To become more resilient, an organisation needs a particular niche at its intersect with society and nature. We determine our niche and the capabilities it requires over time. Capabilities emerge from a mix of skills, assets, technologies, etc, and determine what we are able to do – both now and in potential. This post looks at the capabilities we need at our Intersect in general. The specifics will depend on the particular organisation.

At the highest level, more resilient organisations are able to protect, create and enable value at their intersect with society and nature. They also evolve the ability to detect risks and opportunities earlier and to repurpose existing capabilities to address these quickly and effectively. At a more granular level, the capabilities required to do this depend on the organisation and the nature of their intersect.  Because the risks and opportunities are always shifting, agility is an important general capability.

Companies already protect, create and enable value to a greater or lesser extent and with varying degrees of awareness. They develop these capabilities more actively when they realise that this will increase their options and speed to market of their offerings. Our Sustainability Capability Spectrum – known as ‘The Waves’ – was designed to bring that realisation closer. It helps organisations reflect on their current capabilities at the sustainability intersect and how they might grow them to enhance their competitive ability.

The framework shows how an expanding their range of capability enhances an organisation’s delivery of value. It may face the same risks as its peers, but a more extensive capability base allows it to turn social and environmental risks into opportunities more quickly. Many organisations adopt a linear ‘maturity’ approach to evolving capability at the Intersect. Taking the property sector as an example:

• Most REITs manage carbon emissions and disclose the data to meet ESG raters’ expectations.  They’ve realised that legal compliance provides no immunity to sustainability risk and are now focused actively on managing their ESG risks. The intention is to protect their current value streams.
• Some REITs, such as US-based warehouse giant Prologis, install sufficient renewable energy infrastructure to increase non-GLA income and explore joint offset opportunities with their customers. They have become aware that there is opportunity delivering positive social/environmental impact or ‘creating shared value’. Explorations follow. Viable innovations are scaled and may be linked together to reinforce each other. This contributes to creating value, delivering both financial and tangible social/environmental returns.
• Having developed a solid profit-enabled impact portfolio, organisations have learnt enough to see the value in collaborating with peers – including competitors. These are often large-scale initiatives that enable value by addressing systemic risks to the broader market ecosystem. SA-based Hyprop’s SOKO District digital leasing marketplace, for example, will allow customers to rent space and reusable shopfittings across their portfolio.

In reality, we don’t develop capabilities along a linear path. (Have a look at this piece on pathways to sustainability performance: the Leapfrogs all started by creating value at the Intersect.) In the early days, very few companies thought much about sustainability beyond value protection, so The Waves was meant to show how they were limiting themselves. A lot has changed since then, including our consulting model. By deepening and expanding your spectrum – in all directions at once – you enhance your resilience at the sustainability intersect.

As we become more familiar with our ESG risks and opportunities, we naturally start expanding our range of capabilities. We should also find ourselves asking more difficult questions. Staying with the REITs, for example, we might frame a question when Djo BaNkuna posts in facebook (as quoted by Mark Swilling, in Daily Maverick):

“The sole purpose of a Mall is to permanently extract liquidity in the community ecosystem to the rich suburbs and offshore accounts.” 

If we don’t ask those questions, somebody will ask them for us and this will come in many forms. For many mall owners in South Africa, this took a particularly violent form in August this year, to which the article quoted above refers. And so it will be for each and every one of our sectors as society and nature explore their respective abilities to make themselves heard.

Over a decade, the average client response to the question ‘where are you focusing now?’ has shifted from protecting value to creating value, which means that more companies are seeing opportunity in sustainability issues. This is a good thing and we’re expecting the movement to speed up considerably in the next few years. In The Waves II, I’ll share some thoughts on a hidden resource that few practitioners are aware of, let alone exploring.

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The Great Wave off Kanagawa also known as The Wave, is a woodblock print by the Japanese ukiyo-e artist Hokusai. It was recently parodied in response to Japan’s nuclear wastewater dumping decision (https://www.globaltimes.cn/page/202104/1221726.shtml).