Where to from here?

There’s good news and bad news.

The good news is that, after too many decades of stubbornly pulling against the rope and making up excuses, the horse is being led to water. The bad news is that, the horse is not drinking.

The latest EY Global ‘Sustainable Value Study’ surveyed 520 chief sustainability officers (or equivalent roles) globally about their commitment to climate action and how their organisations are planning to meet net zero targets. The study shows that progress is slowing globally, at a time when climate action needs to accelerate if we are to meet the?1.5°C goal set out in the Paris Agreement.

As mentioned in my last post – and only remains increasingly true – we’re seeing some growing vexation from those who’ve worked so hard for so long to get their own organisations to “get it” when it comes to sustainability transformation, strategy-setting and reporting, to then see the responsible and accountable respective parts of the business failing to incorporate the necessary business changes required. In short, what some would say is the holy grail of sustainability transformation – getting those whose job it is to procure the stuff / count the widgets / build the portfolio / set the contract terms to build sustainable parameters and opportunities into those respective tasks, those people either don’t have the time, or the know-how (or most often, either) to close that gap.

I come again for the umpteenth time to the analogy of health and safety systemic change; about eight years back. In 2016, New Zealand saw the introduction of the Health and Safety at Work Act (2015) which significantly changed how directors can be personally liable for a health and safety failing. Under the Act, directors and other officers are now directly liable if they fail to exercise due diligence to ensure their organisation complies with the Act. The penalty for breaching these obligations is a fine of up to $600,000 and/or imprisonment of up to five years (for individuals). It’s these scary numbers that made directors sit up and take notice: seemingly overnight, everyone in the business was taking health and safety far more seriously. Leadership commitment (undoubtedly spurred-on by fear of consequence) quickly flowed through into behavioural changes, trainings, and personal leadership commitments. Importantly, no-one was asking “why, though?” anymore – everyone got (and still gets) that health and safety at work is everyone’s responsibility,? and that the chain of accountability and consequence is only as strong as its weakest link.

The new climate-related disclosure legislation in New Zealand, and that echoed in Australia by the IFRS S2 standard, requires integrated reporting of climate-related risks and opportunities in a way that enables existing and potential investors to assess the merits of how entities are considering climate-related risks and opportunities, and then make informed decisions based on those assessments. As I heard it recently described: why you should “pick me”, and fund my decarb transition, rather than others’.

This mandatory legislation is starting to have a similar effect as the Heath and Safety legislation did back in 2016: Board directors – spurred by significant penalties for defective disclosure – are encouraging CEOs and C-suite to seek reassurance around being on the right track toward compliance. The Executive, in turn, are turning to the CSO / Head of Sustainability / Risk team / whoever’s carrying the can, and asking for an indication that they are – or can be – on the right path in the right timeframe. The rubber is hitting the road. It’s just that – partly due to this fear of non-compliance – that path is a lot narrower now that it should be. In short, it could be supposed that the very helpful abundance of transparent and highly-sophisticated reporting frameworks have shone a very bright green light upon those who’ve effectively set targets, and not met them with sufficient action. And instead of stepping up to the challenge, some have instead chosen just to remove the ambition, the targets, and the pathways. Nothing ventured, nothing gained.

The EY Global Sustainable Value Study, for instance, shows:

• A decline in the reduction of GHG emissions from a median of 30% to 20%
• A delay in the target year to achieve climate ambitions from a median of 2036 to 2050
• A decrease in the average number of actions companies have completed as part of their climate agenda from 10 to just four (out of 32 actions benchmarked).

There are likely to be as many reasons behind this step-back as there are personalities around the table where the decisions are made. But, like any lifelong climate change professional, I choose to be stubbornly optimistic. Mostly because – as with every single thing in sustainability – there is always an “it depends”. I do not accept the generalisation that all CSOs everywhere are chickening out. I see evidence of leaning-in to the very hard stuff regularly enough to keep me from despairing. Case in point are those transformational leaders (Rachel Depree, Joanna Silver, Belinda van Eindhoven, Kate Beddoe, Dawn Baggaley, Rachel Brown, Florence van Dyke, Carolyn Mortland, Lou Aitken, Abbie Reynolds, Louise Tong, Kate van Praagh, Kiri Hannifan ….I’m looking at you!) who, through their own tenacity and just raw excellence, have a seat at the table, and are treated as having an equal influence on the future direction of the enterprise as anyone else there. Those who see climate, sustainability, wellbeing, nature, resource use, cultural competency, and resilient value chains, as all underlying factors in the resilience of the people and the company (no people = no company / no planet = no people = no company) are finally getting heard. As a recent HBR Article put it:? “The CSO role is finally becoming strategic, as the focus moves from feel-good corporate social responsibility (or “stealth PR”) to hard-nosed sustainable value creation.”

There are three common factors I see in these leading firms:

1. They get that organisational strategies and sustainability strategies are the same thing, and that planning-in long-term resilience is a smart business decision.
2. They get that it’s not the CSO’s job to do the sustainability – any more than it’s the HSSE Manager’s job to do the health and safety, or the HR lead’s job to “do the D&I”. It’s everyone’s.
3. They relate to collaboration as an opportunity to uncover efficiencies, rather than as another layer of complexity.

And this opportunity pays – the EY Study found that companies taking the most action to address climate change are 1.8 times more likely to report higher-than-expected financial value from their climate initiatives, compared to those taking the least action. More and more we see not only an investor aversion to unsustainable portfolios, but with geopolitical unrest and instability, non-renewable energy and infrastructure is making less financial – and ecological – sense. ?Those leaders who recognise this, and are managing to lead the C-suite horse to the more sustainable water, recognise that a resilient value chain goes further than the direct procurement team or account book. The brilliant 2023 Westpac Sustainability Report recognises that value = financial, human, and environmental resilience and sustainability. Much kudos to any report that “acknowledges the intersection between climate change, natural capital and human rights and the need to consider them collectively. More detail can be found in Westpac Group's Climate Change, Human Rights and Natural Capital Position Statements.” This is what leadership looks like.

I had a chat the other day with a colleague about whether politics were a leading indicator of policy. (The context being, how on earth are we going to make any ground on meaningful and effective climate change policy, when the world is attacking each other and babies are being bombed?) Of course politics begets ideologically-aligned policies. But I would attest that politics (in terms of picking your side and voting them in) is a lagging indicator of divisiveness. The positional, adversative, tribal nature of the world today has been leveraged by those who thrive on ego over empathy; power over compassion. So we vote in our tribe. And they make short-term, ego-based, self-serving decisions that you can bet are not in the interests of the whole; and especially not in the interests of our warming, drowning, curling-up-and-dying, suffocating planet.

So – where to from here? In the eternal words of another groundswell movement: “Nevertheless, she persisted”. Those smart people who have a seat at the big table due to their smarts, results, and tenacity, have done so because they’ve persisted. Persisted in spite of constantly shifting policy contexts; in spite of unhelpful (and in some cases downright adverse) political contexts; despite regulatory uncertainty; despite pandemics, despite recessions, despite budget cuts, despite apathy, complexity, and reputational risk. These are the leaders who lean in. And, instead of throwing up their hands and bemoaning all the obstructions coming their way, see the opportunities. The opportunity to overlay their nature policy response over their climate response; to measure their scope 3 emissions alongside the human rights risks in their supply chains. To recognise that there is no climate change risk that does not also impact nature, cultures, and people. ?

Suspend for a moment the boggling complexity of how hard tackling climate change is, let alone transformational behaviour change, let alone scenario modelling. Put aside overlapping complex regulations and how many you might be captured by. Hold lightly dealing with modern slavery on top of emissions accounting on top of nature preservation on top of cultural competency. Where to from here is recognising it’s all the same thing. It’s all tough, intractable, multifarious, wicked, and desperately important.

Nevertheless – persist.

Rachel Depree Joanna Silver Belinda van Eyndhoven Kate van Praagh Kate Beddoe Dawn Baggaley Rachel Brown ONZM (She/Her) Florence Van Dyke Carolyn Mortland Abbie Reynolds Louise Tong Louise Aitken Abbie Reynolds Kiri Hannifin Pip Best Andrea Von Meg Fricke Tanya McKenna Adam Carrel Katy Myers Madeleine Deacon Matt Scott Billie Rathbone Sofia Luz Kate Nicholl Skatt?ng Alexandra Banks

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