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The Musk Paradox 620 450 Dave Knight

The Musk Paradox

There is a massive paradox smack in the middle of the business models of arguably the world’s most innovative man. It provides many lessons for businesses looking to innovate.

Musk has done more than most to disrupt the auto industry, to a point where total cost of ownership of electric vehicles is near price parity with internal combustion engine vehicles and Tesla’s market capitalisation is greater than GM and of Ford. Solar City, another Musk co- owned venture, is part of the renewables revolution that provides at least 5 times as many jobs in the US than the fossil fuel industry. He dabbles with brain-computer interfaces through Neuralink which he is backing. Musk open-sourced his teams design for Hyperloop Alpha, a concept to revolutionise intercity transportation. He decides his commute is frustrating, so sets up a company to tunnel under a freeway and within months has started building his time-saving tunnel – it’s just boring. The list goes on…

But it is his SpaceX venture that provides the big paradox. While most of his enterprises support efficiencies, clean energy and transformation to more sustainable economies, his quest for space travel and ultimately to set up a colony on Mars is doing the opposite. Granted he has disrupted the space industry and I take my hat off to the amazing advances that enable rockets to be reusable, landing back on earth, like a coordinated dance sequence.

However, his childhood ambitions of going to Mars are obscuring some obvious truths. The first is that Earth is beautiful, it is our single home, evolving continually, providing the ecosystem that enables humanity to survive – it is a fine place to live. Mars is beautiful in its own way, but not a great or easy place to live. If we want to continue to thrive as a species, we need to be focused on maintaining our life support systems on our single planet.

It is true that we seem to be doing our best to ruin them, but is the answer to create a back-door escape to another planet that at best, a handful of people could ever use? Our spirit of adventure will always push us to explore new frontiers, but creating a nice place to live on Mars will take millennia. Nine billion people will soon live on Planet Earth, there is no chance they can all go to Mars. After all, it has taken Planet Earth 4.7 billion years to reach the point we are at today. We humans have taken approximately 0.0000015% of this time – since 1950 – to bring our Planet to a point of crisis. It is time to put that right.

The lessons for strategic business innovation are that we need to point innovation in a direction that supports humanity thriving, not undermining it. We don’t need to ‘Save the Planet’ – it will be fine for a few billion years yet, we need to ‘Save Humanity’. Innovation should support business operations to work within our ecosystems ‘safe operating zone’. Strategic decision making can be informed by available tools, like: Ecological Footprinting; the Natural Capital Protocol; the Future-Fit Benchmark; or by simply aligning to the Sustainable Development Goals (SDG’s).

This is not wishful thinking – many leading business’ get this, and are adopting 100% renewable strategies (RE100), 100 businesses now have approved Science Based Targets and many more are developing truly clean products and services. Unilever is an example of a business, which is aligning its brands towards the SDG’s. Every brand must have a clear purpose that contributes to a social or environmental concern. Each product must contribute to at least one of its Sustainable Living Plan targets. If this threshold is not met, it will not pursue the product opportunity. This kind of thinking will help ensure that every business is enhancing our ability to survive, creating business opportunities for the future.

Musk is a man on a mission. While there is a paradox in his business strategies, we can learn from his immense abilities and ‘can do’ approach to innovate for sustainability and resilience. It is time to speed and scale up this process, to disrupt our fossil-fuelled ways of living and transform to the new green economy.

 

photo credit: By Tony Gray and Robert Murray [Public domain], via Wikimedia Commons (https://commons.wikimedia.org/wiki/File:SpX_CRS-2_launch_-_cropped.jpg)

CIRIA’s Responsible Sourcing Handbook 1024 1024 Dave Knight

CIRIA’s Responsible Sourcing Handbook

I was fortunate to join a panel of industry specialists and experts in responsible sourcing, presenting a construction material certification body – CARES case study on its approach to responsible sourcing, at the recent launch of the CIRIA Minimising risk through responsible sourcing handbook (C767) in London.

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The event introduced the handbook to a broad range of construction industry stakeholders, including delegates from companies, certification bodies, industry bodies and NGO’s. There was some great engagement on the theme with questions like ‘How can I focus down on the things that really matter and get more procurement professionals involved?’ discussed in the lively plenary session. Attendees heard that increasing emphasis is being placed on due diligence throughout the construction materials value chain, legislative requirements are growing and that the need for engagement and collaboration has never been greater both to understand impacts and as the basis for improvement. We heard some great examples from within the industry, however there are some opportunities that are poorly understood and managed.

The case study I presented was focused on the CARES Sustainable Constructional Steels (SCS) certification scheme, one of 31 methods of implementing and demonstrating responsible sourcing referenced in the new handbook. The certification aims to provide buyers of constructional steel materials confidence that a broad range of relevant responsible sourcing issues are being managed to improve performance.

One way I illustrated this at the event was through the infographic (see image). It uses the concept of an ‘extended product’ with the centre circle representing the product and its key function – concrete reinforcement. The physical properties required of the product are shown in the next circle, but there is much more to the product than that. The expanding concentric circles represent in turn; the management system requirements of the certification, including holding an Environmental Product Declaration, the scope of material issues covered by the scheme criteria within these systems and finally the range of stakeholders that are involved in or are impacted by CARES SCS produced steel.

This blog first appeared on CIRIA’s website in June 2017 (https://www.ciria.org/News/blog/Responsible_sourcing_handbook_launch.aspx)
Why Trump is the right man to lead us to a better world 750 499 Dave Knight

Why Trump is the right man to lead us to a better world

Every time I look at Twitter, I’ve found myself being drawn in, like a water circling towards a plughole, to comment on the many and varied decisions and policy statements of the world’s most powerful man. I’ve tried to keep a professional distance from politics and to focus my Tweets on a thread with a business sustainability relevance (which are many), but maybe I’m straying across the line, like a kayaker franticly paddling to avoid going down the plughole.

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As with many people, I’ve found myself in disbelief about the nature, tone and approach of someone who is supposed to be the leader of the free world, taking us to a brighter future. While we can debate about the people who voted him in knowing what he stood for, we are where we are, and it is what it is.

So why am I now thinking he’s the right man to show us a path to a better future? I’ve long been concerned that business and their customers and global citizens have not been vocal enough – not standing up for what they believe in – what they feel is right deep down. By stripping the façade of respectability away from the narrow, neocon agenda, Trump is showing us what right-wing, exclusive, business at any cost, policies look like. He is showing us, as clear as day, what ‘winner takes all’, vested interest driven, capitalism looks like and we don’t like it.

Now, more than any other time in my life time, I feel we have to stand up, articulate and shout about our vision and plans for an inclusive, fairer, cleaner world. Stephen Hawking, in a recent BBC documentary, estimated that Humanity has 100 years left[1], Elon Musk’s obsession with finding an alternative home for humanity on Mars[2] (or another planet) shares Professor Hawking’s gloomy analysis. Without going too deep into the energy need and broader scientific challenges of trying to save humanity by enabling a handful of people to set up a new colony elsewhere, I would rather we focused much more attention on trying to maintain a reasonable lifestyle for 7+ billion and the coming generations on our single planet we already have, that we call home.

There are some strong signs that business realises that the Sustainable Development Goal’s and all they represent, are not just for window-dressing and greenwashing, but represent the real drivers of business success over the next 20 years. For example, the swift growth of the Renewable Energy 100 (RE100) companies[3], the development of microloans and other financial services for women and the steady march of the sharing economy are showing us there are newer, better ways to do business. The recent collapse of Trump’s business committees also demonstrates the rejection of inequality and hate.

Thanks to Trump, and some of the other despots like him, there is a new spirit emerging, a rejuvenated group of citizens, organisations and businesses who are prepared to stand up and shout about the future we want. They are prepared to challenge the rhetoric with sound science, humanity and care.

If the consequence of Mr Trump being in power is that he prompts the growth of a global movement with a clarion call for social justice, equality and a clean and productive planet, then perhaps it’s not so bad after all. System change needs a prompt – sometimes you need to shake the tree. So while Trump is trying to cut it down, its time for everyone else to plant the forest.

[1] BBC documentary, Expedition New Earth, shown June 15 2017

[2] https://www.space.com/37200-read-elon-musk-spacex-mars-colony-plan.html

[3] https://www.theclimategroup.org/news/re100-annual-report-2017

photo credit: Gage Skidmore <a href=”https://www.flickr.com/photos/22007612@N05/32984318012″>Donald Trump</a> via <a href=”https://photopin.com”>photopin</a> <a href=”https://creativecommons.org/licenses/by-sa/2.0/”>(license)</a>

Raising the Bar – Report 800 450 Dave Knight

Raising the Bar – Report

This global cross-sector report assesses the environmental dimension of sustainability reporting and provides recommendations to make environmental reporting important to all stakeholders.

It analyses what the key and most common environmental disclosure items are and provides practical recommendations for companies and other reporting organizations on how these items should be measured and reported, supported with best practice examples. In addition, it explores emerging areas of research in this domains, as well as innovative reporting practices. This report contributes to the implementation of paragraph 47 of the Rio+20 Outcome Document, through the identification and dissemination of models of best practices on corporate sustainability reporting.

Dave Knight was a key contributing author and researcher for this report.

Download the report

GEO-5 for Business Report 800 450 Dave Knight

GEO-5 for Business Report

Executive Summary

Global environmental trends are creating new risks and new opportunities for businesses in every industry. Indeed the transition to a green economy, now in its early stages, will open up great opportunities for companies that understand the implications of these trends and account for them in their planning and business strategy. Conversely, companies that fail to understand the changes, or that act too slowly, will put value at risk.

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Dave Knight was a key author and peer reviewer of the UNEP GEO-5 for Business report. It is written for business leaders who are responsible for ensuring that risks and opportunities are understood, addressed, and turned into long-term competitive advantage for their companies. The report assesses the operational, market, reputational, and policy implications of environmental trends on ten business sectors:

  • Building and construction
  • Chemicals
  • Electric power
  • Extractives
  • Finance
  • Food and beverage
  • Healthcare
  • Information and communication technology
  • Tourism
  • Transportation

The report describes business risks and opportunities based on information derived from existing science, business, policy, and other literature. It also includes brief real-world examples that illustrate the nature of some of these risks and opportunities. The report contains extensive citations throughout, allowing readers to easily access source documents that provide further details on specific trends and impacts.

GEO-5 for Business builds on the findings of UNEP’s fifth Global Environment Outlook (GEO-5) report, released in June 2012. GEO-5 assessed the current state and trends of the global environment, in which population growth, economic development, urbanization, and globalization are driving degradation across numerous environmental indicators. Out of 90 environmental goals and objectives assessed in GEO-5, significant progress could only be shown for four. Chapter 2 of the report briefly summarizes the drivers and trends described in GEO-5. Both the specific trends in GEO-5 and the broader picture of decline have significant implications for companies around the world, regardless of size or sector, some of which are reflected in the following table.

To view the full report please click this link – https://web.unep.org/geo/sites/unep.org.geo/files/documents/geo5_for_business_es.pdf

How to Finally Take Science-Based Goals from Rhetoric to Reality 800 450 Dave Knight

How to Finally Take Science-Based Goals from Rhetoric to Reality

Sustainability is mainstreaming, right? You can’t walk through a city, listen to the news or buy a product without hearing something is sustainable, green, eco-friendly — and the list of claims goes on.

So, how much of this is rhetoric, and how much of this actually can be backed up by empirical evidence?

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Many organizations are able to demonstrate reasonable sustainability performance, such as consistent energy efficiency improvements over the last three years, a decrease in normalized CO2 emissions or more social responsibility audits in their supply chain than ever before.

All good, then? Job done. We have embedded sustainability into our operations and can get on with business while feeling warm and fuzzy inside.

But what is the evidence really showing us? We need to remind ourselves of the bigger picture: Are future opportunities unlimited or is future value creation being put at risk; how is our home planet doing; how is society changing?

While it is true and commendable that some fantastic progress has been and is being made, many trends concerning some of our most critical life support systems and basic human rights are not improving. In fact, many are doing just the opposite.

What science really tells us

Last month, I had the pleasure of leading a half-day tutorial on the science of science-based goals at the annual GreenBiz Forum in Scottsdale, Ariz.

We started by reminding ourselves of the greater scheme of things. While the planet has been around 4.6 billion years (give or take a few years), we, as humans, have only been around for the last 200,000 years or so, and didn’t really get going until the last 250 years, with the advent of the industrial revolution.

In this time — the blink of an eye in planetary time — we have achieved many amazing things. We have created unprecedented infrastructure, sanitation and education. We have transformed natural resources into everything from this laptop I am writing on to the sumptuous afternoon cakes we were tempted with at the forum. We have been prolific and imaginative, resourceful and creative.

During the session, we reviewed some high level graphs which showed that with the acceleration of many indicators of progress comes a similarly steep acceleration of our draw on our earth’s assets.
While we have pulled millions out of poverty, the global population has grown faster. Millions — in fact, more than 2.2 billion people — lived on less than $2 a day in 2011, according to the World Bank.

Further evidence is seen in the fantastic work of many scientists carefully sourced and adapted by Will Steffen and others, such as shown in the great acceleration.

Additionally, the summary of UNEP’s review of environmental trends — GEO-5 (PDF), shows that many environmental trends are worsening. While science isn’t static and our understanding continuously develops, there is pretty irrefutable evidence that we are negatively affecting our ability to live well on Earth.

The opportunity: improving quality and relevance of corporate goals

However, there is an upside to all of this.

Great insight on approaches to get us back on track — that can enable corporations to set goals and targets that build value for the enterprise as well as society — was provided by panelists Kathrin Winkler from EMC, Andrew Winston of Winston Eco-Strategies and Nicole Labutong from the CDP.

It was exciting to see the interest and engagement from attendees, and it seems the time is right to ratchet up the quality and relevance of corporate goal setting. Done well, this will close this gap between the rhetoric and the reality of what we collectively need to ensure the success of our businesses in the markets of the next 20 years (not to mention keeping our life support system healthy).

We need to look at what the best science and evidence available tells us, then work backwards so that we set goals that will put us on track to live within our means in culturally and ethically acceptable ways. It requires a fundamental shift in our sophistication.

Winston took us through the headlines of his pivot goals research, conducted with Jeff Gowdy and the team at Vanderbilt University. This showed us that although 75 percent of Fortune 200 corporations have sustainability goals as of September, only 20 percent of these goals qualify as science- or ethics-equivalent goals (only a few are explicitly science-based), according to the pivot goals criteria.

In fact, only a handful of companies have multiple goals that hit the mark. Unilever stands out with 20 goals that fulfill the criteria.

How available and reliable is science for business?

Labutong focused in on a company’s fair shares of emissions reductions in order to reduce CO2 emissions in line with the science of the Intergovernmental Panel on Climate Change, specifically by following a sector-based decarbonization approach.

Science-based emissions targets aim to keep the planet within the widely accepted global goal of a 2 degree C temperature increase from pre-industrial levels.

Labutong explained more about the Science Based Targets initiative, a collaboration of the CDP, United Nations Global Compact, World Resources Institute and WWF Climate Savers. This provides free tools and guidance to help companies set emission reduction targets in line with climate science.

She also introduced a number of other methodologies and tools that companies can use for a range of impacts. Not only are there tools that are readily available, the CDP will incentivize companies to implement science based targets in 2016.

I recall hearing Herbert Giradet, an eminent environmentalist, speaking in my hometown of Swindon, U.K. He said that while CO2 is only one impact area, it is a great proxy for overall environmental impact; if we get this right, other environmental trends are likely to follow.

I think he is right. Carbon emissions are a great starting point — and one where business has the tools available to take action now.

‘Context-based’ goals and fusing science with strategy

Technology firm EMC Corporation is one example of a company that has worked to develop science-based goals. Winkler, chief sustainability officer of EMC, showed how climate science translates to reality for executives.

As Winkler neatly explained, there is more to science than the science itself. It is also about getting buy-in from your executives and presenting a business case that enables a company to stretch its time horizons into the real strategic zone — without creating a threat to business growth and better understood shorter term measures.

Involving a range of executive reviewers, including those most skeptical, not only helps address their concerns, but also importantly brings the variety of voices needed to fully frame the organization’s context.

EMC considered a range of sources for its carbon emissions targets and have established targets to 2050, as well as shorter-term targets to 2020 and the end of this year, 2015.

They evaluated a number of models including the Autodesk-developed C-FACT. These models do not penalize a company if it begins to contribute a greater proportional share of GDP (such as capturing market share), which was a concern for some when the idea was proposed.

Kathrin also suggested that calling this approach “context”-based targets may be more accurate, as science can only provide some of the basis for effective goal setting.

Following through

No shortage of other initiatives are out there to help organizations set more impactful and relevant corporate social responsibility goals.

Many organizations have been referring to principles to help guide their thinking, from the GRI content principles to the 10 principles of the United Nations Global Compact. The excellent and freely available open source Future Fit Framework provides a sound basis for 28 goals across nine impact areas.

Future-Fit Business Benchmark

The Future-Fit Business Benchmark initiative links 28 types of strategic goals.

Identifying the most material of these issues for your business — and then translating these issues these into a set of SMART (Specific, Measurable, Assignable, Relevant, Timebound) goals — was suggested as a sensible next step during the GreenBiz Forum 15 workshop.

As the rigor in measuring progress against a greater range of issues improves, businesses are faced with a number of follow-up questions, such as whether thresholds should be used (should workplace accidents be zero? Should female representation on the board be 50 percent?).

The general consensus was yes, thresholds should be clear. It is the very rare company which does not have a goal of zero workplace fatalities, for example.

Moving beyond explicit thresholds, what is a credible constant to derive a goal? Social dynamics where the science is informed by ethical, moral and cultural considerations are another big area of importance. While we are unlikely to jump to a clear consensus across all issues — and there undoubtedly will be some cultural variation — a number of themes emerged.

One idea was that if it is left to individual businesses, then differences in acceptable thresholds will proliferate. The UNEP’s forthcoming Making Environmental Reporting Important to All report discusses improvement opportunities for environmental reporting, and asks the question of whether it or other supranational organizations/collaborations, such as the Science Based Targets group, should determine thresholds and provide recommendations.

Kevin Rabinovitch, global director of sustainability at Mars, provided a simple and effective suggestion to test the quality of your science- or context-based goals: reverse the target or goal and see whether it sounds reasonable. For example, if you have a goal to reduce waste to landfill by 5 percent by 2020, flip the context of this goal and consider whether sending 95 percent of waste to landfill until 2020 is something you are comfortable with.

In reality, will we achieve true sustainability? The answer is likely not. However, I truly believe that we can make choices that can help develop our businesses, our society and reduce the draw on our resource base now and into the future.

Developing a vision of what our companies might look like and how we want them to operate in 2030 and beyond, with measures and targets to guide progress, is a great next step. Giving them a sound science basis and context can help shift corporate sustainability from rhetoric to a new level of sophistication that makes sense and drives innovation and future success.

This article was originally written by Dave Knight for Green Biz and can be found via this link – https://www.greenbiz.com/article/how-finally-take-science-based-goals-rhetoric-reality

5 Misconceptions About Sustainability Reporting Assurance 635 300 Dave Knight

5 Misconceptions About Sustainability Reporting Assurance

First, let’s clarify what assurance is.

In this context, assurance is a third-party review of the reliability of a sustainability or corporate responsibility report. It often includes the checking of the data and claims in these reports. Best practice also includes confirming the report focuses on the right things (material issues).

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The intention is to increase the clarity and trustworthiness of information, while improving the robustness of the methods used to gather it.

Assurance is what we are seeking to achieve, building stakeholder confidence and internal engagement by helping confirm that a report appropriately and reliably describes what’s happening within an organization.

However, because sustainability reporting is not yet a mature business practice, there are still misconceptions about the value assurance offers. Let’s take a look at five big ones:

1. Won’t assurance expose our vulnerabilities and turn off stakeholders?

This is an understandable — but unnecessary — concern for organizations that worry their data and systems won’t stand up to scrutiny.

Responding to sustainable development challenges and opportunities is a journey. As long as a company is making progress, it’s normal to have room for improvement. A good assurance process will reflect this journey.

Acknowledging that certain parts of the business or particular indicators are less developed than others demonstrates transparency. This will actually build stakeholders’ confidence and trust, rather than damage it.

2. Report assurance is just like auditing. We already verify our environmental data.

While auditing data is both valid and useful, it only covers part of the assurance spectrum.

Report assurance looks to confirm not only the validity of data but also an organization’s priorities. The process helps a company recognize whether or not it’s placing appropriate emphasis on what matters most to stakeholders—what is material.

More attention in terms of business strategy, decision-making and reporting can then be given to areas of greater materiality. This type of clarity, which is often combined with a risk and opportunity model, provides tremendous strategic value.

The best assurance processes mirror this thinking and place more emphasis on investigating the areas of higher materiality.

3. Broader report assurance is expensive. We don’t see the value.

Companies often spend large sums auditing their financial disclosures. As these companies are increasingly judged by more than just financial metrics, they will need to adopt similar practices and levels of assurance to ensure non-financial disclosures are just as accurate and reliable.

The management and reporting of sustainability activities is a key factor driving aspects of financial performance, making it both important and valuable. Furthermore, the scope of sustainability assurance services is variable, meaning it doesn’t have to be expensive.

A limited or moderate level assurance can be reasonably priced for the value provided.

4. Stakeholders don’t care about report assurance.

The recent Green Quadrant survey by Verdantix showed there were a range of drivers for commissioning assurance including giving confidence to internal stakeholders such as managers, board and the CEO.

Additionally, external stakeholders such as customers, NGOs and wider society often don’t trust business outright. The most recent Edelman Trust barometer for 2014 shows that only 54 percent of people in the U.S. trust business to do what is right.

Good quality reporting together with assurance helps build trust.

While some stakeholders don’t care specifically about assurance, they expect companies to manage and report on the things that do matter to them. The assurance process makes sure a company knows what those things are and provides a proxy for stakeholders concerns.

5. Very few companies are leveraging assurance in the United States. Why should we invest in it?

Assurance is increasingly being adopted to enhance business competitiveness and meet the changing expectations of society in the U.S. and abroad.

The 2013 KPMG survey of Corporate Responsibility Reporting showed steadily growing rates of assurance. Nearly 60 percent of the world’s largest 250 companies currently engage reporting assurance. We expect this trend to continue and for more sophisticated approaches to assurance to become commonplace in the U.S.

In certain sectors, industry bodies such as IPIECA (oil and gas) require assurance. And in others, like the Real Estate Investment Trust (REIT) sector, it’s quickly becoming the norm. In addition, many Indices and benchmarks award higher scores to those companies who assure their disclosures.

So, is it possible to provide 100 percent assurance that companies are performing exactly how they say and meeting the expectations of all their stakeholders?

Well … no, total assurance is not possible. However, a well-designed and executed assurance process can deliver significant value to organizations and their stakeholders. This, in turn, helps to professionalize companies’ efforts to play a key role in transitioning to a sustainable economy.

This article was originally written by Dave Knight for Sustainable Brands and can be found via this link – https://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/dave_knight/5_myths_about_sustainability_reporting

Context-Based Metrics Needed to Create Sustainability Value 635 300 Dave Knight

Context-Based Metrics Needed to Create Sustainability Value

Recently, DNV GL announced the results of our latest Tomorrow’s ValueTM Rating (TVR), a benchmark of global best practice in sustainability. For the 11th year in a row, we evaluated how well companies understand their risks and opportunities — and how prepared they are to create future business value through sustainable business practices.

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The TVR rating examines the sustainability practices of companies worldwide, analyzing how well companies have embedded sustainability in their core business models and strategies, how effectively they involve and manage stakeholder expectations, and if/how they use sustainability risks as a lever to drive innovation across the value chain. The analysis is done through the lens of five key measurement domains: strategy, engagement, governance, innovation and value chain.

This year while we are encouraged by great examples of companies’ approaches and performance, there are still significant gaps that we believe business must address in order to truly create long-term value both for business, our environment and society. For example, while our research shows that SMART targets are being set across key material sustainability issues, often they are either inconsistent or lacking in ambition. Additionally, in most cases they lack a connection to scientific research, and therefore the ultimate goal we are all trying to reach — decreasing our impacts on biodiversity, climate change, and society so we can truly live within our planetary boundaries.

However, select members of the TVR — Diageo, BASF and particularly 2014 TVR leader Unilever — stand out for their ambitious, SMART targets and sensible milestones. Unilever is attempting to radically decouple its growth from its impacts and has set a target of halving the environmental impact of its products by 2020 while still maintaining economic growth in that period. But we do not see this approach across the board in the companies we assessed in 2014.

The world’s top companies urgently need to establish new, science-based metrics for sustainability and develop a vision with firm commitments to achieve the necessary change to live within one planet. As the global TVR 2014 report states: “In line with increasing demands for transparency, companies will need to set and communicate metrics that are rooted in a scientific understanding of what our limits are and what we can do to stay within them.”

The State of Context-Based Sustainability

Today, many organizations express a commitment to sustainability, but their current performance, stated objectives and goals are often disassociated from the transition pathways suggested by sustainability principles and the supporting science.

The key challenge we face is to take the good intent and generally shared aspiration that sustainability is good for our planet, society and commerce and translate this into actions at an organizational level. These actions need to address the scaling up of performance improvements as well as the urgency and speed of change needed.

Increasing adoption of science-based goals will help organizations understand the real risks and opportunities facing their current business models.

Another key challenge companies face is aligning these goals to what is actually possible given resource and budget constraints, as well as what they feel comfortable committing publicly to their stakeholders. I recently spoke to Bill Baue, co-founder of the Sustainability Context Group, a global community of thought leaders and practitioners who advocate for Context-Based Sustainability. According to Baue:

“Currently companies are comparing year-on-year environmental and social performance for their own company, but what really matters is measuring yourself against real-world limits and thresholds. If we wish to be sustainable in our collective global impacts, we need to heed what science is telling us — not just for ourselves, but for the planet — as the line in the sand. In many ways we don’t have a choice. Science and science-based goals are a proxy for what our world requires. Science-based metrics demonstrate in many cases how far we are from a truly sustainable business model that exists within biophysical limits.” 

The good news is that more and more companies and stakeholders are recognizing the need for this shift and there has been an increase in the number of companies leveraging context-based approaches to evolve their sustainability strategies, goals and targets. For example, the process of aligning Ford’s GHG emissions reduction target to science has resulted in more aggressive targets than previously stated by the company. Additionally, Autodesk states that if all companies were to apply its GHG emission reduction strategy — C-FACT— we would be on a path to the reductions necessary to align to the IPCC targets.

Industry efforts to address context-based sustainability are also developing. For example, the WRI, CDP and WWF have launched the “Mind the Science, Mind the Gap”initiative that “allows companies to set credible, science-based GHG emissions reduction targets on a company-wide level — with as little effort as possible and consistent with the IPCC 2°C scenario.”

Collaborative Approaches Are Key

Context- and science-based goals may have to be considered at the industry or value chain level, because a company on its own might not be able to make sufficient change to its value chain independently.

This is not to say that corporate goals should not be challenging and that the responsibility should fall on stakeholders throughout the value chain. Companies need to work to understand the science- or context-based goal and then work back from this to come up with scalable short-term goals that are achievable and realistically bring in all parties necessary to achieve the long-term goal. This must also be supported with education and capacity building programs that ensure all players have an understanding of the opportunities these efforts provide and the potential challenges to be overcome.

The Journey Ahead — Sophisticated Approaches

Recent work by scientists at the Stockholm Resilience Centre showed that we already have exceeded three of the nine planetary boundaries within which we must remain for humans to thrive. While we all recognize that building a business which equally balances financial, ethical, environmental, and social aspects is a journey that does not happen overnight, this will always be a challenge, and it is not an excuse for inaction.

The 2014 TVR findings suggest that companies must become more sophisticated in their approaches to addressing key sustainability risks and opportunities. A strategy rooted in context-based metrics, goals and targets is one way of doing this. As we state in the TVR findings: It’s not necessarily about more measurement. It’s about better measurement, better targets and new ways to meet them.

This article was originally written by Dave Knight, for Sustainable Brands, when he led DNV GL’s USA Sustainability practice and can be found via this link – https://www.sustainablebrands.com/news_and_views/new_metrics/shyla_girvetz/context-based_metrics_needed_create_sustainability_value

Mastering Materiality 800 450 Dave Knight

Mastering Materiality

The concept of materiality is cropping up everywhere. The last few years have seen it enshrined in a number of standards and frameworks notably the Global Reporting Initiative Guidelines; the International Integrated Reporting Framework; the AA1000 Accountability Principles Standard and the Sustainability Accounting Standards Board. Not all define the concept in the same way however and there are widespread variations in its application and the value it can leverage.

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I wanted to reflect on an Agrion event I moderated earlier last week. The event is part of a series of live streamed discussions bringing together thought leaders, practitioners and interested parties, this time in San Francisco, to discuss topical issues in the corporate sustainability space. I was joined by Gwen Migita VP Sustainability & Community Affairs at Caesars Entertainment Corporation and Deb Martin the Stakeholder Engagement Manager at SASB to discuss how materiality can deliver strategic value.

So what learning came out of the event?

Materiality is not a new concept.
We reflected on the fact that this is not new. Materiality within sustainability management grew out of the realization in Europe over ten years ago that for sustainability to be taken seriously by business decision makers it needed to professionalize and talk the language of business. And in this case it meant that it learnt and borrowed from the accountancy and legal professions – what issues are disclosed in the mix of corporate information that may substantially alter the decision of a reasonable investor to invest in a company or not.

Varying, yet complimentary approaches to materiality
Having come over from Europe to live in the US seven months ago, it is interesting to see how fast the US is now taking this on board. Deb shared SASB’s vision of having a series of industry specific standards that define the material issues that will enable investment analysts to more easily compare performance, spot risks and highlight opportunities. It should foster competition in a way that improves the signals that guide a transition to a more sustainable economy. SASB is not hanging around, there are 80+ standards planned with 18 currently available for use and 26 in development over the last 16 months.

However the reasonable investor is not the only interested party and companies have to balance the interests of a wide range of stakeholder groups. Gwen shared the process behind Caesars determination of what issues are most material for the entertainment group. This included ranking the significance of a range of potential issues drawn from the GRI G4 guidelines and expanded to include issues of direct relevance to the sector such as responsible gaming. This was then added to a number, representing the influence on stakeholder assessments and decisions, to arrive at the overall materiality picture. In this case materiality is concerned with what could alter the decision of broader stakeholders. Caesars has to understand and respond to the expectations of many groups and it places more weight on the opinions of the stakeholders critical to its operations.

Embed materiality into your core business strategy for optimal benefit
Sustainability reports, SEC filings, and other disclosures are only a reflection of what is happening within an organization and how it considers its risk and opportunity profile. Getting the most value from materiality process depends on it being embedded into and informing core business strategy. The panel agreed that whilst this isn’t always happening, the silos are moving closer.

The IIRC framework for example, encourages organizations to map their material aspects across their value chain. Companies are also applying the concept at multiple levels. DNV GL is working with companies to explore materiality at a supply chain/commodity level and others, such as Rio Tinto, at corporate and regional levels. Conglomerates or portfolio investors may need to have a number of analyses to adequately understand what will drive value and present risks.

Present materiality outcomes in a way that speaks to your stakeholders
Examples of the way the information is presented were also shared.  Cisco, for example, presents its materiality process outcomes on a matrix which also shows the degree of influence or control it has over the issue. Until 2010, SAP presented its materiality complete with a slider control, which enabled the user to change the time when the materiality review was completed and track changes in issues and relevance across a number of years. It’s more recent approach uses business model filters and value drivers to focus in on those issues that really matter. Girvaudan, the French spice company and Nestlé use other visual guides to show how issues are trending.

How the leaders are leveraging materiality
Attendees at the event questioned whether these processes adequately represented the global sustainability context, in particular the scale of many environmental challenges and the speed of response required if we are to alter current trajectories. The panel reflected that there are some ways to do this but it is not generally easily achieved. For example, GRI expects reasonably estimable sustainability impacts are included through the consideration of the latest science or involvement of experts. Others are using ecosystem evaluation methods to improve their understanding of the financial implications. These are helping, but predicting the future is not an exact science.

Leading companies are leveraging their approaches beyond reporting. They are using them to consider not only the risks to their business but also the opportunities for revenue growth and sustainable innovation. They are using materiality in a dynamic way to feed into strategic decision making, enterprise risk management and sustainable innovation. They are applying the concept at multiple levels and focusing in on what it means for how they act and respond.

This article was originally written by Dave Knight, for Sustainable Brands, when he led DNV GL’s USA Sustainability practice and can be found via this link – https://purplechannelltd-public.sharepoint.com/Pages/Blog.aspx?Paged=TRUE&p_PublishedDate=20140508%2014%3A57%3A00&p_ID=19&PageFirstRow=11&&View=%7BB1126BAD-1836-4073-8CDA-8D77387EF356%7D

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