In The Waves, I shared our Sustainability Capability Spectrum. It shows how companies deliver more value as they expand their range of capability and action at their Sustainability Intersect. The Waves generally elicits a good discussion – even online, thanks to the real-time feedback of Mentimeter. A Cheshire cat kind of point we make about The Waves is that ‘you are where you are’. And where you are is fine – unless you want to be somewhere else. It’s not for a consultant to tell you what capabilities you need.
Being honest about your range of capability is more useful than trying to talk up your game in the absence of evidence. Obvious point, but one lost on many corporates and all brand agencies. Scan the integrated reports of the Top 100 on the JSE to see how many companies claim to be ‘Creating Shared Value’ (what I call Profit-Enabled Impact at scale) without much to show for it.
A second point, also obvious, is that focusing on Profit-Enabled Impact doesn’t mean you no longer manage ESG risk. Companies do well to develop the ability to protect and create value at their intersect simultaneously. The actual capabilities are revealed in time, but in general companies need different capabilities to protect, create or enable value. In The 2% Company, practitioners from the BCG Henderson Institute write about the tiny fraction of companies that excel at exploration and exploitation simultaneously. They are not talking about Sustainability, but the underlying point is the same:
Being excellent at both exploration (new ideas and innovation) and exploitation (operational proficiency and efficiency) simultaneously is difficult because these activities are contradictory; they pull companies in different directions. They require different skills, different performance management, and an ability to drive success with different time perspectives.
This helps to explain why companies struggle to place the Sustainability function within their organisational structure. For them, Sustainability is either ticking the box to protect value (putting the function into safety, human resources, finance, risk management or corporate affairs) or its about innovating to create value (putting it into strategy, R&D or sometimes the CEO’s office). Of course, Sustainability isn’t a function, it’s cross-functional and a highly distributed effort. The overwhelming desire to meet investor ESG expectations is likely to keep ‘sustainability teams’ far from the innovation effort, improving their proficiency in ESG disclosure and not much beyond.
Most of us got into the job to make a difference. Then we discovered that we were not welcome in those parts of the organisation that held the greatest potential to make that difference. Our marginalisation may have been implicit, explicit or in-between. At some stage, the cognitive dissonance got too much and we opted to leave rather than compress ourselves into mindless cycles of ESG reporting. (Perhaps not entirely mindless, but you know what I mean.) One upside of the present investor awakening is that practitioners are getting desperate calls from parts of the business that have effectively held them at bay since they started in the job. I think this is an opportunity. And don’t take it personally when they insinuate that you should have been doing all along what they are asking you to do now. I know you’ve been telling them exactly this for the better part of a decade…
Sustainability requires a particular kind of agility. When we’re protecting our business from ESG risk, we’re keeping the problem away. When we innovate to scale Profit-Enabled Impact, we embrace the problem. We access novel insights by acknowledging our complicity in creating it. At that point, we connect and are open to change. This is a dangerous place. We walk a fine line between system persistence (‘we always did it like this’) and change (because if we don’t, we die). Whether we are rewiring our neural pathways or catalysing new processes for our organisation, a phase shift takes energy. And we’ve just noticed that our reserves are running low…
Where does the energy come from? This touches on what my long-time mentor and friend Niall Campbell calls ‘a Special Kind of Fitness’. He uses it in a personal context which I’ll write about some day (here’s a clue), but I think the point translates to organisations. The energy we need to make the shift is located within the Intersect itself: that deep complex of socio-environmental relations that determines what matters and that ultimately defines who we are. As practitioners or organisations, accessing this energy requires us to open to a depth of relationship – a new intimacy – with people, place and nature. That’s the Special Kind of Fitness Niall is speaking about. It is terrifying and thrilling beyond measure. And it returns us to where we belong.
In all honesty, I am not sure we’re going to make it. But you know that old story about the person throwing the starfish, one by one, back into the sea…
Banner image cropped from a photo by Gleison Bancolita on Unsplash