In Tesla II, I wrote about seeing ESG performance in two dimensions. The ESG capabilities of sustainability high performers are both wide and deep. They have developed ways:
- To protect, create and enable value at the ESG edge (‘wide’ – range of practice); and
- To keep doing these things effectively under radically changing circumstances (‘deep’ – maturity of practice).
When organisations have depth at the ESG edge, they are more resilient. What they do and how they grow may change, but they are much more likely to survive. What does depth look like? I promised to share Incite’s framework on this (and you can skip down to it now if you like), but I’ll take a quick step back to explain where it came from.
Kaizen means ‘change for the good’. The Japanese management philosophy is usually translated as ‘continuous improvement’ and in the mid-nineties it permeated the Nissan SA factory at Roslyn, north of Tshwane. As their newly appointed Environmental Manager, I was part of a team implementing the ISO 14 001 Environmental Management System Standard. The Kaizen areas – where workers met every morning to share their ideas on how activities and processes could be improved – were turning out to be integral to its implementation.
Nissan’s burly plant engineer, Chris Jansse van Rensburgh, was also big on the Gemba walk, by which managers and leaders walk around looking for potential improvements (aka ‘Management By Walking Around’). Chris’s particular thing was compressor leaks, and he found enough to significantly decrease the electricity usage in the plant. (South African electricity was dirt cheap in those days, so use reduction was quite a new idea). As he tracked the trendlines Chris noticed that the local municipality had been significantly undercharging the plant for several years due to a decimal error. Being a rational chap, he duly informed them, and an agreeable back-payment was negotiated. Despite the unintended consequences (I had over-confidently assured the CEO that ISO would yield both environmental and cost benefits), it became clear to me that Kaizen and Gemba would be critical ingredients in the process. While they had a role, the reams of policies and procedures I was helping them to write were like chaff by comparison.
Nissan duly gained the first automotive certification in the southern hemisphere which pleased them a lot; and a green-behind-the-ears industrial ecologist gained an important lesson in distributed sense-making and informal networks. With 20-20 hindsight, I can see what I intuited at the time: that there were several levels of environmental practice underway simultaneously at the Nissan plant, although they weren’t necessarily aware of them. In increasing order of maturity, they were:
- Level 1 – Clarify ESG practice. Informed by best practice as codified in ISO 14 001, our team was busily writing up environmental policies and procedures, dropping them into an accessible database and auditing the operations against them. As we clarified our practices and aligned with ISO’s expectations, some improvements were made along the way.
- Level 2 – Coordinate ESG practice. Care for the environment did not feature in the factory’s culture, but safety, health and quality were core elements. Integrating environmental issues into existing systems was a slight shift and made effective coordination possible. Environmental responsibility had already found traction in the CEO’s office: John Newbury was one of a handful of visionary South African execs who recognised environmental trends – and their potential competitive implications – early on. (A few years earlier I had written to Nissan requesting a bursary to study industrial ecology. Newbury called personally on a real car phone to interview me!)
- Level 3 – Distribute ESG practice. Fortunately for Nissan (and for me), the plant’s distributed sensory network – the informed eyes, ears and hands of the workers and Gemba-walking managers – did the rest.
After a few more decades of learning and practice, and exposure to virtually every business sector, Incite formulated this into a general maturity framework for sustainability or ESG which is still being tweaked but currently looks like this:
(Each of the elements relates to specifically ESG – or what we call practice at the ESG edge – but it may apply beyond the ESG field.)
Level 1 maturity develops as we clarify our efforts, usually aligning with good or best practice. This often refers to elements that are simple enough so as to be fairly obvious or predictable in their outcomes, and which get codified in standards and guidelines. From an ESG maturity perspective, codified ‘good/best practice’ lays out the basics. Beyond that, it’s what we might like to emulate in our peers.
Level 2 develops as we start creating our own particular version of what this means for us. The organisation’s energy pulls inwards as we centralise coordination, orienting around a unique sense of purpose, and making it possible for multiple elements to work together nicely. Because the whole is more than the sum of the parts, ESG practice advances considerably.
Level 3 requires the energy to move outwards again, activating distributed capabilities that exist all over the value chain to enhance ESG decision-making. At this point, our insight and efforts expand exponentially and we start emulating how complex systems work in nature.
Beyond reiterating that maturity does not necessarily develop in linear stages (see the Nissan example above) and that the elements are actually examples rather than a set of tick box requirements, I think the framework is fairly self-explanatory. Even at a glance, it seems to make sense to practitioners, so there’s at least the start of something useful here. I’ll share some examples for the less obvious boxes at some stage, but the proof is in whether it makes sense to you. I’d love to hear your thoughts.
Actually, I’ll end with one more general point on maturity: it is unequivocal. When we move to another level, and become aware of it, we are different to what we were before.
The banner image is a photo by Sanni Sahil on Unsplash. It reflects the process of the moon ‘coming to fullness’ as expressed in the Zulu term ukuthwasa. The same term describes the process of traditional initiation that catalyses a deep shift in cognition – and spiritual maturity – necessary to graduate as a practitioner.