Introducing the ESG Edge
3 August 2021

I haven’t seen it used in this way, so I am tentatively naming the ‘ESG edge’.

This bit of jargon has helped me to cut through endless mental chatter about what sustainability means, what ESG means, what Shared Value means, how they differ, regional nuances, etc. See for example Eccles on “the difference between purpose and sustainability aka ESG.”   Despite my participation in various debates and chatterings over the years, I’ve decided that most of it is distraction. We all need distraction now and then, but I am trying to find it in more useful places.

My exit came when I stopped worrying about what the field was called and got entangled with the territory.

The ESG edge (or simply ‘the edge’) is your organisation’s interface with ESG challenges. It is the conceptual space where a myriad of ESG trends and issues become material risks and opportunities requiring a response.

The edge is:

  • Two-way: as in, ESG trends impact your organisation; your organisation impacts society and environment.
  • Dynamic: as in, an ESG issue could become material overnight; an ESG risk today could present an opportunity for positive ESG impact tomorrow.
  • Complex: as in, ESG issues are inter-connected and the edge is inherently unforecastable.

Being able to wrap all these things into a short phrase is helpful. Being a little more complexity fit since attending a Cynefin Basecamp, I see it as a scaffold. It helps people to explore ESG issues without being swamped by their lack of knowledge (take it from me, imposter syndrome comes with the territory). When my clients start using the word, I know things are about to accelerate in a positive direction.

In a ritual mood, I greet clients with a silent bow, acknowledging the immensity of their organisational edge. I lack the chutzpah to act it out, but I think it has the makings of a timely greeting. Let me know your ideas here. As practitioners, if not in sufficient awe of the edge, we do well to experiment with small ritual acts.

Materiality analysis is sustainability jargon for making sense of our edge – this means working out which of a myriad of entangled trends and issues may be more important and why. Far too often, these exercises degenerate into senselessness via quasi-quantitative processes. When your sustainability consultant starts asking you to vote on Mentimeter or assign dots to prioritise ‘material issues’, we are in dangerous territory. While I am all for materiality discussions being informed by data and analytics, getting managers or executives to vote on priority issues ignores the fact that materiality is context-sensitive. And that’s before we get onto several cognitive biases that will inevitably come into play.

Two further things are important when introducing the ESG edge:

  1. People in your organisation see the edge differently
  2. Every edge is unique.

The first point helped me understand why people ‘just don’t get sustainability’. If you have ever asked yourself this (and fess up here) you may appreciate a longer reflection which I’ll get to post about soon. Hint: It’s about different – though valid-in-context – perspectives that are underpinned by different worldviews. The problem may be more about our ability to self-reflect that our communication skills.

The second point is the reason I often mutter about ESG ratings and worry that the recent investor awakening, though welcome, may take us backwards before moving forwards. In short, ESG risks can be more or less standardised for the edge of a given sector or sub-sector, but how an organisation chooses to respond to those risks depends on their ingenuity. As companies become familiar with their edge, they start seeing more opportunities for innovation in the same risk set. By rewarding standardised responses of the best-practice-risk-management type, ratings may inadvertently slow down this natural progression of sense-making at the edge. Well, let’s see. Such ruminations probably fall in the category of distraction anyway.

Once we are familiar with our edge, sense-making becomes a process of tweaks, peer reviews and relentless awareness. Another name for this is tracking and it is probably the oldest science known to humankind. That’s good news: we have deep evolutionary wells here – despite our equally deep wells of forgetfulness. The only way to activate this awareness at the requisite level of granularity is to distribute the job of ESG sense- and decision-making to those who actually do stuff at the edge. Diversity counts because of insight, not compliance or political correctness. This is also why informal networks are becoming more important.

Since an eye-opening visit to a shebeen on the outskirts of a mine in Namibia, I have been experimenting with taking myself into aspects of a client’s edge. One approach is to walk around in a client’s field of engagement having aimless conversations before doing any work with them. I intend to get back to that when things open up, though only for local organisations. Zoom has its limits.

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