'To truly embed sustainability, businesses must redefine value itself'
EXCLUSIVE: As ever more companies strive for sustainability which stretches beyond the confines of a separate CSR department, they will need to explore ways to define success beyond monetary value.
That is according to The Capitals Coalition’s chief executive Mark Gough, whose mission is to help support more than 350 organisations as they attempt to integrate their positive and negative impacts on people and the planet with their financial approach.
Support for the concepts of natural and social capital thinking has been growing exponentially in recent years, amid a backdrop of growing interest in plastics, climate change and biodiversity (probably in that order, both in time and focus terms). Such concepts aim to illuminate hidden value provided by nature and humanity and how this can be expressed in qualitative, quantitative or monetary terms.
At time same time, ever more businesses are beginning to explore or invest in a “post-CSR” model of sustainability, in which responsibility is spread across all business functions rather than being contained to a standalone team. Unilever, for example, is designing its long-term sustainability goals around the insights of its 172,000 staff. Henkel has said it would love all staff to be ‘sustainability ambassadors’, driving progress both within the company and in their communities. Patagonia has claimed that CSR departments are not broadly compatible with action on the climate emergency.
For Gough, who regularly collaborates with representatives from business, government and the general public alike, the fact that these two trends have run parallel to one another is no coincidence.
“The only way we are going to be able to achieve global climate targets is by thinking systemically,” Gough told edie ahead of his appearance at the 2020 Sustainability Leaders Forum (scroll down for details).
“Once you start thinking using capitals, you realise that you’ve not only got an impact, but a dependency as well. This is a real lightbulb moment for many senior business leaders. It changes the dialogue in a way that you have to think about nature and society first thing on a Monday morning, then in every decision you make through the week. You can’t approach the issue as a side-CSR project; it becomes part of the core business.”
Metrics, miscalculations and miscommunications
In a survey of the UK’s 100 largest companies earlier this year, two-thirds said they planned to include environmental risks in their annual financial or combined report within the next 12 months. And in the policy space, the Capitals Coalition has recorded 100 governments globally making pledges to include environmental or social metrics in their accounting processes – including the UK, which is leading a major global review into the economic value of biodiversity.
This deluge of interest has been visible to the Capitals Coalition, which has now circulated more than 75,000 copies of its guidance globally and received regular website visits from more than 90% of countries globally.
Indeed, it would be easy to assume the bulk of the work here is done.
But, according to Gough, the majority of the companies the Capitals Coalition works with directly are still “at an early or even embryonic stage” of shifting to a new model of value.
Gough detailed several factors contributing to slow progress in taking capitals thinking from ideology to actuality, all underpinned by the fact that economic systems, to date, have not assigned value to the resources and systems upon which humanity depends.
Among the barriers the Capitals Coalition’s partners have bemoaned, Gough explained, are a lack of data and materiality metrics; poor economic policy support; and business resources already being too thinly spread to justify a standalone, internal project.
Corporates also tend to be adverse, he added, to investing in work which “exposes holes in their business models and mess in their back yards”.
Of course, there are some embracing the need for change beyond the incremental, in a bid to reap a share of the $12trn (£9.3trn) of value which researchers believe bold action across all areas of sustainable development could create. Several carmakers are shifting to all-electric portfolios; fashion brands are increasingly betting on resale and repair; a handful of firms are aiming to sequester more carbon they emit. But for Gough, this is the exception rather than the rule.
“I think the statement ‘if we measure things, we manage them’, is complete rubbish,” he summarised. “If you measure things and don’t act on the numbers because you’re not assigning value, you’re ignoring context.”
Birds of a feather…
In the absence of a silver bullet, what would Gough – who, prior to leading the collaboration that delivered the Natural Capital Protocol, held green roles at the likes of Reed Elsevier and The Crown Estate – recommend?
His message is one repeatedly shared by sustainability leaders from organisations of all sizes and sectors, and in all locations: collaboration.
The Capitals Coalition notably takes the view that all aspects of human activity are interconnected and need to be broadly aligned both to spark systemic change and to sustain the “new normal” for an extended period.
“Simply leading with business solutions will lead to NGOs turning around and saying not enough is being done, and simply leading with government solutions means businesses will think change is being forced upon them,” Gough said. “The trick is seeing all of these actors connect, which is like seeing the wood for the trees.
“Moreover, if we all have one voice on this, surely we can have a much bigger impact than if we were separate.”
Gough highlighted the fact that many of the recent climate protest movements have been borne from the fact that citizens feel there is no other option left, after repeatedly not receiving the support they wanted from governments and businesses, as a “case-in-point” example of the fact that change must now be driven from all angles.
But he was keen to emphasise that all the systems thinking in the world could not predict or bring about this alignment with 100% certainty. He pointed to Blue Planet 2 as a “magic” moment which “moved the conversation [on ocean plastics] forwards by 20 years almost overnight”.
While plastics are undeniably easier to comprehend than entire global socioeconomic systems, amid a backdrop of global climate strikes, ‘nature emergency’ declarations and transparency through digitisation, there is a general feeling that an ‘Attenborough moment’ for broader thinking is coming. The challenge now is catalysing the spark and making sure it doesn’t burn out.
The Capitals Coalition at edie’s Sustainability Leaders Forum 2020
The Capitals Coalition’s chief executive Mark Gough will be appearing at day one of edie's Sustainability Leaders Forum 2020, to co-deliver a session on re-writing business plans to respond to the climate emergency.
During the two-day event at London's Business Design Centre on 4 & 5 February, some of the biggest companies, individuals and organisations championing sustainability will gather to discuss the future of sustainable business in an age of climate activism and net-zero legislation.
The flagship, multi-award-winning event features keynotes speakers including former President of Ireland Mary Robinson; Rebecca Marmot, Unilever CSO; Gilbert Ghostine, Firmenich CEO; Tom Szaky, TerraCycle CEO, plus directors and senior managers from Pret-A-Manger, Interface, Vattenfall, John Lewis, Taylor Wimpey, Aviva, Pernod Ricard, LEGO Group, M&S, Diageo, Tesco, WSP, BASF, Mondelēz and more. For details and to register, visit: https://event.edie.net/forum/