Are You Really Following?

?Good design can, at no cost, accomplish great things. Take your cup of Starbucks: If you add cream second, you need a stir stick—a piece of wood harvested from forests, manufactured and transported, packaged and distributed. But if you add cream before you pour in the coffee (a design solution) you suddenly don’t need a stir stick at all. You’ve replaced a material thing with intelligence; you’ve eliminated waste through thought. What an unbelievably compelling way to view our problems!

-Auden Schendler is the author of Getting Green Done

1889-90: global flu pandemic (1,000,000 dead)        

1890: American bison face extinction, likely less than 1000 animals (est 60,000,000 in 1491)

1891: Telluride, CO first community to receive AC supplied (hydro) electricity.

1892: Sierra Club starts (Henry Senger of Berkeley and John Muir).

1893: New Zealand becomes the first country to give women the right to vote.

1895: Gillette invents the first disposable razor.

1896: Svante Arrhenius, a Swedish chemist, calculates how changes in levels of atmospheric carbon dioxide could alter temperature through the greenhouse effect (Nobel Laureate 1903); Hamilton, ON and Buffalo, NY receive transmitted AC (hydro) electric power (from DeCew Falls and Niagara Falls respectively – ends the first ‘standards war’ in favor of AC transmission over DC); first modern Olympics.

1898: Gifford Pinchot, US Secretary of Interior encourages ‘wise use’.

1899: Thorstein Veblen coins the term conspicuous consumption.

Fast forward to 2019        

Storms were strengthening, carbon emissions were growing, air & ocean temperatures were changing, seas were rising, and ice was melting in April of 2019. Was it all due to "conspicuous consumption"? Or was there a bigger foe lurking in the shadows that we were completely unaware of?

Endless Growth appears to have been a foe        

But, in May of 2019, I had the same question as The Guardian        

Well, one thing was clear that the ‘new economics’ argued that it is time to acknowledge that the state must play the central role in marshaling a response to looming systemic environmental shocks. The vision: "a new relationship between the state, local communities, and nature aligned behind a more holistic notion of progress than gross domestic product (GDP)".

So, what did we come up with?

• SDG (Sustainable Development Goals)
• Paris Agreement
• Greenhouse Gas Protocol
• UN Global Compact
• Corporate Sustainability Reporting Directive (CSRD)
• Climate Disclosure Standards Board (CDSB)
• IR (Integrated Reporting)
• Mandatory Climate Risk Reporting (alignment to TCFD)
• Principles for Responsible Investments (PRI)
• EU Taxonomy Regulation
• Sustainable Financial Disclosure Regulations (SFDR)
• ESG (Environmental Social & Governance Reporting)
• Impact Investing

But, did that work?        

Here's how it worked for businesses: Companies self-report on how environmentally responsible they are. Then there are third-party UN agencies or other non-governmental organizations (NGOs) that will score and analyze corporations depending on their carbon production. Some ESG data sources will combine third-party ratings, NGO results, and self-reported information, discounting the self-reported information and providing a more objective analysis where the third-party ratings do not match the self-reported information.

And it was then that the term "greenwashing" was coined! But, greenwashing was never only an ethical or moral issue; it was always a systemic "reporting standards" issue, involving both financial and non-financial data (please get that straight). It's a little disingenuous to criticize businesses for hypocrisy when they have to adhere to a political system.

At the same time, the greatest game-changing invention in the entire corporate sector was "design transformation," which none of us even noticed. The design-focused thinking allowed us to find a dynamic balance between the needs and expectations of all stakeholders with reference to the three usual dimensions of CSR (economic, environmental, and social).

And now you could question        

Frankly, there was and is no answer to that question! However, we were aware of two major issues that were preventing us from incorporating "accountability" into "sustainability":

1. At the core of the problem is how ESG ratings, offered by rating firms such as MSCI and Sustainalytics, are computed. Contrary to what many investors think, most ratings don't have anything to do with actual corporate responsibility as it relates to ESG factors. Instead, what they measure is the degree to which a company’s economic value is at risk due to ESG factors.
2. The second problem involves how rating firms assign weights to each ESG factor. It is subject to human judgment and inconsistent access to ESG information, making for tremendous variability across raters. But more detrimentally, it permits companies to achieve high composite scores even if they cause significant harm to one or more stakeholders but do well on all other parameters.
3. Take the case of Pepsi and Coca-Cola. Both companies get high ESG scores from the biggest rating firms. They are also typically amongst the largest holdings for ESG funds, largely because they rank high on parameters such as corporate governance and greenhouse gas emissions. However, their core businesses involve the manufacturing and marketing of addictive products that are a major cause of diabetes, obesity, and early mortality. Pepsi and Coke leverage their power to prevent taxes and regulation on their businesses and fund large amounts of research to divert attention away from the health impact of their products. With the cost of diabetes now over $300 billion annually in the United States alone, the human and economic harm caused by these companies may outweigh their economic contribution.?

Last 7 days: COP26        

Since Thorstein Veblen invented the phrase conspicuous consumerism in 1899, #COP26 has been the most anticipated development of all time. But, why did it matter so much?

Because:

• Positive developments can trigger an upward spiral for a sustainable and just transition
• New business models apply, and they are pushing economic action
• All this can only lead to a 1.5°C world if it is the starting phase of exponential development?

Okay then, what did we get done at this event?

1. Trees: Leaders from more than 100 world countries, representing about 85% of the world's forests, promised to stop deforestation by 2030.
2. Methane: A scheme to cut 30% of current methane emissions by 2030 has been agreed upon by more than 100 countries.
3. Coal: More than 40 countries - which include major coal users including Poland, Vietnam, and Chile - agreed to shift away from coal.
4. Money: Some 450 financial organizations, who between them control $130tn, agreed to back "clean" technology, such as renewable energy, and direct finance away from fossil fuel-burning industries.

In the last seven days, global Twitter dialogues (seen above) suggest that the time has come for leaders, governments, organizations, and institutions to join together on common ground, or else our humanity and existence will be jeopardized.

What matters most for the companies?        

With the IFRS Foundation's much-anticipated news that it is forming a new International Sustainability Standards Board, efforts to produce trustworthy, uniform sustainability reporting took a big step ahead.

The IFRS Foundation has devised a concept for uniform disclosures by establishing the ISSB to function as a single worldwide standard-setter in collaboration with the IASB. The Association of International Certified Professional Accountants applauds this statement as a step toward building global sustainability standards that are uniform, dependable, and comprehensive, resulting in purposeful, resilient enterprises and a more sustainable future.

But, if that's the case, why doesn't it appear that people are aware of the ground/fundamental truths behind sustainability concerns and opportunities?        

Maybe because

Or maybe because we didn't learn the right approach/mindset to tackle our present-day problems. Isabel Rimanoczy in her book "The Sustainability Mindset Principles" highlights that:

• While analytical thinking (which is prevalent in Western countries) has its advantages, it tends to overlook a holistic perspective and the linkages of seemingly unconnected pieces, cycles, and bigger relationships.
• We currently face major health and environmental problems as a result of paradigms established, adopted, and maintained for at least 50 years (mainly economic) patterns that neglected the bigger picture of the land, water, and air.
• A focus on the rational, such as energy production and consumption at any cost, precludes the emotional consequences, like social and environmental implications of climate change.
• Rimanoczy also advocates for more "personal interaction" rather than a profit-driven standstill. She is correct in posing such questions in the light of catastrophic climate change. "How does this affect me?" "How do you think it makes me feel?" People should be able to inquire about their role in issues and solutions if data is linked to emotional rather than automatic responses. Her thesis appears to be that the social and natural worlds should be seen as one, not as two distinct entities and that they should be considered as part of one's self-identity.?

Finally, what does the future look like?        

Maybe, it will be free of Capital and replaced with Impact!

Or Maybe, a more globally connected world!

Regardless, we do know that "human emotions" will continue to function in the same way in the future, but with different inputs. And we'll still want to "grow," but perhaps "not indefinitely this time"!