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Examining Sustainability Context: A Thought-Leader Dialogue (Part 3 of 3)
October 1st, 2012
We pick up where we left off from Part 1 and Part 2 of this dialogue and debate amongst thought leaders about the theoretical underpinnings and practical implications of implementing sustainability context — which we affectionately dub “susty context.”
John Fullerton: What really resonates is the overall objective to move out on the continuum outlined above. In that vein, I'm working on a piece now I'm calling "regenerative capitalism" (in part a response to Generation Investment Management's Sustainable Capitalism white paper that I gently critiqued. Here's the relevant paragraph:
How can we go beyond sustainability?
Generations' Sustainable Capitalism says "sustainability does not involve a trade-off between profitability and improving the environment." We believe the authors meant "harming or using the environment less," not "improving the environment." Discussions of sustainable business often confuse the two, and fail to take up the hard choices. If we are to achieve the sustainability of natural systems, we should be searching for a regenerative capitalism that rebuilds, rather than breaks down, the social and ecological support systems we depend on, promoting true prosperity in the process.
So I'm sure our thinking on "regenerative" is aligned, which is encouraging. But I've never heard of "thrivance," so have more to learn! I'm for thrive ...
Marcy Murninghan: John, in response to your point about “regenerative capitalism” (what Bill calls “thrivance”), I’d like to draw your attention to Marjorie Kelly’s important new book, Owning Our Future: The Emerging Ownership Revolution, in which she writes about ownership models that promote a “generative economy.”
I think it’s wonderful, even as my personal beliefs are that we never really “own” anything, but we do serve as stewards. I’ve written a lot over the years about the notion of “civic stewardship”, which parallels what you and Marjorie discuss, although rooted in ethics and values. There are profound normative considerations here.
John Fullerton: Marcy, I fully agree with you, and find it interesting about Marjorie’s word choice of "generative" compared to my "regenerative," which I got from a regenerative design guy.
And Bill, is "thrivance" similar to "regenerative," or is it "beyond regenerative"?
Bill Baue: Marcy and Bob Massie kind of poo-pooed the term "thrivance" when I first floated it by them in 2010, so I've been slowly seeding it anyway to see if it "takes." The history, I suppose, goes back to a quip by Joe Laur from a Sea Change Radio interview I did with him and Peter Senge, that goes something like, If I ask you how your marriage is and you say it's "sustainable," then I'm sorry for you.
Point taken: While sustainability is clearly much in need right now, it also represents a kind of failure of the imagination, a lack of inspiration, which gets to Gil's point about setting the bar just at meeting thresholds. What we really want to do is not just survive, but to thrive — hence "thrivance."
In more recent conversations with my Marlboro Sustainability MBA faculty colleague John Ehrenfeld, he's pointed out that his definition of sustainability (from his book Sustainability by Design) hinges on the term "flourishing" – clearly along the same lines as thrivance, though using an accepting word instead of inventing one. Flourish also has the nice resonance with flowering ...
In terms of the continuum you suggest, I'd say thrivance is an outcome of a regenerative economy & society. That said, I don't necessarily claim "ownership" of the term after midwifing it into the world, so I suppose it's a collective job to define it in more depth ...
John Fullerton: Peter Brown likes to use "flourishing." But yes, it's an outcome of a process ... got it!
Bill Baue: And picking up on Marcy’s point about normative considerations, when it comes to reporting, I would argue that the term "sustainability" is inherently normative, and it also implicitly sets thresholds. By contrast, ESG (environmental, social, and governance) reporting looks at un-contextualized impacts. But calling it "sustainability" by definition wades into the realm of contextualizing impacts against the norm of what's sustainable, and what isn't.
Mark McElroy: I agree with Bill — unless sustainability context is included in reporting (and not just 'context' defined in other ways), it is literally impossible to compare the sustainability performance of one company against another's, let alone a single company's by itself.
Gil Friend: I think I have to still respectfully disagree with you guys. Though susty context (depending on what we each mean by it ;-) is deeply important, I question whether it must be "included in reporting" vs be made computable by other parties. For example, when Innovest introduced the Carbon Beta some years back, it created a contextual metric by computing a ratio from two "non-contextual metrics" (emissions and EBITDA). Notably it did not set thresholds, but the directionality of the metric was clear, and it was then simple for investors to give that metric whatever weight they chose in their deliberations (which is what investors do with metrics). I'm at loss to think of anywhere else investors use thresholds (thought they use context/ratios and directionality all the time), and remain concerned that any threshold scheme risks sub-optimizing the great degree that the planets living systems require.
Mark McElroy: Gil, one area of performance where thresholds are used all the time in reporting (to investors) is in profitability. Revenue must exceed expenses in order for an organization's financial performance to be positive, or profitable. Expense levels thereby comprise a financial threshold of performance. Try doing income statements without it. The same goes for non-financial reporting.
As for the absence of thresholds on the non-performance side of reporting, you're right, they are conspicuously missing. But that is the point of all of this; they're missing, and should be added. Their absence is a bad thing, not a good one.
Gil Friend: Mark, I think your example is flawed. Profitability has a vector (more is better, though we're all aware of the problems with that) but not a threshold (this percent that must be achieved); just look at all the Internet companies, from Google on down, that amassed great value before (without!) ever showing a profit.
Bill Baue: Gil, I continue to greatly value your respectful disagreement, as it continues to move our collective thinking forward.
I agree that Innovest's Carbon Beta methodology set directionality that investors could use as they wished, back when it was introduced. But I wonder if we're really content with mere directionality at this point in the game? Indeed, investors aren't content with directionality on financial metrics — they want to see the information necessary to determine profitability, which as Mark points out is a threshold.
You seem to worry that susty context may constrain progress by setting targets at thresholds, instead of inspiring action that catapults past thresholds — I applaud that deeper aspiration!
But is this really an either/or? Stated differently, you focus on the risk of establishing thresholds, but what are the risks of NOT establishing thresholds? I'd venture to say that a very small percentage of companies will take the more inspired approach you suggest, leaving the vast majority of companies to languish in a nether region that's both uninspired and threshold-free. That's essentially where we're at now.
And as we discussed earlier in this thread, susty context (as Mark and I and others define it) is a both/and — thresholds do not prevent companies from taking more robust action, and indeed, you could argue that a thresholds-based approach sets the grounds for catapult behavior. Such is the case with Mars — in my conversation with Kevin Rabinovitch, he said that the company assesses what the scientific community says is needed, but is committed to surpassing this, as it recognizes the stakes ...