The big ESG pushback is sparking useful self-reflection in the Sustainability field. Here’s a view on the evolution of our field since its formal inception in the nineties. It applies Dave Snowden’s Flexuous Curves framework and ‘back-of-the-napkin’ sketch to the paradigms informing Sustainability practice. Flexuous Curves brings together ideas like Apex Predator, Keystone theory and Moore’s Chasm in the product space. It shows how something novel emerges and gains traction with those frustrated by the dominant paradigm.
Sustainability practice initially focused on doing less bad. Companies leading the charge had more to worry about: BP, Shell, Dow, Du Pont. In 1995, Shell’s Brent Spar incident epitomised society’s frustration with the harm reduction approach as the company was widely considered to be a Sustainability leader. This is my marker for the start of the new ‘Sustainability integration’ paradigm. Around that time I started my first job as Sustainability manager for Nissan South Africa, so much of my career has focused on this challenge.
The integration era brought new Sustainability leaders, including Unilever, M&S, GE and Natura. But enthusiasm for a new approach is difficult to maintain. In this case, most people are still grappling with what Sustainability means; most consultants are still promoting what their current tools are designed to fix; etc. So, we see the adoption curve dropping down into the classic ‘Moore’s Chasm’. Around this time the branding agencies embarked on an all-out embrace of the marketing opportunity in ‘good and green’. Goodness pushed the movement into the values (rather than value) space, with many executives assuming that trade-offs were required on their profit margin. For many years to come, this would impact companies’ ability to see Sustainability as a strategic opportunity as well as a risk.
In 2010, we saw BP’s Deepwater Horizon oil spill. I’ve placed that to mark what Snowden calls the ‘last chance saloon’ for the harm reduction era, although the 2008/9 global financial crash had already done the heavy lifting. At this stage, it is finally clear to everyone that something is needed beyond harm reduction. This coincided with Porter and Kramer’s (2011) article on Creating Shared Value, with field politics spiking in its wake. You can see why: Sustainability practitioners had started exploring the concept well before Porter and Kramer scooped the brand in Harvard Business Review, but much of that energy was focused on addressing what was holding the movement back.
Within a few years, the mainstream began to align behind the era of integration, driving a new upward curve. Impacts rippled across conference titles, guidance documents and consultants’ service offerings. Organisations still clinging to the old compliance era now risked oblivion as capital began to find its feet in the integration movement. Enter early stage taxonomies for sustainable investment. Here, Snowden makes a critical point: “The dominant player does not fail because they were incompetent, but because they were too competent in the old paradigm and that very competence means the inattentional blindness is writ large into the very fabric of the organisation.”
The <IR> Framework published by the International Integrated Reporting Council (IIRC) in 2013 was another key development at this time. Nearly a decade later, the IIRC would join with the Sustainability Accounting Standards Board (SASB) to become known as the Value Reporting Foundation. This set the stage for mainstream pushback against the greenwash that flowed from the marketing embrace.
In their book All In: The Future of Business Leadership (2018), Grayson, Coulter and Lee see the purpose-led business as another era. To my mind, purpose-led approaches are still in pursuit of strategic integration, they just focus on the opportunity within the risk. Snowden sees purpose as a fad. I initially disagreed but now I’m not so sure. Either way, I still see it as part of the integration era. I’ve been working on how to get companies beyond a singular focus on ESG risk for ten years and my Profit-Enabled Impact patterns are finally helping our clients grapple with opportunities in a real way. I am hoping that PEI patterns will make it easier for late adopters to move more quickly on integration too.
Which brings us to today. Spurred by the pandemic, the regenerative era has arrived in the interim and I’ll let you do the word searches to validate that. Suitably forewarned, we can expect the chasm to be wide and deep. The stakes are higher now and this will reflect in the dynamics. Mirroring the brand agencies an era ago, the investors have fully hopped on board and this makes a difference. Our challenge now is that most of the players in the ESG investment space are still prioritising data flows that reflect the harm reduction and early stage integration (i.e risk or pre-purpose) eras. One reason is that it’s easier to standardise risk across sectors than to focus on how companies innovate to address them. Standardisation makes comparison possible and it lets machines do the job. (Along with climate tunnel vision in the global North, this is what I lose sleep over.)
Although the current ESG pushback has clear political overtones, some form of resistance was inevitable because the investor approach is not taking sufficient account of where the bigger system is headed. In other words, ESG analytics are currently limited by the assumption that what worked in the past (a dogged focus on short term risk reinforced by the discount rate and accelerated by digital valuation models) will work in the future. Once (or if) enough investors get over that assumption, things will really get interesting.
So, although regenerative business is a popular idea and will make it into brand statements and media claims, I think most companies are far from coming to terms with what it means in practice. Sustainability veteran Jonathon Porritt bemoaned this point a year ago in his blog Regeneration Made Real. Quoting Snowden again: “A general strategy to get [across the chasm] with an upwards trajectory is what I call a symbiotic strategy in which the novel capability is made an apparently insignificant additional aspect of convention…”.
What might a symbiotic strategy look like for your organisation or your approach as a practitioner?
The Flexuous Curves sketch is informed by: https://www.aglx.com/evolving-naval-safety-an-apex-predator-approach/; Grayson, Coulter & Lee (2018 ) All In: The Future of Business Leadership and Volans (2013) Project Breakthrough. Volan remains a go-to sources for smart thinking in this field.