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Beyond The ESG Trend

Updated: Aug 8, 2023

Business change-management processes and paradigms of the past are the wrong models for bringing business into the age of the fully sustainable and regenerative economy required to solve the climate, environmental and social disruptions threatening the world. Only imagination can do the trick. What could be beyond the current ESG trend?

Climate change and other environmental issues are colossal topics for today's business, generating demands for action from investors, customers, and the government. Many business leaders see ESG (Environmental, Social and Governance) and other business sustainability strategies as simply the latest business trend, on par with the Japanese "Total Quality", Lean Manufacturing, Big Data, etc. Processes, procedures, and tools are generated from frameworks and checklists, creating an atmosphere of "tick these boxes, repeat these formulas, and voilà: businesses, economies and the environment will flourish."

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As I see it, ESG and sustainable business experts have the responsibility to help organisations see beyond these old business paradigms to create transformational visions for building a real, sustainable business and circular or regenerative economies.

Applying ESG frameworks just because they are a trend will not accomplish sustainable development goals. Treating any type of sustainability scheme as a new frame for business will not fully address the environmental and social challenges we are setting to tackle.

Why do I say that?

Past frameworks were pathways to adjust production systems to market demands. Those demands were man-created. How is that? Money is not an inherently existing real thing. It was invented following the first agricultural revolution to facilitate exchange. People imagined it, designed it, gave it value, and over time came to agree on it as a valid concept. And over time, we forgot that money is not a natural truth. We had at least two other remarkable agricultural revolutions, the latest and the one from when our problems increased exponentially was the called Green Revolution. Despite solving shorter-term demand issues, together with other developments, these revolutions contributed to waste, consumerism and to the fact that today, we've come to the point where we think nothing is possible without money because we are completely locked into this paradigm.

People also created economic systems to support the exchange of goods and money and came to believe the only healthy economies are growing economies. We went even further and attached our understanding of growth to the idea of money. Growth became monetary growth, measured in GDP. Capitalism and Friedman's theory exacerbated that idea, making success a measure of accumulated money and continuous economic growth. To support such growth, we developed marketing and advertisement. We increased demand beyond the everyday needs of society. All compelled us and our businesses to speed up and be within standards, leading to the requirements that generated all the previously enumerated developed methodologies and processes.

For hundreds of years, we have been acting to fit everything into the belief that the base of a worthy economy is monetary growth. Money, financial systems, marketing, and economic growth are man-created concepts with which Total Quality, Lean Manufacturing, and Big Data align. All these frameworks, systems, processes, or technologies were created to keep the idea of an upright economy as we crafted into continuous growth.

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Climate change, the reduction of resources and biodiversity and, the increase in social inequality present us with the perfect trial to this created paradigm. That conflict is also man-created. Nonetheless, the issues we now face are unintentional outgrowths of our previous creations.

ESG and other sustainability strategies should address these unintended and adverse effects. Therefore, they cannot support the previous paradigm, maintaining an ineffective and destructive loop. The environmental and social challenges currently faced threaten us in a much broader way and ask us to break out from the paradigm. For that reason, it is a mistake to continue a course of action based purely on frameworks, methods, and processes as if they could adjust our ways of doing things just so that those environmental and social issues stop negatively affecting our invented economy.

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If we consider ESG and sustainability as "just another trend" and apply some new methods and frameworks simply to accommodate things to our will, we will fail as a society.

The way out of this situation may start with acknowledging that the current idea of growth has become very limiting. Growth correlates with productivity, more consumption, more powerful companies, higher financial returns, and concentration of resources. Our society admires and values the few who accumulate the most. We accept those things as life-as-it-is, and many keep trying to be one of those few rich. Meanwhile, we miss out on the opportunity to create a better reality for everyone. In this capitalistic thinking, growth is the increase of wealth measured in monetary terms, usually for the "deserving few", the shareholders. However, growth could reflect something much beyond that. As it has been well put by Paul Polman and Andrew Winston in their recent book, Net Positive, "If we keep shareholders at the driver's seat, we cannot build a system that optimises for well-being for all, which requires long term thinking". They propose that shareholder's value should be a result but not a goal.

Well, what if we re-imagined growth then? What if we imagined growth to mean enhanced happiness and harmony? Or to mean sharing. It could be measured in how much is given back. After all, we can think differently and break with old, created models. Evidence of that came when the World Commission on Environmental and Development (Brundtland Commission) developed in 1987 the definition of sustainable development – Our Common Future, that later gave birth to the SDGs (Sustainable Development Goals). As they defined it, sustainable development is a development that grants us to keep advancing our good lives while allowing and enabling future generations to do the same. Those ideas created the World Business Council for Sustainable Development's vision 2050: Time to Transform.

The original concept encompasses two fundamental principles, often ignored:

  1. Real development is only true if it is available for all people and primarily for the poorest.

  2. Development happens within our social organisation and technological level; therefore, we need to evolve on those elements to develop sustainably.

Yes, the SDGs are as well a framework, but their origins are the understanding of what is necessary to support the life of all (not only human life) in the very long term. They aim to break with the old paradigm that dictates that good is a growing economy for men (and for just a few of them), quarter by quarter.

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As ESG/Sustainability professionals, we should never forget that. If we focus on that vision and understand what it means to humanity, we can transform the current meaning around growth and reach actual sustainable development.

I now propose a challenge! Allow yourself into what you could call idealistic thinking for a few minutes into your reading without giving up. Imagination is one of humanity's most formidable tools; some say it separates us from other animals. Are you ready to embrace this difference? - to embrace humanity? Here we go!

Envision that growth could be translated as regeneration, resulting in that every generation would aim to leave the planet better than how they received it by enlarging the availability of resources and wealth to a broader number of people.

Imagine we would measure growth in factors that result in development available to all people and equally to all other living creatures on the planet. We would grow at each generation our ability to have more resources available, not possessed. We would outgrow our technological limitations and diversify our social organisations as instruments to enable better conditions for us and those coming after us.

Can you keep imagining for a little longer, with no judgment? Here are some designs that started to be explored by various sectors of our society:

  • People and organisations would be rewarded for providing us with ecosystem services much more intensively than today. There is such a market in creation today, and we could connect that with a trade of sustainable goods at the level of regular businesses. That could generate activity for the ones who would be unemployed from a movement of decrease in consumption and increase in technology. The linkage of these ecosystem services to tokens of value that people could use to acquire services and products could create demand for more ecosystem services.

  • Companies would be rewarded for enabling, investing, or delivering carbon sequestration and other such regenerative technologies that expedite the availability of more resources beyond the concept of carbon credit, which is still attached to the old paradigms. For instance, produce obtained in ways that sequestrate carbon could be traded at a lower monetary value but generate "green" credits to both buyer and seller at every transaction—generated credits they could use to trade for other sustainable goods, services, and technology.

  • In the same light, we could insure manufacturers would pay for carbon released in production and during the use of their products. Carbon taxation and sustainable finance are already looking into ways to do that, but we could attach those tools to new value creation and sharing dynamics. For instance, if such products would be given to the socially in need, the poorest, with their after-use disposal treated, the manufacturers could get credits to pay for their carbon taxes until they'd transition to sustainable production is completed. That would start creating a culture where sharing is value creation while enabling the sustainable transformation needed.

  • To address consumerism, envision implementing a system where we don't pay for goods based on their convenience or desirability, demand & offer rules. Instead, we would have a currency of sustainable behaviour credits adjusting the price of things to the buyer's profile related to those credits. The more sustainable one's lifestyle, the lower one pays for something, but their credits go down if they acquire too much or unsustainable items, impacting their lifestyle. We could label it a sustainable consumer virtual cycle.

  • In a capitalistic way, we reward capital and labour. Instead of paying for labour hours, conceive we would compensate people for efforts and results in creating availability of resources or social equality, either with effects today or expected in the future. People would have "salaries" based on their sustainable action contribution, not on hours of work producing stuff.

  • We could create an entire lifestyle currency, wherein the measure that you live sustainably within parameters you are entitled to have access to housing, education, food, health, transport, tourism, and entertainment. And the businesspeople providing those products and services would be rewarded for raising the number of sustainable customers and market. They would measure their success in a new type of "stock exchange" where stocks go up based on the creation and potential of sustainable lifestyle growth.

  • From the basic income concept, which is already being implemented in different parts of the world, we could evolve into having all basic needs covered with sustainable products and services. The more people within the basic income system, the better, not the worse, as that would increase credits which the governments would use to acquire technology and reward sustainable innovation and production.

Conceivably, in this case, the pathway to wealth would be in regenerating the environment, social fairness, and equality we all need. Perchance this wealth should not be accumulated but given back, and the moment one doesn't give back in proportion, one doesn't earn more, avoiding a new type of inequality.

Possibly we need to reinvent the finances, money, and production systems not to grow the economy in monetary terms or material richness but, instead, to increase the availability of resources to all in the re-organised economic formulation.

People would focus on developing business models to make nature, other people, especially the poorest, and life itself prosperous. Businesses could withdraw from focusing on making themselves and their shareholders well-off in monetary terms because that would, instead, limit their earnings and possibilities within society. And in doing so, within this transformed economic and new notion of growth, they would achieve prosperity too.

By now, you may think this is all craziness and that this would never be possible. To the cavemen, fighting for survival and food every day, a world where one has access to stuff one needs by exchanging something we call capital would never make sense. We are nothing more than cavemen from the perspective of the men in the future. So, why can't we reinvent the economy all over?

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Undeniably, that is not achieved by merely following a trend, a fashion, or a framework. Reaching the creation of a new context and expanding it into a better paradigm consists of cultivating a new mindset. It lies in believing and working within a reality that is non-existent today and that we may never see implemented. Still, the vision, the imagination, not frameworks, is what transforms.

We need a fundamental transformation of the concepts used today, which are the basis of how our economies run. We are fully capable of generating alternatives to what we identify as a suitable economy, as proper social organisations. We are adeptly capable of issuing new concepts to switch the way we deal with monetary value.

Nothing I am saying here is new. People much brighter than me said it before in better words and even piloted with success those new ideas. It is just worth echoing inspirational alternatives to the current reality. I am mindful that viewpoints like the above are often labelled as dreams, utopia, out-of-touch, or pie-in-the-sky scenarios. I am also aware that any creation starts in one's mind.

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People like me and others who work in sustainability with today's businesses, companies, and professionals, have a greater responsibility in using imagination.

When advising about ESG, sustainability, social companies, and similar topics, we need to be skilful to bring such organisations, and the people within, to see beyond the frameworks. We need to help them envision something different from what exists today - something toward the bigger dream of a better world. Yes, we use SDGs, GRI, SASB, PRI, planetary boundaries, and more. Yes, we investigate implementing renewable energy and solar panels and clean technology while attentive to budgets and stakeholders' perceptions. Yes, we experiment with remote work, part-time, schemes and quotas for diversity and inclusion, and all of that which is not yet transformative. But those ideals of transforming the world cannot be ignored.

Every opportunity we use to look for new ways of doing business, transforming the fundamental assumptions behind what it means to be a successful business in this era of climate change and social unfairness, is unquestionably valuable. Maybe a simple way to do it is to remind others and be reminded of the concept of sustainable development at its core. Let's repeat over and over that sustainable development is the development that allows us to keep advancing while permitting future generations to do the same, especially the poorest, considering, and evolving technology and social organisation.

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The more we keep a bigger vision in mind, acting now, the more we can transform things in a direction that put us closer to a better reality.

We don't know what a fully renewable economy and sustainable world will look like. Still, if we're genuinely being honest, we know it requires transformation and not simply adaptation to our shorter-term needs while ignoring the needs of all.

I don't pretend to know how to make the more extensive transformation I talk about here. Nevertheless, I recognise that every time I work with a customer, I have the opportunity and the responsibility to look and envision with them a better world beyond what the frameworks tell us. And that is our chance to transform. If we keep sight of the more significant meaning of sustainable development underneath the frameworks, we have a better chance to cause the positive impact we are up to.

Michelangelo is known to have said that his sculptures were already there before he started working on the marble; he just needed to uncover it. We, sustainability consultants and professionals, may contemplate our work in the same way. Maybe today, we are working on the marble as a square thing, limited by current paradigms we cannot ignore or deny, and we are using frameworks and methods and feeding on a trend. Maybe we cannot forget to deliver a well-written sustainability report and action plan to attract investors. But that does not need to be the final sculpture. There is a fine piece of art hidden inside each customer's business; all we need to do is uncover it with imagination.

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About the author: Karime Abib is a former Unilever executive, currently a consultant and advisor helping companies to create sustainable business models and leadership, business transformation and ESG strategy and sustainable supply chains. She also dedicates herself to programs and actions for the empowerment of women. Learn more about her on LinkedIn and more about her current work visiting AdvantiKA GmbH and Empowr International.

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