At SB's third annual #NewMetrics Conference at the University of Pennsylvania in September, the need for next-generation sustainability goals — which measure progress toward real-world goal-lines such as carbon budgets, water tables, and living wages — emerged as a key theme. To dig deeper, #NewMetrics channel co-curator Bill Baue discussed this question of “endzone” goals with prominent voices in the field, including Andrew Winston, author of the forthcoming book, The Big Pivot*; SustainAbility CEO Mark Lee, and Bob Willard, in the first installment of the #SustyGoals series last month.*
This is part two (of two) of Baue's conversation with GISR's Allen White. In part one, the two discussed the history of the Sustainability Context Principle. Here, they explore the current status and future of goal-setting.
Bill Baue: So fast-forward to the present: what’s your sense of the current state of implementation of Sustainability Context in both ratings and corporate sustainability reports?
Allen White: On the ratings side, Sustainability Context is, to my knowledge, virtually invisible. It is a rarity. SustainAbility's Rate the Raters project found 100+ sustainability raters of all types, both integrated and topic specific. And one would be very hard pressed to find even a single example in any rating where such Context is seriously represented. So when we decided early on in GISR’s life to carry forward the Context flag and embed it in the emerging standard, we knew this would be new territory for most raters, that it would be a high bar, it likely would be met with some skepticism. Unfortunately, we were right. But after multiple rounds of public comments, it remains intact and will appear in Version 1.0 of the Principles.
While to this day in the reporting world, as you well know, Sustainability Context is incipient, uneven, and occasional. In the best of worlds, reporting would have evolved to supply ratings with Context-based disclosures. But this is not the case. We hope that inclusion in the GISR standard will spur a new wave of attention to Context in the reporting area. Think of ratings as a customer of reporting. If the demand side speaks loudly enough, the suppliers will respond.
Bill Baue: And to pause from one moment on that. All of these things, both the ratings and the reports themselves, are all framed as sustainability — they use that term. Just a brief comment on the semantic or linguistic logic of that framing.
Allen White: It’s important! When we developed GISR, there were some voices that said, “Look, the conventional language of financial markets (which are the primary target for GISR) is ESG. So why are we calling these sustainability ratings? Let’s just call them ESG ratings, as the language of the market. But we said — I said particularly — that we want to reach beyond ESG ratings. ESG does not, by nature, carry a true sustainability gene. A company may rate very highly on an ESG score, but do so just because it has performed well against its own internal goals or against a peer group. But to say this company is an excellent sustainability performer is a very fundamentally different statement. It means that the company is positioned to prosper for the long-term and in a way that respects limits, thresholds, and norms that are externally defined, not simply defined by peer group comparison or internal targets and goals. Sustainability requires contextualization within thresholds. That’s what sustainability is all about.
Bill Baue: That’s really where the notion of a goal line beyond the corporation’s own targets really comes in. So looking towards the future, gazing in a crystal ball, most of the empirical evidence says that we have a ways to go to reach that externally defined goal line. So as a last question, what’s the role that you see ratings playing in moving us towards that goal? What function do they serve in the landscape of change?
Allen White: I’d say they can serve two basic functions. One is a messaging or positioning function. As GISR evolves, if the principle of Context is prominently displayed, and embedded in the ratings accreditation process, we are making a statement that Context is indispensible. And if we’re faithful to our mission as a sustainability ratings standard, there’s simply no avoiding its presence. So we’re signaling to the market — the ratings community, accreditors, investors, and companies – that the GISR subscribes firmly and unequivocally to the notion of Sustainability Context. It’s a voluntary standard, of course, so those who don’t believe in Context — or any other part of the standard, for that matter — will decide which path they wish to take: adjust their beliefs or elect not to accredit. But at this moment, I believe it would be a disservice to the entire sustainability movement to retreat or soften GISR’s commitment to Context*.* We recognize the challenge ahead, just as GRI did a decade ago. I anticipate GISR will devise an accreditation process that enables a gradual adoption of the Context principle, an “on-ramp” that allows for experimentation, adaptability, and learning. But the core commitment to Context I believe will remain intact.
GISR must collaborate with those who are serious about seeking methodological advances for both the environmental and social aspects of Context. No one has the lock on the science or applications of the concept. But we must refine both, sooner rather than later. We don’t have decades to get serious about Context in light of the ecological and social perils that lie ahead. I think the time for procrastination has passed and the time for aggressive movement is upon us. The world is issuing a collective wake-up call on the issue of thresholds and limits. We've lost precious time dawdling in the last decade. We can’t afford another decade of the same.