Date: 2025-01-15 Page is: DBtxt003.php txt00021684
SUSTAINABILITY
MANAGEMENT METRICS
Polman/Winston ... Why sustainability professionals are key to a net-positive world
MANAGEMENT METRICS
Polman/Winston ... Why sustainability professionals are key to a net-positive world
CSO hero ... Shutterstock
Original article: https://www.greenbiz.com/article/why-sustainability-professionals-are-key-net-positive-world
Burgess COMMENTARY
I have been a 'follower' of both Paul Polman and Andrew Winston for a long time, but I don't find this essay particularly persuasive. In fact it is exactly the opposite of what I thought Paul Polman did many years ago when he was at Unilever.
It was my understanding that when Polman was the CEO he acted to mainstream sustainability into the management decision making, getting rid of the various sustainability departments that were dotted around the organization without any true leverage to actually change operational processes. It has been my understanding that by bringing sustainability into the core of management decision making, significant progress was made at Unilever.
During my career in both the corporate world and working on international economic development and humanitarian assistance it has become clear that the socio-enviro-economic system has become dangerously dysfunctional. I associate this with an excessive preoccupation with the financialization of performance. Over the past 40+ years most investment decisions and big corporate decisions have been driven by financial parameters with social and environmental issues almost totally off the table. The profit performance of the business sector has been spectacular for decades thanks to massive improvements in production productivity while social progress has been negligible and the environmental increasingly degraded with essential natural systems becoming more and more unstable and unsustainable.
I believe we need to have a major rethink how the socio-enviro-economic system is managed ... how priorities are made and operational decisions financed and implemented.
Conventional financial accountancy is at the center of all corporate management metrics. It is ubiquitous ... used in every company on planet earth ... and really no longer 'fit for purpoise'. I argue that it needs to be enhanced so that the rigor associated with money profit metrics is also applied to corporate impact on every aspect of social capital and every aspect of natural capital (the environment). To make this work in a meaningful way, the social dimensions and the environmental dimensions should not be using money as the measure, but something that is independent. We do not measure distance in kilograms ... so why do we try to measure social performance or environmental performance in dollars or Euros?
But we have to go further than this. We have got to get meaningful management metrics (measures) into play everywhere, not just among investors and corporate decision makers.
Many years ago I was the CFO of a manufacturing company in the American South where college football was as important as religion. As an immigrant from the UK, I don't know that much about American Football but I quickly learned that everyone in this company knew absolutely everything about the performance of the teams they followed. Surprise, suprise, when I started to talk about the comapany's performance in the same sort of way that everyone was talking about the performance of their favorite college teams, we got to have a company that had a play book that we all were able to execute.
When it comes to everything associated with the socio-enviro-economic system, there are a massive number of different ACTIVITIES. There are also a huge number of ACTORS.
In conventional corporate financial accountancy there are both balance sheet accounts and profit and loss accounts (or income and expenditure accounts) that together give a fairly comprehensive picture of the STATE of the company and the PERFORMANCE of the company. The total of the income accounts less the total of the expenditure accounts is the PROFIT or LOSS for the period.
By looking at the CHANGE IN STATE for a period, then it is possible to ascertain the PROGRESS for the period.
The big weakness of conventional financial accountancy is that it is only about the business entity ... or group of entities ... and anything beyond a circumscribed reporting envelope is ignored. This is now supported by law, no matter that it is now resulting in damaging decision making in respect of society and the environment.
This Polman / Winston article does not fit very much of what I am wanting to see. In fact it is going in exactly the wrong direction. The good news is that they are in print and being read, while I am not ... but hopefully my thinking will eventually emerge in a useful way in due course.
Peter Burgess
Why sustainability professionals are key to a net-positive world
By Paul Polman & Andrew Winston
February 14, 2022
Reprinted from GreenBuzz, a free weekly newsletter.
It’s a paradox. We are doing more than ever to tackle climate change, taking strides that would have been unthinkable just a few years ago, yet we feel more overwhelmed and even terrified. This is the “eco-anxiety” everybody’s talking about, and the young feel it most.
But there is good news. Throughout the COVID-19 pandemic, sustainability has risen up the corporate and global agenda as more CEOs and world leaders recognize the systemic nature of the challenges we face. On climate, 65 percent of countries, accounting for around 90 percent of global emissions, now have some kind of net-zero commitment, as do hundreds of big companies and $130 trillion worth of private capital. Social issues such as racial equity and economic inequality are beginning to get greater attention in more boardrooms. Technology, too, is lowering the costs of sustainable business at a remarkable rate and creating multitrillion-dollar opportunities.
In a world where we’re doing more, but even more is needed, how do we find our courage and willpower?
Collectively, we’re moving, but we’re not moving fast enough. Climate change isn’t linear, it’s exponential: The worse it gets, the faster it goes. Corporate commitments are growing, but are often far from what is needed, and the “say-do” gap from both politicians and business leaders is still too wide. Courage is missing among leaders who too often prefer to kick the can down the road by setting, for example, 2050 targets, when the real window for curbing global emissions is the next eight years.
So, in a world where we’re doing more, but even more is needed, how do we find our courage and willpower? How do we step up to build a private sector that drives higher ambition, directs the best of human ingenuity and trillions of dollars towards our shared problems, and collaborates with government and civil society in radical new partnerships for needed systems change?
As President Eisenhower said, when you run into a problem you can’t solve, don’t make it smaller, make it bigger. Timidity and incrementalism deplete our spirit. We’ll find energy and solutions when we embrace the scale and urgency of humanity’s challenges.
Narrow CSR initiatives to make business “less bad” or “do no harm” simply won’t cut it anymore. Imagine, instead, companies that actively leave the world better than they find it. Companies that regenerate our planet, renew our societies and that ultimate profit by fixing the world’s problems, not creating them.
This is the goal of the Net Positive movement. Ambitious, yes. But never before has there been such a need and appetite for businesses to take responsibility for all their impacts, improve the well-being of all their stakeholders and operate for the long-term benefit of business and society. Increasingly, companies that pivot towards this model reap the rewards by building trust, attracting the best people, unleashing innovation and securing their resilience and relevance in a fast-changing world.
No company is yet fully net positive, but more are on the journey every day. In more C-suites, leaders are seeing the light, helped at long last by shifts in the financial markets. And their employees and customers are demanding better as well. Mercifully, change is increasingly being driven from both the top-down and the bottom up. Either one alone is not enough, and there’s another critical element: the mid-level managers and executives who are bringing a vision to life.
Speed and scale can only come when the full organization is rowing in the same direction.
We’re often asked, “How do I make a difference? I’m not the CEO. What can I do?” The answer is: a lot. Companies can only truly become net positive when seasoned and passionate professionals provide leadership from the middle out.
You are the bridge between senior executives and a younger workforce that needs no convincing. You are the people most looked to for guidance, training, career development — and inspiration and motivation. You understand like no one else how the company works: it’s the systems that drive behavior, and often the company’s history and journey thus far.
At Unilever, some of the most effective changes came from passionate employees, from small efficiencies to developing new products, to rethinking entire business models. Professionals in the middle are well-placed and have a unique opportunity to generate, identify and champion the best ideas and innovations.
You are also agents of your company’s culture. When Andrew interviewed dozens of current and former Unilever employees from around the world, he was struck by how alike they sounded — not as robots, but with a clear sense of the company was about. We would bet good money it’s the same at other companies that have not only defined their purpose but have applied it over and over again in what they do. When Paul took over at Unilever, he asked himself two questions: What are the habits and mindsets that need to be different? And what are the incentives and conditions driving them?
Jeffrey Hollender, co-founder of Seventh Generation, which makes sustainable cleaning products, says “Everything a company does is an expression of its culture.” He’s right. Culture is created when an army of professionals applies the company’s values to achieve its purpose, consistently, at every level, every day, over time.
Finally, you’re the conduit to the outside world, to the stakeholders and wider systems that we need to transform. We need companies to collaborate with their critics, their competition, civil society, and governments on the big, systemic problems we cannot tackle alone. You will need to push hard and make the organization uncomfortable at times — but it’s about staying relevant, connected and powerful. It’s a unique and critical set of skills to identify shared purpose and common objectives with partners, enabling what we call “1+1=11” outcomes.
This call, to build a net-positive business with a higher purpose — and making it live and breathe — is the antidote to the fear and fatigue that might otherwise grip us in these challenging days. Each of us has a part to play, and each has power and leverage.
It cannot be done without the full support from middle-level leaders. Yours is a vital role in propelling more businesses along the net-positive journey and accelerating the transition. With enough leadership, we will, together, do more than we ever thought was possible.
Paul Polman is a business leader, campaigner, former CEO of Unilever and co-author of Net Positive: How courageous companies thrive by giving more than they take.
Andrew Winston is a best-selling author and leading thinker on sustainable business and co-author of Net Positive. Find out more at netpositive.world.