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.

Diagram 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:

Diagram 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.

 

Stopping ‘Dilbertarian Sustainability’ – time to be ‘steered by the stars’

End of July 2012 Deloitte published the report ‘Toward Zero Impact Growth – Strategies of Leading Companies in 10 Industries’, summarizing outcomes of the work of Deloitte Innovation and John Elkington (Volans) around describing the need for a new breed of industrialists, called the ‘Zeronauts’, and a new measurement regime around ‘Zero Impact Growth’. It was clear that Elkington’s new book would become a megaseller, but the Deloitte report that focused more around the measurement of sustainability performance has clearly hit a nerve too – thousands of hits and report downloads on the website  http://t.co/Iqo0QePl  just within a couple of weeks already send a clear message. Why has the report has attracted so many readers:

The call for a green and inclusive economy has never been so loud. In the run-up to the Rio +20 conference the UN Global Compact called for a ‘quantum leap’, and the World Business Council for Sustainable Development was asking their 200+ members to ‘change the pace’ as necessary precondition on how to get there in a timeframe until 2050, with many crucial decisions to be taken way earlier, many of them in the next couple of years. However, how would we know that we are successful, quick enough and effective in this transition, ensuring a new economic model that allows growth in the future as well (demographics simply demand that), but that this growth balances with the planetary limits and human well-being (or should we be more drastic: human survival)? Honestly, not one industry, not one company on earth is able to tell us that at the moment!

Our current appetite for radical transformation surely isn’t the way forward. Looking at the time span between the first and second Rio conference, we have altogether learned how to be ‘less bad’, without knowing what is actually ‘good’ overall performance. We are flying blind on many levels while we clap shoulders for marginal efficiency improvements, and even often don’t know if our improvements are causing extra burdens for fellow human beings. The current reporting regime – the GRI G3.1 Guidelines – asks for sustainability context information in order to be able to define report content, but reporters dramatically fail to report on them due to many reasons. If it is the fact that the GRI indicators only ask for ‘less bad’ while leaving sustainability context to the foreword of the board or CEO (which normally do not deliver on that task), the fact that report boundaries are in most cases limited to the annual report boundaries and not to real impact (the Guidelines still offer a sneak-out ‘and/or’ option), or simply due to the fact that often stakeholders too do not understand the sustainability context of a reporter’s actions and therefore materiality is way too ‘negotiable’, it is becoming painfully clear that this is not enough. What we need is a North Star benchmark, a joint paradigm that allows all industries (and companies as part of them) to identify, adapt and perform towards that common vision. The Deloitte report offers ‘Zero Impact Growth’ to be that North Star, with the necessary Zeronautics as measurement regime. This is not yet fully developed and needs the involvement of all industries and stakeholder groups. Elkington’s book not only shows a set of mental mindsets on how to get there (the 5-step ‘pathway to zero’ model), it also shows ample examples of organisations and individuals that already work towards Zero Impact Growth. The paradigm embraces ideas like the circular economy, cradle-to-cradle, bottom-of-the-pyramid or shared value creation as practical concepts in the need to speed up, whilst Zero Impact Growth and the Zeronautics help to assess the effectiveness of their partial contributions towards the overall targeted North Star.

Based on the pathway to zero model Deloitte developed a maturity model and has assessed 65 leading companies on how far they are in this mental journey. All of these companies are either part of the GC Lead program, the C4C or Water mandate campaign. The outcome of the assessment in 10 industries is described in Deloitte’s report, both as a complete outcome as well as the single performances of the 65 companies. Figure 1 illustrates the outcome in the 5 categories.

Figure 1: Results of the Zero Impact Growth Monitor 2012

Furthermore the report also reveals 4 major gaps that were visible through the ZIG Monitor: a major comparability gap (that is why all rankings and ratings tell us different stories about best-in-‘their’-class performance), major gaps between the overall strategy of organizations towards Zero Impact Growth and furthermore the real capabilities of sub-strategies to deliver on the organization’s overall strategy (it simply doesn’t add up in many cases), and finally gaps in the balance of sub-strategies and major performance gaps in and between industries. And all of that while the report only assessed companies that see themselves as leading in sustainability.

The Deloitte report gives us a baseline picture of where we really are, but also assesses the brakes, the accelerators and the options for a ‘joint flight’ towards adapting Zero Impact Growth as the new basic and minimum paradigm that we all together need to agree on, recognizing that there is a whole world to win behind Zero Impact Growth, some call it regenerative or restorative growth. It’s a process that can be a door-opener for cross-industry fertilization, for social entrepreneurship, for collaborative action to develop true costing, true pricing and true taxing initiatives (so true valuation of resources, goods and services) as part of the Zeronautics we need desperately and that can be breakthroughs to real ‘integrated reporting’ (in which the sustainability context gap is finally closed).

I once sadly noted and called our current way of acting ‘Dilbertarian Sustainability’, it’s now time to have the courage and the willingness to go beyond: ‘It’s time to be steered by the stars, not by the light of each passing ship’, as mentioned by Omar Bradley many decades ago. It’s time we start doing exactly that. Be part of the ‘joint flight’ and see where you are by applying the Zero Impact Growth Monitor to your own organization.

[This blog was originally published in the ACSRN newsletter for October 2012]

 

John Elkington’s Zeronauts ‘Roll of Honor’ – Interview with Ralph Thurm

In May John Elkington’s book ‘The Zeronauts – Breaking the sustainability barrier’ got published and since then gets a lot of attention in the sustainability community and beyond. In his book about the new breed of inventors, innovators, entrepreneurs, intrapreneurs, investors, managers, or educators who promote wealth creation while driving adverse environmental, social, and economic impacts toward zero, John Elkington has come up with an inaugural ‘Roll of Honor’, 50 Zeronauts that are examples for this new breed, coming from different constituencies. John admits that some of them didn’t even know that they were infected with the ‘zero-gen’ and simply did what the did because it made complete sense. I am very humbled and happy to be amongst the chosen few, however I am thinking that my journey to zero has also just begun. Please find below a short interview that explains my rationale, intentions and beliefs for the ‘zero agenda’. You can find many more examples on www.zeronauts.com and in John’s blog with 2degreesnetwork, to be found at http://bit.ly/NkeXH3.

Ralph, you have become a leading proponent of Zeronautics. Why?

“My journey towards Zeronautics began in 2005/2006 when I was working with the Global Reporting Initiative (GRI) and saw a growing gap in the area of Sustainability Reporting.  My question: How could you assess the positioning of a given company’s sustainability performance against a real benchmark?”  (This issue was addressed by the Sustainability Context Principle in GRI G3.)

“The indicator section of G3 wasn’t able to capture this need due to the lack of globally accepted and applicable ‘denominators’. To date, we can only measure efficiencies and relative levels of performance, and can only get a sense of whether organizations have become ‘less bad’ in their material focus areas.  What is missing is a core definition of what is actually ‘good’.”

But why is zero-based thinking needed?

“We are all somehow flying blind. I was immediately excited when I heard about the Zeronauts book project, at a GRI event in Rome in late 2010. Since then Deloitte Innovation and Volans have worked together to work out how to implement the book’s agenda into the day-to-day world of companies.”

“Much is going on that seems to be headed towards the idea of what the book dubs a 1-Earth Economy, with buzzwords and phrases like ‘sustainable capitalism’, ‘beyond GDP’, the ‘circular economy’, to mention just a few. I came up with the term ‘Zero Impact Growth’ as the minimum ‘North Star’ for our work, a door opener and conversation starter as we work towards measurable and commonly accepted denominators.”

“I especially like the embracing character of the emerging discipline of Zeronautics, which I see as a complementary development to the many existing initiatives in the ‘Sustainability Quilt’. I value the opportunity to use Zeronautics as a reality check in terms of individual and organizational effectiveness. The goal has to be a jointly agreed upon Zero Impact Growth Framework.”

“We need many more Zeronauts, in all areas of society and in the corporate world. As Yogi Berra once said: ‘You’ve got to be very careful if you don’t know where you’re going, because you might not get there.’ A first step will be our Zeronauts Symposium in Rotterdam on 5 June 2012, Earth Day.  Encouragingly, the event is more than sold out.”

—end of the interview

In the meanwhile the mentioned Zeronauts Symposium at Deloitte’s Dutch headquarter took place on June 5, 2012. I will come back with a longer blog on that fantastic event in due course. So stay tuned.