In part 1 of this 2-part series, we broke the word sustainability down into its parts. The word ‘sustain’ is a verb meaning to support, hold, or bear up from below. This is something we actively do - not something we are or something we have. When we shift that word to a noun - sustainability - it takes on a whole different meaning and carries a political vibe. Foundational and supportive transforms from functional and necessary to polarizing and subjective. That’s the crossroads that needs exploration.

With its roots dating back to the 60’s and 70’s, ESG reporting as we know it today began to take shape in the 2000’s. The United Nations launched Global Compact which urged companies to blend strategy and operations around universal principles such as human rights, labor, environment, and anti-corruption. Then came frameworks including the Global Reporting Initiative (GRI), the Sustainable Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC), an alphabet soup of acronyms followed along with the regulation.

We don’t have to look much further than RTO (return to office) to see that mandates don’t necessarily work - especially if the culture feels forced and uncomfortable. A lot of ESG feels forced and uncomfortable at a time when humanity wants choice and flexibility. That’s a whole different story.

Back to ESG.

Shifting the reporting from a politically charged issue to one broadly and enthusiastically embraced by organizations and individuals will be a big lift. Even individuals who strongly resist the concept of climate change agree there is a social responsibility to keep the Earth green (or blue). The only exposure we have to the reporting/regulation is from the news - where it’s highly sensationalized to fit the viewer's profile.

What if we had a clearer regulation framework? What if we had a database of ingredients, whereby the company could create its own menu? I’m not suggesting they could pick only what they wanted to report, but perhaps they could choose their own roadmap. For example, carbon. Carbon sequestration, embedded carbon, operational carbon - there’s so much malalignment in qualifying, let alone quantifying carbon emissions. So much so, that companies are forced to buy offsets to meet requirements. That just feels wrong. Yet, on the other side - impact avoidance - there are little to no reporting methods. In other words, choosing not to (avoiding) isn’t rewarded as much as building and buying offsets. That doesn’t feel right either.

Something is off.

We need to develop comprehensive, yet flexible, regulations around building standards. Not a fancy certification that we hang on the wall to say we followed a ‘recognizable path.’ We need to lead from the front here - not follow from the back. We already tried that - it’s not working.

How? Ask the Project Managers who inherit the projects - they’re being asked to get blood from the turnip after they inherit most of the limitations. They need to be involved more with site selection - more with strategy- so they can help inform the process of how those decisions will impact the outcome.

Show me the money!

There have to be some financial incentives at play. Change costs money and requires a significant shift in resources. With risk and supply chain leading the charge in the concern category, perhaps lowering insurance premiums with “Proof-of” protocols is an option. There are a host of blockchain technologies with integrated smart contracts that could validate and verify it. How about a new category of loans? BlackRock has progressive investment vehicles right now in their low-carbon transition products and their Bitcoin ETF - IBIT. Preferential loan terms for businesses who seek better outcomes through transparency seem like a layup. The formation and entity of the businesses should be taken into consideration. B-Corps movement has achieved explosive growth with almost 8,000 participating companies in 160 industries and 93 countries all while successfully maintaining their socially conscious values. There is a different path - leaning into it with an open mind and a curious disposition is important.

Where from here?

Awareness and education for those who can afford the slow approach and innovation and creativity for those who can’t. Training programs with educational initiatives and access to better information is a great start. Young, ambitious companies need to incorporate this into the fabric of their hiring practice. Hire the curious. Create a culture of lifelong learning. Seek the explorers not the experts. Use compasses not maps. Something as simple as workshop programming and format has a huge impact on the learning experience. Consider avoiding the ‘Sage-on-the-Stage” and incorporating the “Guide-on-the-Side.” We like to be taught, not told.

Then what?

Recognize participation, incentivize through positive reinforcement, and tell your story. The ideation process is only as good as how you end up pulling it off! Whitepapers, case studies, and benchmarks for the analytic side and awards and recognition for outstanding ESG achievements.

We can transition a compliance obligation into an intentional, transparent, and willful process - but we need creative minds and fresh energy…..one could call it renewable energy 🤣. If we make it about being a pro-planet business, and we start using ‘sustainable’ as the baseline rather than the goal, we have a chance to change the world. 🌎🌱

Song for this one? 👇🏼👇🏼