need for a circular economy)?
  • Is the internalization of external effects seen as part of a ‘True-Value-Screening’ an option to better understand the value-creation process?
  • Does one differentiate between various capitals and are these integrated in the success measurement? Does the company therefore know its value-creation potentials and weaknesses better? Does the company address the consequences from these outcomes?
  • Does the company identify one or more SDGs to align measurement methodology that looks at context-based or science-based thresholds, and does it aim to develop multi-capital assessments about their contributions to these SDGs?
  • Does the company also collect data about the organizational transformation capacity and leadership capacity, taking into account the 3-dimensionality of achieving ThriveAbility, responding to the 3-gap-problem?

 Target setting:

  • Are there defined target corridors for the sustainable use of different capitals?
  • Are ‘science-based-goals’ assessed and context used for connecting to ‘social floors’ und ‘environmental ceilings’ when targets are defined?
  • How are long-term targets defined and then used to backcast mid- and short-term targets?
  • How are data of organizational transformation and leadership capacity used in defining targets also for these categories?
  • How are potential scenarios linked to target-setting?

Incentives:

  • How does the company incentivize sustainable performance? How does it punish unsustainable performance? Is this based on the measurements as mentioned above?
  • How does the company trigger and incentivize better leadership and transformational capabilities?

The combination of multi-capital approaches in internal accounting and controlling as well as external reporting, combined with experimenting their interconnections through True Future Value Calculations, and adding transformational and leadership capacity factors into measurement, target-setting as well as incentive structures, could help tremendously to report on the future readiness of an organization’s business model(s).

 

 
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Posted by on March 11, 2016 in Thriveability

 

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Integral Thinking & True Materiality – Part 3/7: Purpose Defines Connectedness

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 3/7.

In Part One of this series, Diagram 1 showed an overview of the three main areas of the proposed change need for integral thinking and true materiality; Part Two explained why we need this new impetus. Part Three now tackles the upper section of the triangle – the need for chrystalizing purpose to better show connectness to the problems that need to be solved in interrelated ways.

Bildschirmfoto 2016-03-08 um 10.37.37Diagram 3: Integral thinking and true materiality need a renewed focus on the purpose of the organization and connectedness to the economy we want to live in.

It has been interesting to see how the discussion about ‚the purpose’ of an organization or an economy has moved into the forefront in the last 1-2 years. The 2015 numbers of the Global Footprint Network (GFN) or from UNDESA on population, consumerism and the environment [insert link] are just telling one striking story: as a species, we humans are on a slow death path.

The fact that the ‚human’ role in sustainability now gets back into the focus simply shows that it dawns on us that we forgot to take people on board of the sustainability journey, in companies as well as in private circumstances. Sustainability is not exciting for the majority of human beings. We see constant shoulderclapping about reports in which we are told how much less bad a reporting entity became, without any ‚North Star’ that could tell us what is ‚minimally good enough’, or what would lead to an envisioned future beyond just having a ‚zero negative impact’; this was sucked up by our frugality of installing sustainability departments that took care of policies, management systems, reporting and assurance. The ‚three gap problem’ as discussed in Part Two of this series led to a reduced understanding of sustainability in which essential aspects of sustainability like ‚people, planet and prosperity’ became ‚people, planet and profit’ and intergenerational equity fell by the wayside.

In consequence, Sustainability Context still remains the most neglected Content Principle of any GRI-based sustainability report. Seldom does a reader understand the ‚world view’ of a company, its leadership advocation to change the economic system towards serving a green & inclusive economy, and how the product & service spectrum offered makes a positive contribution (instead of less negative impact), alone or in collaboration / co-creation with others.

It is amazing to see how disconnected sustainability or integrated reports are with ‚the whole’ which we are contributing to (or not). Reporters typically claim it’s too complex to envision a different economic model, exploring a new level playing field in which market mechanisms can automatically work towards an aimed-at state of being regenerative and inclusive. Isn’t that what scenario analysis was invented for?

We developed our current economic model as one set of conventions, and it is up to us to change that for the better. Haven’t we already decided to aim for a green & inclusive economy at Rio+20 in 2012? So where are we with that? There are indeed some positive prompters here:

  • There is a whole set of macro datasets that show the ‚global pulse’ of our continued negative pathway, which means a better understanding of the interconnectedness of our doing and its effects on the planet is more and more possible. Various IT networks, data providers and technology firms work on making ‚the whole’ visible, up to artificial intelligence (AI) approaches (see a variety of these in the Reporting 3.0 2015 conference report, http://www.reporting3.org). The main issue here is to translate that into data clusters that corporations can use for their ‚micro-macro’ impact interpretation.
  • A variety of companies and development organizations work with the idea of Creating Shared Value (CSV) as proposed and vividly defended by Porter and Kramer for years. While definitely a good learning approach, CSV doesn’t yet prove to be able to either move the concept beyond the ‚feelgood’ areas of collaboration and co-creation; the nasty issues aren’t really solvable since they need new ‚rules of the game’, a normative approach to global change. And secondly, CSV aims at optimizing within an existent frame of economic system boundaries. We won’t get to a sustainable or regenerative economy without also tackling those economic system boundaries to create new level playing fields in which industries can transform. Porter and Kramer, it seems, remain in the 1990s thinking of enlarging competitive advantage with creating (extra) shared value.
  • The Sustainable Development Goals are an interim step towards learning to understand thresholds in a context-based sense, leading to less-bad impact, probably a planet of ‚Zeronauts’ (to stress John Elkington’s brilliant book from 2012). The translation to apply and measure contributions in the corporate world, in local and regional circumstances as well as globally, is still to be developed. A plethora of initiatives are underway to find out, and hopefully it will be a training area to explore the possibility of thriveable, gross positive impact as the greatest innovation boost ever. Each company needs to define where they stay in the continuum that the ThriveAbility Foundation has offered, see the following diagram:

Bildschirmfoto 2016-03-10 um 11.13.50Diagram 4: The strategy continuum to assess a company’s position in a world that needs to leapfrog from surviving to thriving (Source: A Leader’s Guide to ThriveAbility, page 18).

  • Kate Raworth’s ‚Doughnut’ model, showing environmental ceilings and social floors, has given us a 2-dimensional picture of interconnectedness, but only good enough to get us from suffering to struggling – it misses the ‚operating system’ to create real thriving. This model needs adaptation to become 3-dimensional, adding the component of human transformation to accelerate positive change. This is what the ThriveAbility Foundation recommends to get us from stage 1-3 of the above diagram to stages 4 and 5, and in consequence appeals to a change from an ‚ESG Push’ towards a ‚GSE Pull’, addressing authority, decision-making and accountability in one stringent approach. This needs leadership in ways that until now only a Ray Anderson (Interface), Paul Polman (Unilever), Sir Ian Cheshire (ex-Kingfisher) and some other corporate leaders have shown. Only through this advocacy will we get to economic system boundaries change addressing the ‚macro-micro change area’, mainly though the combined integration of external effects into cost accounting, translation into pricing mechanisms, and counterbalancing those effects by a drastically changed tax and subsidies regime on a global scale. The work of Trucost, the True Price Foundation, Ex’tax and others in this area are therefore essential to get this masterplan done over time, together.

So, imagine a sustainability and/or integrated report that showcases a reporting organization’s contribution through a chapter on purpose and connectedness. What would a reader expect to see answered? The below are examples of what I personally would find substantial in that area.

On Contextualization:

  • Does the company have a ‘World View’ and a long(er)-term idea of positioning in the continuum from ‘Compliance’ to ‘Thriving’ when it comes to impacts and outcomes across the multiple capitals? Where does it want to be in the future?
  • Is there one strategy, or does the company have a separate sustainability strategy (which should be avoided, as it signals sustainability as a side issue)?
  • Is the corporate strategy based on affecting the root causes of global non-sustainability, or is the strategy just based on curing symptoms of non-sustainability (like the majority of companies do at this moment)?
  • Are there various scenarios in which the company is testing its possibilities to impact and gets addional insight into its long-term positioning?

On Leadership:

  • Is the socio-cultural leadership gap addressed (part of the three-gap problem)?
  • Are company leaders assessing the transformation blockages in the sustainability gap (also part of the three-gap problem)?
  • How is sustainability visible in the organizational hierarchy? Is sustainability integrated in strategy and governance so that the sustainability team could veto non-sustainable corporate decisions?
  • To what extent is the leadership group aware about a responsibility for sustainability above and beyond the legal construct of the organization?
  • What does the company contribute to asks or campaigns to change the unsustainable boundaries of our current economic system, e.g. trade barriers, unsustainable subsidies, political lobbying, testing new ‘level playing fields’ through the combination of true costing, true pricing, true taxation?

On Ambition Level:

  • What’s the company’s view on growth? How does it differentiate sustainable from non-sustainable growth?
  • How does the company define its ambition level and how are short-term targets derived from succeeding its long-term ambition level (e.g. through back-casting)?
  • How are all employees included in defining the purpose and connectedness of the corporate strategy to sustainability?
  • How does the company differentiate efficiency gains, productivity gains and their respective rebound effects vis-à-vis the need for sustainable innovation?

It is these questions that build the ‚glue’ and segway into the vision of performance beyond just doing the minimum needed. It would add to the idea that current approaches don’t add up altogether and that technology alone won’t cut anything without the humans on board. This is tough work in hierarchical structures and even tougher in multinational companies. But it honestly the only way we can deliver. It is time for new conventions.

 
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Posted by on March 10, 2016 in Thriveability

 

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Integral Thinking & True Materiality – Part 2/7: The Need for a New Impetus

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 2/7.

Those of us who have been working in the areas of corporate sustainability and integrated reporting struggle to reconcile the gap between our aspirations for a world we envision, and the current world that falls short of sustainability and integration. More precisely some of the following aspect have also lead to the raison d’être of the three initiatives that I presented in Part 1. Here are the most important ones:

  • the fact that existing standards (GRI, IIRC, SASB, etc…) fall short of enabling if and when an organization will actually be ‚sustainable’. We call this the Sustainability Context Gap, which the Sustainability Context Group has been addressing with the major standard setters for years. Many Sustainability Context Group members are actively engaged in Reporting 3.0 as well as the Sustainable Brands community of practitioners.
  • the failure of linking corporate performance with social floors and environmental ceilings in ways that lead to organizational transformation and pioneering leadership. The ThriveAbility Foundation calls this a ‚three gap problem’, and, if not tackled all together, there is little chance of success that the reporting entity will ever be sustainable.

Bildschirmfoto 2016-03-09 um 11.07.01

Diagram 2: The 3-Gap-Problem defines the lack of ‚integral thinking’ (Source: A Leader’s Guide to ThriveAbility, page 33).

  • the still diverse understanding of materiality. Allen White, co-founder of GRI described this in a recent virtual dialogue, held to prepare the 2015 Reporting 3.0 conference: ‘Corporate reporting must keep pace with the realities of an economically and ecologically interdependent world. The narrow scope and short-term horizon of financial reporting is increasingly detached from the complexities and multiple performance drivers of 21st century organizations. It is a moment for leading initiatives to find common ground, synergies and win-win situations in laying the groundwork for the next decade of innovation and mainstreaming a new form of corporate reporting. It is time to remove the artificial distinctions between internal and external materiality’. In other words, companies need to address both what’s material when considering the interests of their own organization, and what’s material when considering broader societal interests.
  • the contracted notion of what is now called integrated reporting. This way of applying what the IIRC advocates for as ‘integrated thinking’ lacks two main components. First, integrated thinking is mainly used to increase the collaboration of departments within an organization and often still lacks fluid interaction with various sets of external stakeholders around the multiple capitals, which is traditionally addressed through old-fashioned dialogue, but has become less and less prevalent and truly functional as of late; and secondly, this sort of thinking misses out on two of the three gaps as described by the ThriveAbility Foundation, namely really instigating organizational transformation and pioneering leadership. Integrated thinking as articulated by IIRC falls short on these fronts, and thus fails to be truly ‘integral’.
  • the fact that accounting isn’t yet ready to shift toward multi-capital bookkeeping (even in trial pilot form). The litmus test of ‚integral’ approaches in accounting needs to showcase that financial capital hasn’t been built on the back of any other capital (natural, maufactured, social, human, relational, intellectual). Based on that the ThriveAbility Foundation offers the idea of ‚True Future Value’ as a new business equation of success, to be discussed in part 4 of this series.
  • the fact that many organizations pursue sustainability as a goal isolated from other aspects of the business. For example, most organizations focus on negative footprint reduction, and have yet to learn how to increase their positive impacts (handprints) and how to scale them up through their products and services, through collaboration, through advocation of their leaders, and by organizing their own operation around flexflows instead of hierarchies. Scalability of what works well and how it can be combined through yet unknown possibilities are often far out of sight.

In consequence of this list of struggles, strategy, organizational dynamics, data management, accounting and finally reporting need a new impetus if we want to tap the ‚transformational potential’ to become thriving organizations. We need trust, innovation and resilience as the outcome of a combined approach to renew the discussion around purpose, success and scalability, as shown in diagram 1 in Part 1 of this series. Part 3-5 will pick up on each element – purpose, success and scalability, while part 6 will look at the wanted effects – trust, innovation, resilience. Together, they define the future agenda of reporting as a trigger for sustainability – to create the future we envision.

 
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Posted by on March 9, 2016 in Thriveability

 

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Integral Thinking and True Materiality – Part 1/7: Introduction

This 7-part series has been first published on Sustainable Brands between late January and early March 2016 as a 6-part series and a follow-up by Bill Baue, co-founder of Convetit and the Sustainability Context Group. It captures the essence of my thinking I was able to gather through the extraordinary work of the Reporting 3.0 Platform, GISR and the ThriveAbility Foundation in 2015. What came out is a structure that I called a ‘new impetus embracing purpose, success and scalability for thriving organizations’. I am reposting the original 6 parts here and add a part #7 with reflections of others. This is part 1/7.

If 2015 was the year that inspired new hope in sustainability with the publication of the Sustainable Development Goals (SDGs) and the success of COP21 in Paris, 2016 is year the rubber needs to hit the road when it comes to implementation and impact. So rather than add to the end-of-year ‚10 best of this and that’ listing stampede, instead I have worked on this 6-piece series summarizing essential learnings from 2015 to focus priorities and actions for 2016.

Reflecting on 2015, my own work focused on front-end developments needed in three interlinked areas:

  • Reporting: I am curating & facilitating the Reporting 3.0 Platform, a community of several hundred concerned global individuals from various constituencies that instigates ‚Reporting for a Green & Inclusive Economy’, and looks into the greater whole of reporting, accounting, data architecture, and new business models. Helping aligned constituencies to build the necessary glue between these four interconnected areas the platform has organized 3 annual conferences, various Transition Labs and just presented their ‚Call for Participation for 2016’, offering participation in four ‚blueprint projects’ to help bridge gaps between the different areas mentioned. See: reporting3.org
  • Ratings: As Director for Engagement at the Global Initiative for Sustainability Ratings (GISR) I am helping with the implementation of CORE, the Center of Ratings Excellence, grounded around the GISR ‚Framework’ (Principles & Accreditation), the GISR ‚Hub’ (a database with more than 100 data points on more than 440 rating products from 125 or so companies globally), the ‚Labs’ in which companies, investors and rating agencies can work on use cases for that increased transparency and work on continuous improvement of ratings; and finally on training and ‚convenings’ for the community, building a greater knowledge base around CORE. See: ratesustainability.org
  • ThriveAbility: for several years I have been involved in the ThriveAbility Foundation as a co-founder. The Foundation published ‚A Leader’s Guide for ThriveAbility’ last summer and has started the process to scale up the ThriveAbility equation, innovation roadmap and index development through masterclasses and pilot projects, with plans for a multi-year development to deliver on the index by 2019. For an introduction about ThriveAbility, please see: http://www.sustainablebrands.com/news_and_views/new_metrics/bill_baue/intro_thriveability_next_stage_development_sustainability

Circling back to the SDGs and COP 21, instead of following the hype around them, I continue to take a longer-term perspective towards what I call ‚integral thinking and true materiality’. The below diagram structures these areas in which activity is most needed, and of course Reporting 3.0, GISR and the ThriveAbility Foundation are great hosts for ongoing work in these areas. It is not without reason that they form the basis of my work portfolio.

Bildschirmfoto 2016-03-08 um 10.35.48

Diagram 1: the new reporting impetus – integral thinking and true materiality in reporting for a green & inclusive economy.

This series will focus on the different parts of the diagram. It is a distillation that might have the potential to a) define a structure for what I call ‚integral thinking and true materiality’, and b) instigate various pockets of needed change and areas of activity. The additional parts will unfold as follows:

Part 2: The need for integral thinking and true materiality

Part 3: Purpose clarification defines connectedness

Part 4: Success definition defines true future value creation

Part 5: Scalability opportunities define size of impact

Part 6: Integral thinking and true materiality define trust, innovation and resilience

Part 7: Reflections

Each part will build on earlier parts, and together they will explain the above diagram. Each part will also look at the necessary change needs and focus areas within an organization. Fully developed integral thinking and true materiality can become a real game changer!

 

 

 
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Posted by on March 8, 2016 in Thriveability

 

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