One of Dave Snowden’s three basic rules for knowledge managers is: We can always know more than we can say, and can say more than we can write down. I’ve had an image of Incite’s overall approach to Sustainability integration in my mind for a while. I finally wrote it down at the request of a client. True to my promise to share our IP (CC BY-SA) on this site, here it is with a little preface.

Sustainability refers to an organisation’s overall response to constraints at its intersect with society and nature. In complexity science, the word ‘constraint’ does not imply a negative. It simply refers to the fact that things are contained or connected in some way.

Sustainability integration is an approach to sustainability that recognises that any decision, taken by anyone in the organisation, at any time may result in social and environmental impacts that are positive or negative, large or small, immediate or in the future. This means that  we are working in the context of uncertainty.

This sounds like a daunting process. Where do we start?

We could probably start anywhere, but given current pressures and expectations from stakeholders, it makes sense for most companies to focus on:

• Strategy (how they allocate) and
• Disclosure (how they share and use information).

These are both important to remain competitive, but they require very different approaches. Disclosure integration requires alignment with increasingly standardised requirements. Strategy integration requires multi-level innovation in pursuit of competitive advantage. For those familiar with the Cynefin framework, strategy takes us into the complex domain; enhancing disclosure largely takes place in the complicated domain.

If we’re using the same approach for strategy and disclosure integration (or assuming one will inherently lead to the other), we are part of the problem and are contributing to the pitiful pace of change. While we can never guarantee that our efforts will lead to a sustainable world, advancing sustainability integration in the organisation is not an impossible task.

Generally speaking, disclosure requires informed box-ticking (which is not ‘bad’ or ‘undesirable’); strategy is a walk on the wild side. Companies hit a snag when they use disclosure expectations as the basis of their ‘strategic’ response. They feel under pressure to do this because:

1. Investors are demanding about ESG disclosure and tend to have power in relation to our organisations; and
2. The real cost of a badly focused strategy is usually seen in retrospect.

But… the longer a company delays strategy integration, the more these costs escalate.

The flow diagram roughly depicts Incite’s approach to sustainability integration. Every client does it differently, in their own time, but the steps are broadly consistent if they are taking it seriously. (Note: Incite IP is constantly simplified and updated. You can can find the latest diagram depicting our integration thinking here.)

Of course, the map is not the territory, so things will never happen in exactly this way. This is simply a rough idea which can be useful in turbulent times.

The critical first step in any integration process is to clarify your ambition and where, in broad terms, your organisation offers you potential to deliver on that ambition. Making this explicit will deliver a high level strategic framework. Then follow the number for strategy or disclosure, remembering that this is only a guide. Essentially, the diagram tries to show integration into decision-making (align), strategy, innovation, disclosure and communication.

Integration is about getting teams within the different parts of the operating model to take responsibility for what they do best. This releases the Sustainability team to focus on coordinating the broader transition. Transition management should not go on forever. Once integration has occurred sufficiently and in the requisite areas, it should gather its own momentum. At that point, we should all be glad to find other jobs!

A few thoughts on the strategy side:

• Incite does strategic alignment with almost every client, even if they have already decided on their focus areas. The process counts as much as the output.
• The initial commitments (1) can sometimes be integrated into business planning immediately.
• You will not have enough information to create BHAGs, hard targets or roadmaps at this stage. These commitments are primarily directional and highly strategic (determined by the profit-enabled ESG envelope). They commit the organisation to exploring scalable options with requisite urgency rather than to outcomes or other milestones along the way. We just don’t know how best to do things at this stage so rather admit that and double down on your efforts to find the next best step. (This particular stance – based on what The Cynefin Co calls the ‘Frozen II’ approach – puts me at odds with many people, including those I tend to agree with on other issues.)
• Don’t stop there. It is important to increase the granularity of your analysis and subsequent ideation (3), ideally as part of an organisation-wide awareness and inclusion process.
• Strategic metrics (5) are imperative and they will almost certainly be different to the standardised disclosure requirements you are prioritising through the parallel disclosure process. These can take a few years to get right. Unilever’s metrics task team worked for about 10 years before they considered their sustainability metrics to be sufficiently integrated and the metrics capabilities sufficiently distributed to disband. Rushing this part to please any stakeholder group is a bad idea.

On the disclosure side:

• Strategic alignment will help you keep the present disclosure madness in perspective: the execs are onboard and once you’ve explained, they will fully appreciate the difference between strategic indicators and standardised disclosures. (Remember these are both important.)
• Beyond an initial review and prioritisation (1), the rest of the disclosure integration process is about focusing your effort. Prioritise based on explicit criteria, including relevant standards or frameworks (e.g. GRI, TCFD, JSE disclosure guidance), cross-referenced against the rating agency benchmarks used by your biggest investors (e.g. MSCI, FTSE Russell). The others stay on the sideline. They aren’t irrelevant, but they don’t count as much.
• Disclosure and communication are not the same. Disclosure reveals or provides information; communication encompasses the exchange of information. By integrating these flows, they can be used to reinforce each other.

The point of Sustainability integration is to integrate into existing business cycles as far as possible (the grey shapes in the flow diagram). It is not to make the sustainability team more visible or give them more power. By getting these weighty things off their back, it helps the Sustainability Lead and his/her team focus on coordinating the overall transition.

___

Banner image cropped from a photo by Markus Spiske on Unsplash.  For many years, practitioners have been desperately trying to counter the limiting assumption that Sustainability = Green (+ Good).  The leaf image here speaks to what Snowden calls “naturalising sense-making” which is something else entirely. More on that in relation to our practice soon.