If it hasn’t already, the global sustainability effort is going to underwhelm. There are several reasons for this. One is the assumption that ‘sustainability’ is a singular challenge. It is not. It requires us to address at least three challenges and that is before we slice and dice it into E, S and G.
At it’s simplest, sustainability seeks to address:
– a disclosure challenge
– an integration challenge
– an innovation challenge.
Doing one without the other will result in suboptimal performance. Attempting to do all three using the same approach is guaranteed to fail. The fourth challenge is that companies are usually confronted with ‘everything, everywhere, all at once’.
It’s easy to mistake parts for wholes. Succeeding at being a sustainability consultant, for example, is not the same as succeeding in sustainability practice. After learning hard at my clients’s expense for two decades (despite all good intentions), here – in a nutshell – is how I now approach these three interconnected challenges. The type of challenge refers to the Cynefin framework which I consider to be indispensable for effective sustainability practice.
Challenge 1: Sustainability disclosure
Approach: Prioritise disclosures based on key investor expectations; identify significant gaps; close the gaps as far as possible
Impacts: ESG ratings, cost of capital (marginal)
Challenge 2: Sustainability integration
Approach: Develop a decision-support framework for your organisation; make it as easy as possible for people to use it; support their desire to make a difference. (The diagram shows how we do this. Note that this is seldom a linear process and ideally avoid calling the framework a ‘strategy’.)
Impacts: Potentially every decision in the organisation.
Phase X | Accelerate may occur at any time during the process of integration or not at all. It is what we consider to be…
Challenge 3: Sustainability innovation
Approach: Develop a Profit-Enabled Impact portfolio; prototype high potential initiatives; scale those with high likelihood of success. PEI initiatives deliver scalable social/environmental impact without compromising the profit formula. Find them by analysing the PEI patterns already emerging within the field and explore how you might activate them by extending or adapting your current capabilities. This is called exaptive innovation. Any other kind of innovation risks being outcompeted on cost and is unlikely to scale.
Impacts: Profitability and competitiveness
Progressing your response to all three challenges creates the foundation for a useful sustainability brand. Integration starts to deliver when we actively cultivate the brand.
What does this have to do with regenerative business? Not much. But if we manage the above well, we open a space to explore what regeneration actually means.
Unlike sustainability integration, regenerative business will probably require us to shift our:
– understanding of value
– time horizons
This takes serious leadership and a whole new level of resolve.