New Metrics
Context and Capitals – The Next Big Things in Corporate Sustainability

A dramatic statement is often a good way to start an article – and sometimes they are justified; this piece explains why I think that context heralds big changes for the practice of sustainability and CSR.

The traditional focus of CSR and sustainability has been upon continual improvement. An emphasis upon reduction rather than reinvention; it is based upon the idea that meaningful sustainability achievements can be delivered through modest year-on-year advances. That may be the case, however it is very difficult to really know! Achieving a given target doesn’t tell you whether your position is sustainable unless you are able to understand the planet’s ability to sustain that activity. This is what context provides, it helps describe the ‘safe space’ for our activities, and articulates limits for activity.

The idea of limits is not new. Thomas Malthus talked about the limits of population and food availability in the late Eighteenth century, and the Club of Rome did so famously in its 1972 book, The Limits to Growth. While each has been criticised for aspects of their predictions, the central observation remains true – we have only one planet to live on.

The recognition of clear limits is becoming ever more important for sustainability professionals. These can be socially agreed (for example the need to keep within 2 degrees of warming) or can arise from scientific approaches. The Nine Planetary Boundaries were developed by Johan Rockström et al in a 2011 paper in Nature. Put simply, it’s a concept seeking to identify and quantify aspects of the Earth’s natural systems which present close-to-absolute thresholds we should not cross.

This idea has massive implications for company sustainability. These are largely two-fold: At the strategic level – to recognise the company’s relationship to the limits (dependency and vulnerability); and at the practical level, working out how to relate company performance to these limits. A number of approaches have developed to assist with translating the idea of limits into practical action.

Context-based sustainability is one, as is the Science-Based Targets Initiative, which focuses on inspiring businesses to set greenhouse gas emission-reduction targets in line with climate science. In addition, in 2015 The Stockholm Resilience Centre provided this briefing on how the Planetary Boundaries relate to business.

Multiple capitals concepts seek to identify and prioritise sources of value other than financial. They are at the heart of developing approaches to reporting sustainability, such as the International Integrated Reporting Council’s (IIRC) Capitals Framework. and the Sustainability Accounting Standards Board’s (SASB) Conceptual Framework. Another recent example is the release on July 13th2016 of the Natural Capital Protocol. Developed by the Natural Capital Coalition, this provides guidelines to support better decision making by considering how we interact with nature and specifically natural capital.

These concepts and initiatives bring rigour and wider perspectives, but why are they game-changing? The answer lies in a fundamental shift in risk management.

Much strategic analysis focusses upon ‘risk-from’ - i.e. by asking the question, ‘What are the strategic issues that may affect our ability to execute our chosen strategy?’ For me, Planetary Boundaries introduce a ‘risk-to’ dimension. They therefore imply the alternative question, ‘To what extent does our chosen strategy impact upon issues or conditions that will accelerate unsustainability and instability?’

You can already find companies that express their sustainability strategies not in the form of doing progressively less, but in a wider context of the big-picture trends and trajectories that will affect the planet as a whole. For instance, here is an overview of how Unilever approaches these issues, and here is Bosch’s analysis.

New concepts and tools are providing a valuable guide to the territory of sustainability and also new means to help navigate a safe path. However, the goal of all sustainable behaviour shouldn’t simply be focused on impact reductions, but instead upon positive contributions.

More ideas on capitals and context can be found in ‘Sustainability Context: Why the elephant is the room’ the third in our e-Book series, available for the price of cheap(ish) coffee on Amazon Kindle. Free downloadable pdf excerpts from all 5 books are available from us at Terrafiniti.