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GRI Reloaded – redefining the matrix for disclosure on sustainability performance – #GRI2016 conference reflections

It’s the week after the GRI Conference, the week when we attendees all return to our desks and reflect what we heard and learned. Clearly, GRI has set important steps, has changed its strategy towards becoming a standard setter, and has entered the digital age in earnest, finally. And yes, it was the networking that was valuable and to me it felt like a family gathering. There is no doubt about that. But are we convinced? Is this the big next thing?

Let me take you on my personal journey, and note my background with GRI from 1998 onwards, including time as a GRI staff member from 2002 until 2008. I am probably one of the very few that have been actively involved in developing all 4 generations of the GRI Guidelines. My feelings about GRI come deep from the heart, I sometimes joke about GRI as being a child going through its childhood and puberty, and now leaving home to truly build a life on its own, exploring new relationships, independent from the family’s own past. I’d like to present my thoughts in three sections:

Atmospheric distortions

In the run up to the conference I spoke to many people that I suspected going to GRI’s conference. I learnt that many of them decided not to go this year. When asking why, the answers were quite mixed, but they addressed various issues, and this continued in conversations at the conference as well:

  • The glamour is gone: earlier conferences had highlights that were missing this time. GRI had Al Gore, Queen Rania of Jordan, Michael Porter and BBC news anchors in the past. Seems like these ‚sustainability celebrities’ are indeed attracting numbers of participants and GRI might have purposefully decided not to approach such people this time, for various (good) reasons.
  • GRI’s communication about the new strategy, the new GOLD model of participation, the ‚exclusive clubs’ (Leader’s Group, Technology Collaboration, certified GRI practitioner process) isn’t yet resonating well with many, taking into account that most reporting organizations are also part of minimally half a dozen and up to a dozen other initiatives and networks. It all becomes complicated and hard to follow. Many out there who I talked to were surprised not to be ‚Organizational Stakeholders’ any more.
  • A feeling of cold commercialization of what was supposed to be a community that embraced its members, involved its stakeholders for a common purpose (and I’m not even touching the pricing strategy for the conference, especially the huge amount of ‚exclusive’ sessions and to-be-paid-for masterclasses). The true multi-stakeholder nature has moved a bit into the background. A new set of standards is now presented to the world, designed by the GRI staff and the GSSB. ‚Hold on a minute’, I heard often: ‚wasn’t there a working group process designing this? There suddenly is a public comment period about something I wasn’t even aware would come?’ Of course, just restructuring G4 into a set of standards doesn’t need a full multi-stakeholder process I said, but it wasn’t clear to many and a sign that information overload takes its toll.
  • The notion that GRI’s conferences tend to lose focus on the reporting aspect. Many sessions are broad discussions about sustainability with little rigor or facilitator focus to bring it back to reporting and/or disclosure, at least at the end of the sessions. Is it helpful to have sessions about who to trust more (governments or NGOs or corporations) when all of them have a role to play in adding and consuming data? While I thought this year’s conference was more focused when looking at the session’s titles, the discussions themselves often remained less focused.

Summing up this part, the words of a former high level representative of GRI’s governance bodies still rings in my ears, saying ‚GRI is losing its soul!’. Indeed, some say GRI starts to copy/paste what SASB has been doing in past years, has a strong bias with financial market players (although hardly present at the conference), is very North America and Europe focused, and communicates less with its (former) community. My own experience is that there’s now at least as much talk in conferences why not to follow GRI any more as there is talk to position it in the overall reporting regime, including IIRC’s integrated reporting approach, SASB’s industry specific disclosures, the EU Directive’s requirements, the rating organization’s questionnaires and the requirements of stock exchanges. I think we are at the point where GRI’s growing number of younger staff starts to forget about the roots of the organization, where the different departments within GRI have their own means of communication and that indeed some ‚soul searching’ would be recommendable. If 1.200 participants (including 200 speakers and GRI staff) mean ¼ less participants at the confernce (noted by many), it points to some homework to be done in re-emphasizing the true purpose of GRI. To many it isn’t so clear any more, before and after the conference, at least for those who went.

Necessities

A lot of what GRI presented at the conference makes a lot of sense to me. The move from Guidelines to standards helps to generate a more constant work rhythm for the GRI Secretariat, creates the ability to make changes to individual standards, given the advances of science or technology, becoming more strict in defining requirements besides recommendations and guidance. This could strengthen stock exchange requirements, legal requirements, governance aspects, assurance processes and simply enhance additional clarity away from blurry descriptions. It would also hopefully reveal still existing greenwashing in reports.

GRI finally also moved into the world of digital technology and data. The Technology Consortium – as was announced at the conference – will be broadened through the ‚Digital Reporting Alliance’, called to be the ‚vanguard of the next phase of sustainability reporting’. I agree with the need to ‚liberate’ data from pdf’s and use new technology to make the data available for everyone’s use. In the end, it’s the impact that data make, so the number of sustainability reports per se doesn’t really define the success of sustainability reporting. Rather, it’s the transformational capacity these data entail; it’s what the data reveals about those affected by corporate actions and how companies and their stakeholders alike can use these data to drive such transformation. This needs new approaches and open source platforms, like WikiRate, that have the ability to not only liberate data, but also to democratise the accuracy and use of data and put them into context through open data indicator development. It holds the power that an emission scandal like Volkswagen could be detected before it actually goes through the roof. eRevalue, a narrative screening ‚vacuum cleaner’ data service has shown that disclosure of emission data has gone down in the majority of corporate sustainability reports of automotive companies in the last years, except Ford Motor Company. Look at what has come out over the last half year and who is now accused of using emission control software and who is not: Ford Motor Company is amongst the few in the latter category. The power of data is just at the beginning of an explosion, so GRI’s aim to support data liberation through partnerships is important. Various sessions during the conference focused on data and transparancy.

The uncovered to-do’s

GRI’s conference took place at an important moment in time. After COP21 in Paris and all the follow-up happening to get countries adopting the agreement, and after the SDGs got accepted and are now waiting for the processes to best implement them internationally and country-by-country, GRI looked at these from the perspective of making necessary links (GRI, WBCSD and UN GC already published the SDG Compass last year). Of course GRI was also involved in the preparations of both these events, within the limit of its mandate. These themes were of course captured in important sessions at the conference.

But what struck me most was what was not discussed, and given the fact that about 90% of the global multinationals are still not reporting on their sustainability achievements (partially based on the fact that a huge amount of these companies are privately held and still sneak out of mandatory reporting requirements), we are still far from mainstream. As the conference subtitle was ‚shaping reporting for the next 20 years’ GRI missed addressing a list of things that will have at least as much influence on the future success of GRI than the steps now taken. Here are my top 5:

  • As sustainability reporting sort of goes with the flow and – while mentioned in the Guidelines – chronically forgets about sustainability context, we remain at an incremental stage of disclosure. We are missing the benchmarks of getting closer to the real deal: disclosing when a company can call itself a ‚sustainable company’. While environmental ceilings and social floors are known, global footprints are defined up to local level, and more data about the condition of the world are available than company-internal data, the discussion around context was close to absent. Just a glimpse of that came up in a session about linking corporate data with national statistics data on the SDGs. I highly doubt that the national statistics offices will excite corporations to make the necessary data links and suddenly push innovation.
  • Redesigning dislosures based on a more capitals-based approach. The basic assumptiom of building accounts around a ‚systemic contribution’ to society will need to answer the question about value creation. There isn’t any better litmus test than to disclose in how far financial capital has been built on the back of any other capital. This doesn’t mean total monetization of all capitals, but starting to discuss conventions and directions on how to count and account, working towards qualities such as the ‚Total Contribution’ concept of the Crown Estate in the UK. Realizing that net positive and gross positive approaches are possible beyond what is now seen as sustainable (doing no harm) seem to be so far away from mainstream that GRI doesn’t give these truly commendable approaches a stage. As such the needed collaboration with accountants – not very active in rethinking accounting from throughput to circular – isn’t a programmatic area of GRI, but will be the Achilles heel of the purpose of sustainability disclosure if it wants to stand the litmus test.
  • The word ‚innovation’ was high up on the agenda. The opening session carried a set of three innovative entrepreneurs (potentially none of them producing a sustainability report), that aimed to somehow make a sort of connection to innovation, but in the proceedings it boiled down to the forthcoming standards and data aspects that seemed to be the only real news in reporting. Of course, communication, XBRL (if ever used mandatory) and open source data can make a big difference, but it’s the combination with data that are not yet in GRI’s terrain that can empower stakeholders to new qualities of dialog (at this moment often in a degenerating stage due to boring processes) that will potentially revitalize dialog, meaning empowering stakeholders to be well informed to talk to corporations at the same eye-level.
  • The systemic component of how to create a longer term roadmap involving macro, meso and micro level, defining a truly serving purpose of reporting, linked with innovations in accounting, data management and new business model reporting demands, was little to non existing. The conference emphasized once more the need to go beyond the reporting standard setting world to overcome the inherent problem of standard setting – a too short scope to be able to deliver on future-ready reporting. The Reporting 3.0 Platform, now in its 4th year of existence (reporting3.org), has recently announced the ‚Blueprint Projects’, a set of 4 projects that develop and cross-pollinate the different necessary constituencies in the reporting landscape: reporting (clarifying the principles and serving function of reporting that truly supports a green & inclusive economy), accounting (based on a multi-capitals approach), data (taking into account the internal and external data sources to deliver on the litmus test question of being sustainable), and new business models (and their demands to disclose in principal ‚handprint’). Will we be able to deliver on reporting ‚for the next 20 years’ without any of these areas fully embedded?
  • Lastly, are we actually asking the right questions? The predominant focus on ‚footprint’ isn’t exciting for the majority of companies on this planet. We totally forget forging ‚handprint’ information. Instead of not doing harm, doing good isn’t structured in sustainability reporting, so all reporters are asked to figure that out themselves. The new circular, sharing, collaborative businesses are bluntly absent from the disclosure through existing standards, but it would be them to learn most from. Also, there are no data and benchmarks that would aim to describe the organizational transformation capabilities and socio-cultural leadership capabilities of an organization, adding to the litmus test question described above. We’re not even touching the sustainability context gap in its totality, and we’re missing two major components of necessary disclosure (see the work of the ThriveAbility Foundation to learn more about that, thriveability.zone).

Summing up this last headline, GRI needs to of course balance the needs of the mainstream and take reporting organizations from where they are at to where they should be, but the conference didn’t deliver on a good sketch of ‚the next 20 years’, embedding the SDGs into disclosure and liberating the data seemed to be the maximum presentable to conference participants.

Of course, one can argue that first things come first and that we are expecting too much. I know so very well from my own GRI past that ‘globally applicable and globally acceptable’ was and is the mantra for disclosure items to be added to GRI’s list. There will be another 5 GRI conferences until 2030 where more of this could be discussed, but do we have the time to wait? The absence of at least a statement of what’s still needed to deliver on the mission of GRI and a roadmap that offers a back-casting of the next steps for the next couple of years, concerned many of us at the conference. Now was the time to address and embed these necessary enhancements, but it seems we have to wait until the 2019 edition of the conference to add these points to the reporting matrix. The least we can do is to continue to work with GRI to show what is possible until then.

 

 

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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.

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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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Homo homini lupus – the failing answers to the refugee crisis

A month ago I published ‘The long sustainability shadow of the refugee crisis’. Today, with hundreds of readers and about 200 reactions richer, I am writing a sequel to this blog. It sums up what I heard, both negative and positive, both disgusting and heartening. My inbox was a showcase of how torn our society worldwide seems to be.

First, what struck me most was the fact that there seem to be just two camps on the issue: those that see refugees as the source of all evil, and those that see refugees as the opportunity to learn and thrive in a future to come. There’s no difference between that in Germany, UK, US, Netherlands (reflecting the countries most of the reactions came from). And there’s nothing in between.

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Secondly, it was strikingly clear that those in the haters camp are simply not able to envisage a positive future mindset. All of their argumentation stems from whatever source from the past they could find and sucks up all negative provocation of current refugee misbehavior without reflecting the why. Furthermore they are amendable to all the hoax and purposefully faked stories. A German website (see http://hoaxmap.org/index.html) collects these fake stories and uncovers the bullshit.

What doesn’t come to mind to them at all is the fact that the way that we in the Western world exploited the refugee’s countries of origin in the past might have been unfitting, that we were for a couple of hundred years protagonists for creating the situation we now face, from stuffing dictators to exploiting resources just for our own benefit, from climate change up to being asleep at the wheel and cynic when the first signs of the refugee crisis showed up (see Lampedusa). Their mindsets stop at their very own boarders, it doesn’t even need fences for that. I refuse to see them as Europeans; their national pride, their distorted sense of belonging and belongings (my home is my castle) evaporates a potential to develop a higher level of consciousness. The fear that refugees will take away what belongs to them is the primary source of the hate.

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They are ice-cold when looking at the situation, there is simply no appreciation about what the refugees have gone through. In spiral dynamics terms they are stuck in blue and orange mindsets in which self-interest prevails and dominates all thinking. The fact that Europe has a huge solidarity problem is something that they of course refuse to accept, they totally ignore it. The below map shows the whole dilemma frighteningly well:

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But there is light at the end of the tunnel. The Bertelsmann Foundations recently published a study in which they state that the majority of the EU citizens wants a European response to the refugee crisis and is in favor of fairly distributing the burden amongst all member states. They strongly reject the idea of individual countries acting unilaterally. 79 percent of all Europeans are in favor of a common European asylum and migration policy. Also 79 percent want a fair distribution of asylum seekers across all countries of the EU. A majority of around 70 percent also supports the demand that those states, which refuse to accept their share of the responsibility, should receive less money from EU coffers. While this is positivity news, the study also shows how decided Europe is between East and West. While a majority of 85 percent in the old EU member states think that the burden of asylum seekers should be fairly distributed, only 54 percent in the new member states support that view. Also, whereas in the old member states 77 percent demand that those states, which refuse to accept their fair share of asylum seekers, should be subject to financial penalties, only 41 percent of the citizens in the new member states are in favor of such a measure (see study here).

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Thirdly, and funny enough, I was accused for not being able to exactly prove why I think that the refugee crisis will in the end be a blessing in disguise for Europe. As if one is not allowed to have an opinion without having a glass bowl at home that accurately proves future predictions scientifically. Or for not having a time machine ;-). Of course, nobody can predict the future, and what will come out over the next years and decades will mainly be dependent on how much Europe will now unite (its called a ‘union’) and be able to manage. The European question will stand or fall around this issue. To me, this is all connected to how we will develop the innovation potential of the refugee inflow. For many years we crow about ‘Diversity’ – and here it is. Fresh blood, cultural views and interpretation of whats needed for the world that is a village, knowing that scalability of solutions will be essential globally. The crowd wisdom of refugees can be a game changer.

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Fourthly, let me thank all those that shared positive comments on the blog. Looking at the percentages – which are of course not representative – there was a 85% positive halo effect on this first blog. The haters camp always repeated their one-dimensional backward-looking argument: immigration didn’t succeed in the past, so it can’t succeed in the future as well. It costs us money that our own people should get. It takes jobs away that belong to us. They get our apartments that we subscribed for. There is no understanding that Europe will fall apart – damaging all economies multiple times more (see alone the Schengen discussion) – if we continue segregation, division and mercilessness.

Summing it all up, what we can state so far:

  • The majority of Europeans have a different mindsets than the refugee-haters; it doesn’t make sense to try to convince them, their experienced life conditions won’t let them change easily. The only way to dry up their dangerous mental matchboxes is to educate the next generation of Europeans that will make them run into opposition every time they light up one of the matches. Constant dripping wears away the stone.
  • Europe so far has a devastating track record in explaining to their citizens what give and take as well as solidarity and values really mean in the European context. It has both to do with awareness about Europe’s history in leading to some of the current developments (a connection often not made as it seen as ‘normative’) as well as to help citizens understand the need for immigration, the management of integration and designing circumstances in which the value added by immigration can come into full fruition. I appreciate the outcome of last week’s German Summit of Industry Federations that wholeheartedly supported Angela Merkel’s resolution towards the ability to gain strength through a proactive immigration policy, despite all opposition inside the country and from the European countries that are backsliders in taking their fair share of the solidarity value effort (see here).
  • Eastern European countries are in a cocooning mode while asking Brussels to pay for the cocoon and support if the cocooning doesn’t work and will have negative economic impact. This is the opposite of how Europe works and what to expect. If you take, you have to give. The developments in Eastern European countries, now having affected Austria (that historically always saw itself as the gateway to Eastern Europe) as well, is stubborn, demagogic and dividing. It also shows that becoming a member of the European Union was mainly built on economic benefits than on values like solidarity. Nation egos are still the main ‘elephant in the European glasshouse’.
  • We have yet to understand that a 500 million people strong European Union has not only an obligation, but also a benefit from one million refugees per year and that we need an ongoing capacity to deal with these numbers every year, spread over the whole EU. We haven’t understood the impact of climate change and have yet to define the term ‘climate refugee’. It doesn’t make sense to define ‘secure countries of origin’ when the life conditions don’t allow a life in dignity in these countries just because the political system wouldn’t imprison or kill someone that got deported back. It is in my view therefore already problematic to distinguish between ‘political’ refugee and ‘economic’ refugee. There are more than enough economic reasons to flee, based on the underlying sustainability context. Of course checking the circumstances is still an appropriate means of differentiation, I don’t believe in ‘one process fits all’.
  • The current discussions about ‘healing the problem at the source’ needs to take the broader and holistic/systemic developments into account. Otherwise we continue to throw money at countries with little to no effect.I do believe that we will continue to have 1-2 million refugees in Europe every year, no matter how many fences we build at the boarders. Refugees will find other routes. Defending our borders at that massive rate of refugees will be a bloody undertaking and will ruin Europe’s reputation. Already now there are hundreds of thousands of new refugees waiting in Libya. If we find a way to agree on a fair share in Europe and find the resources to reduce the worst conditions in the country of origin, further escalation can potentially be prevented. The systemic aspects around climate change, poverty and demographic effects won’t go away for at least another 30 years. Let’s also please keep things in relation: 1 million refugees per year mean 0,5 % of the total European population and will just protect us from social systems drying out and declare bankruptcy. It will be some of the refugees that will pay part of our pensions in the future. Yes, it does cost money in the beginning, but the payback will be rich.

In finishing this blog post I was reminded of David Suzuki’s words below. What was written to describe environmental degradation in my view also applies to Europe’s future if we’re not finding minimum agreements on how to manage the refugee issue in the long-term, making it a major success story of the EU and support its reason to be. And by that it is also a true sustainability issue. Let’s prove ‘homo homini lupus’ wrong!

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Posted by on February 28, 2016 in Thriveability

 

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The long sustainability shadow of the refugee crisis

For those of us working in the sustainability field for many years, sometimes decades, following the current discussion about the ‘refugee crisis’ hurts. We are used to think longer-term, at least those of us who are not just on the compliance path of following a reduced understanding of sustainability. Remember, wasn’t it people, planet and prosperity, wasn’t it intra- and intergenerational equity, and wasn’t it about human’s behavior to remain safe on this planet, offering limited resources for up to 10 billion people, recognizing that there will minimally be 3 billion more people by 2050-2100. Sustainability was asking us to get ready. The current refugee crisis painfully shows how far we are away from that. What surprises me most is the fact that none of this comes right out of the blue! Politicians saying to be amazed of what has happened in the last 12 months should look into the mirror and ask themselves why they couldn’t have seen the big lines of development and have allowed themselves to be eaten up by the daily nitty-gritty. What went so awfully wrong?

Let’s go back in time. Weren’t you amazed in school when you looked at a continent map like Africa and saw the straight lines that showed the borders of all these African and Middle East countries? This is one of the most visual leftovers of colonization, lines that got drawn 100-150 years ago. Why bother, a desert is a desert, so these lines were drawn in the interest of those colonizing, not those that lived there hundreds of years, tribal heritage, cultural sights, trade routes, etc.. While colonizing is over the scars sit deep in the minds of generations and generations of Africans and Arabs, remembering very well who abused their habitat for resources, threw money at dictator regimes in a broad variety of these countries, only to keep the revolt down and continue to ‘dig, baby, dig’ for the growing need of Western consumerism. Development aid for decades ran into the wrong canals, often only a little portion reached those in need, while Westerners remained rather easy on these fatal flaws, it simply continued to keep people quiet and secured easy access to resources. Most of the oil producing countries were or are based on a brutal regime of a dictatorship of a single or a couple of families that managed to keep the poor majority somehow in a ‘too much to die, too little to live’ state, while building a life of affluence for themselves. Sure, there was growing awareness that our country’s systems and ideas about ODA failed, we needed more help for people to help themselves, avoiding what went wrong in the past. But can we say we succeeded? In my view we can’t, we never solved this problem. Did we really do the best we can? Just look at how wimpy we created development aid programs, how unimportant a development minister always was and still is, and look at the history of cuts in their budgets to close other holes in the overall budget. Look at how many countries really succeeded to spend at least 0,72% of GDP for development aid, the minimum agreed upon, hardly ever delivered upon. And why? Because it was known it was mostly useless, the real problems were never tackled since it meant stop funding dictatorships.

And then climate change, demographic developments, poverty and transparency through social media created the brew that lead to the Arab spring. Dictatorships fell because of the inability to react to massive poverty created by more and more climate-related droughts. Look at Libya and Egypt as examples. The tragedy of that situation simply was that those revolted and took dictators down had no education and hardly any help how to build strong democracies, they never learnt it. This gave space to regained religious and tribal power, awakening from their decades of suppression. While the economy was down and no improvement in sight fights between myriads of little new parties, partially religiously motivated, went on and on. Instability, just droughts and poverty, no jobs, no trade, no life. People started moving.

In other parts of the Middle East existing regimes fight against religiously motivated groups, with IS the most radical one, trying to re-establish an Islamic caliphate. It created new alliances in which the West changed fronts all too easy, the Assad regime in Syria is the best example. While he was called a tyrant some years ago, throwing poison gas against his own people and the West condemned him for that, he is now a ‘partner in crime’ against the IS. The country facing climate-related effects and related poverty is now totally demolished. There’s no hope for anyone trying to raise a family in dignity, people fled to Turkey, Lebanon and Jordan in the first instance.

Two decades earlier Russia and the US failed in Afghanistan, and whoever is still there from the Western alliance faces the Taliban when they attack the semi-democratic leaders  through suicide bomb and other terrorist attacks. Together with Irak it remains unstable terrain, one can easily see the hesitation of Western countries to totally withdraw the remaining armed forces from there. Droughts and uncontrollable floods continue to pester these countries every year, including also Pakistan. No wonder more and more refugees also started to move from there. The ongoing struggle between Saudi Arabia and Iran is on the surface one of tribal rivalry, but in the end it’s about power in the region, with the Wahabites being the most aggressive force.

Let’s be totally clear. While all of that turmoil is multi-facetted and overshadowed by tyranny, religious infatuation, tribal power plays, missing segregation of religion and state (one can say that Islam never had a renaissance like christianity) and lack of education of how to handle democracy, the root cause of this has been climate-related poverty and a disillusionment of being able to have a proper life for families. And here is where I don’t understand the Western governments: while the Arab spring was probably surprising, climate-related movements of people are not. Let’s not forget that many of the refugees now reaching Europe also come from countries like Eritrea or Sudan. So, besides historical effects, the West is now also paying back for their ignorance of climate change and climate-related poverty in these parts of the World, forecasted since decades.

Europe is at a make-or-break point of being able to solve this crisis. And while we have ignored the environmental source code of this crisis for long we utterly only have this one chance to at least show the social salvation potential of the crisis we helped to create in the first place. Europe doesn’t have a refugee problem, Europe has solidarity and humanity problem. While we always say we need immigration for demographic and economic reasons (just look at the demographic trees of our societies growing older and older) we don’t accept this opportunity now as a blessing in disguise. We have 380 million people in the European Union, one million refugees per year means 0,026% increase of population if we would be able to equally share the ‘burden’ of this immigration wave. It is in my view a devastating behavior of the majority of the EU member states, totally ignoring the mess created in the past, and a total blindness of responsibility today. As a European citizen I am ashamed of the year-long inactivity of the European Union in the light of repeating tragedies in front of the island of Lampedusa. More than once European Commissioners and ministers of various countries promised to help, the writing was on the wall for a long time, and nothing happened as soon as they were back at home. They helped to create the mess Europe is now in, and as politicians are, they are very easy to forget or blame an earlier Commission or Cabinet for purely disgusting political game plays. Let me not even start to talk about the rape of the refugee theme in US-American pre-election Muppet Shows.

While we could easily cope with this situation in Europe – and we have to as a whole – the ignorance of the past now creates the short-term problems that lead to new short-term devastation. Building fences, securing borders, the potential closure of the Schengen area, costing billions of tax-payer’s money and having enormous economic implications, are totally wrong moves and will play into the continued re-establishment of right-wing parties, partially extreme. Poland and Hungary are early warnings. Refugees are blamed for a situation we created in the first place, and honestly: it is not for the first time that I have a déjà-vu with the early days of the Nazi movement, where all of us always wondered: how on earth could this have happened? We are now seeing extremist right wing movements gaining power again, the police is met with no respect, in certain areas of our cities private groups organize ‘security services’, and all fueled by our authority’s inability to cope with the massive stream of immigrants, empowering criminal energy to recruit new herds. I am shocked that there is no streamlined immigration procedure in Europe, not even in my home country Germany, allowing system abuse. I am shocked by the fact that deportation isn’t equally enforced, and that people that now want to move back to their home countries because their immigration procedure could take up to a year and are unable to bring their families in for even longer can’t get their passports back and/or their home countries actually refuse to have them back. It is not the refugees to blame, it is a blatant failure of the European Union and its member states not being able to have organized at least a rudimentary streamlined procedure and enforcement.

So what does a sustainability expert recommend in such a situation?

First of all, those involved need to understand the broader context of the situation. We need to accept the long curves of history and establish an understanding of ‘climate refugees’. Separated from the ‘white noise’ of all of the religious, cultural and tribal aspects, we are moving into a future in which between 60 and 250 million climate refugees will be the new normal. Whatever the COP21 treaty will lead to the situation will still get worse for the next 30 years before their is a chance that it can get better. We are now seeing the effects of CO2 emitted 30 years ago. Also, understand the demographic implications of 10 billion people on Earth is essential. Immigration of 1-2 million climate refugees per year will continue. Any politician that thinks this can be solved through fences is naive!

Secondly, learn to understand the social implications of immigration. Immigrants want to work, want to learn our languages, want to put their kids into schools, and look for nothing else than a bit of dignity, and being able to make friends. Let all young people in our countries do a ‘social year’ devoted to help especially immigrants to adjust. We ourselves made friends with a Syrian family, now living close by, and offer our service as helpers when new refugees arrive. We made extremely positive experiences. The most important fact is quicker processes to get refugees into a position to be able to work and produce value-added. What has to be avoided vis-a-vis our own population is a feeling of greed in which refugees are prioritized when it comes to social housing, allowances, social services, etc.. Many of the refugees would love to help to create work to help themselves. We have architects, engineers, translators, nurses, doctors, social workers amongst them. Give them the opportunity to do something. If we created systems that don’t allow refugees to work as long as they are not fully accepted as immigrants, change that very system. Again, these people can and would love to work!

Thirdly, dry out criminal energy in our towns from the outset. We don’t get more criminals just because refugees come into the country. What needs to be avoided is that criminals can recruit disillusioned refugees into their groups, given our slow procedures. If 1 percent of the people in each country shows criminal energy the increase of the population through refugees is more likely to lower that percentage, but only if refugees get a positive vision of a potential life in our countries. It is simply not true that the refugees increase the crime rate. Simple statistics 1:1. Some culture shocks like we saw them at New Year’s Eve need to remain ‘anomalies’ in these early days of learning how to cope with such massive immigration.

Lastly, refugees are a blessing in disguise for our economies. Not only that the majority of the billions of extra budgets for handling immigration right now are already spent in our countries (and increase GDP), it’s the long-term economic effect of letting refugees work. There are many thousands of open vacancies in many industries, and our social services can themselves benefit from educated refugees. We need diversity to learn from. Infusion of new and different thinking will give extra impulses for growing strong together. We know that, the high priests of the global economy just told us in Davos this week.

It is essential to keep our inner borders open while existing law is enforced (and that includes securing the outer borders). It is a fatal flaw to close borders and blame the refugees for that. It is a flaw to think it will hold climate refugees back from coming into our countries. It is a flaw to allow right-wing extremists to fuel the fire. It is a flaw to think we need to defend our culture while all of us more or less come from immigrant families (just look back 2-4 generations in your own family history). It is a flaw to believe that Islam takes away anything from us, it adds a new colour to our society.

At this moment this is not the Europe I was born into, it is not the Europe I want to live in. I feel ashamed of what is going on. It was all foreseeable, so let’s be quick in remembering what we learned about sustainability and apply it as should have for the last 20 years.

PART 2 will come out in a couple of days.

 

 

 
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Posted by on January 24, 2016 in Thriveability, Uncategorized

 

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Comparability of sustainability information – slaughtered on the altar of materiality?

This is the third of four installments of a blog series covering crucial sustainability reporting issues on materiality, sustainability context, comparability and stakeholder inclusiveness.

The GRI content principles – sustainability context, materiality, stakeholder inclusiveness and completeness – are forming a balanced set to give guidance on how to define what a ‚good’ sustainability report should cover. The focus of work pulling G4 together was on making that balance and the process of how to get to such reporting even more clear and crisp. While our last blogs were digging deeper into the need of putting real teeth into step 1 – defining sustainability context better – another principle from the report quality section, namely comparability, has started to be discussed. The reason for that is that most communication of GRI under the banner ‚what matters, where it matters’ zooms heavily into materiality, and questions start to arise on what that means for the other important reasoning for standardized reporting – producing information that can actually be compared. This discussion has a strong connection with our earlier plea on getting more clarity around sustainability context and working on micro-macro-linked indicators. The discussion around a potential lack of comparability is making painfully clear that not having worked on these potential indicators in the G4 development process will most likely break open a whole plethora of uncomparable information. We have enough experience how certain information was presented in sustainability reports so far: take SOMO’s 2013 study on energy companies disclosure, Transparency International’s 2012 study on reporting on anti-corruption indicators, or Deloitte’s 2012 study on zero impact growth strategies that examplified dozens of ways in which companies described their CO2 target-setting. Either information was presented in many different absolute or relative ways, or different information than asked for was published (should we call this pretending?), or no information was published at all, or no context was given on what was published (how would we call that then?). Our view here is: without micro-macro-linked indicators comparability will heavily suffer. The loop to our sustainability context plea and the need for ‚different’ indicators as we have them right now becomes clear when we consider the text in the Guidelines around comparability, the core sentences here are: „Comparisons between organizations require sensitivity to factors such as differences in organizational size, geographic influences, and other considerations that may affect the relative performance of an organization. When necessary, report preparers should consider providing context that helps report users understand the factors that may contribute to differences in performance between organizations.“ Together with the wording of the sustainability context principle we really doubt that consistency in reporting can be delivered in a way that comparability will at all become realistic with the current indicator set. In total, we think that the dilemma between focusing on materiality on the one hand, and delivering comparable information on the other hand, can’t be solved without micro-macro-based indicators. The existing indicators will not cut it, we have seen this all before! Work on micro-macro-based indicators will be necessary, the denominators of these indicators will need to help defining comparability, not the voluntary, company-by-company target setting (whose long-term basis is normally not disclosed – most likely because it doesn’t exist at all?). This status quo has several consequences and effects, and it is interesting to look at least at some of them:

  1. The work of rating & ranking organizations will continue to produce more confusion. As we continue to have information about how organizations became ‚less bad’, the more than 120+ different rankings & ratings will continue to produce ‚best-in-class’ champions, for none of them we know what that really means, since we don’t know what is feasibly ‚good enough’. We have seen first attempts of rating organizations to get out of this dead-end-street, e.g. Climate Counts or Inrate who themselves start to make the link to macro-based goals by simply setting them. As GISR also puts sustainability context clearly into the focus of ‚good’ ratings, the need to also consider macro-based information on global, regional and/or local level will also continue here. More comparability will most likely be the outcome.
  2. The lack of focus on micro-macro-based indicators will produce competition for GRI. A whole set of organizations already work on such indicators, first and foremost the Natural Step-based approach on the ‚Future-Fit-Benchmark’, an approach that includes Bob Willard and a set of sustainability reporting veterans. The Sustainability Context Group, around 120 members strong, has several members that actively work on other alternatives of context-based indicators, their plea to work on them together with GRI has been noted down there, but with no outcome so far. WBCSD has started to team up with the Stockholm Resilience Centre (and the various other players connected to them) to see how Vision 2050 can be supported by an Action 2020 and how ‚values-based reporting’ can be set up. Worthwhile to mention here is that this approach also includes tooling and accounting methods, so gets to a deeper level than to just think about reporting indicators, but also how to create the processes. WRI, CDP and WWF now work on ‚science-based target setting’ and has invited to several workshops. Also here, an increase in comparable information will be a foreseeable outcome.
  3. At this moment we also observe the development of the Sustainable Development Goals, to be presented in 2015. It will be interesting to see how they will develop further; as it stands right now they seem to be more sort of ‚corridors’ of change in 16 different issue areas, and it is not yet sure how interdependencies (nexus effects) will play out on this variety of areas. In our view it would be much more effective to take a step back and first develop a set of principles (based on the probably most important ‚North Star’ question: what will really make up a succesful green & inclusive economy?) and then define action areas with a special view on interconnectedness of effects to define clear and actionable roadmaps or adaptation plans on how to get there. Targets could be defined per region, taking into account the various cultural and mindset calibrations as well as timelines necessary to measure progress. These could be built into a comparability approach for defining indicators of change with actionable items where each company can define a positive impact (instead of concentrating on the reduction of negative impact). See it a bit like the approach Unilever took when they connected their mid-term target setting with main sustainability issue areas. It is no wonder to us that Unilever’s approach scores extremely well in certain ratings, e.g. the latest GlobeScan and SustainAbility Leaders Survey, published just a couple of days ago.
  4. As a side effect the lack of comparability also creates a revival of the discussion around what was supposed to be called ‚Beyond GDP’. First of all there is the question if GDP should be used as a denominator in order to increase comparability in micro-macro-based monetary and relative comparisons, but much more important there is also again increasing discussion about the usefulness to use GDP at all as a means to measure a valueable contribution of a single company. In our view this is a must-have discussion that will sparkle ideas on what ‚success’ really means for a society at large, it seemed to get stuck around the idea of happiness in the last couple of years, which in our view is a very individual mindset and difficult to standardize. Hence, there is a glimpse of hope, and it is good to see that GRI is also one of the partners in one of these projects, called ‚Measure what matters’, with amongst others the Green Economy Coalition, Accounting for Sustainability (who are the initiators of many good developments, e.g. IIRC as well), the Stockholm Environment Institute (SEI) and IIED.
  5. We are still amazed to see how little companies are interested in defining what a ‚green & inclusive economy’ or ‚resilient economy’ actually means for themselves. That is mainly due to the lack of real comparison opportunities to give this vision real meaning. And it will remain like that as long as we don’t define the expected minimal and/or positive contribution per company and stakeholder. We refer to our last blog on the ‚mindset gap’ for further depth there. Comparison and target setting will be the most interesting pathways for competition in the future, so again ask yourself what all that focus on materiality will help if comparability possibilities will suffer from that in this heavily interconnected world in which nexus effects will be part of the comparability agenda, to be analyzed when thinking about sustainability context.

Overall, we expect that the discussion about comparability will become as vital as the one on materiality today, simply because more materiality will not automatically lead to more comparability of information (we fear even less), and more comparability focus will not simply lead to more materiality. There needs to be a balance as both are of critical importance to understand, define and act on these urgently needed adaptation plans towards the economic blueprint of the future, the ‚green & inclusive economy’. Authors: Ralph Thurm is the Founder & Managing Director of A|HEAD|ahead, Nick de Ruiter is partner at Sustainalize.

 
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Posted by on May 27, 2014 in Sustainability Reporting

 

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