Over the past five years, the rapid ascent of global sustainability disclosure and reporting frameworks has been astounding. The rising and turbulent tide of financial, accounting, regulatory, NGO, and trade-based standards has promulgated a new generation of business acronyms that seek out greater data transparency, business (and executive) accountability, and enterprise impact. This alphabet soup of new reporting obligations has spelled out trouble for global corporations who have been ratcheting up their regulatory-required and voluntary environmental, social, and governance (ESG), and more broadly, sustainability-focused disclosures to remain responsive to the growing expectations of salient shareholders and stakeholders.
Global companies have plunged head first (in some cases without floatation devices) into the stormy acronym sea to strategically posture among their peers as they compete for capital, reputational advantage, and social significance. The adage, ‘what gets reported gets measured,’ has provided credence to the advance of the ESG and sustainability transparency movement. Truly, if there is a business metric that is monitored, measured, and reported upon, it must be important, right?
With ESG and sustainability disclosures amplifying the requirements and process of corporate reporting, the toll on corporate Boards, governance, accounting and finance, investor relations, and ESG/Sustainability teams has been significant. Recent emphasis on ESG reporting has increased the overhead associated with disclosure. Companies now spend more time and money both internally and with external counsel, accounting, and specialty consulting firms to ensure they can meet the rigorous timeline and nuanced requirements of all the acronyms riding the disclosure wave.
What’s troubling and uncertain, (call it an informed, professional “hunch,”) is how long companies can safely surf the disclosure wave until it smacks down against the sharp reef and rocky coast comprised of activist investors, citizen scientists, regulatory reformers, employees and consumers. Transparency does not equate to sustainability, and the acronym soup of disclosure requirements has elevated the risk of “a lost in translation” moment for business sustainability. So that I’m not misunderstood here, let me say that I’m not against corporate transparency and disclosure, particularly as focused on sustainable enterprise and impact. The question that will soon require reconciliation, however, is whether or not individual companies, supply chains, business sectors, and the entire global economy are enabling a greater prosperity, grounded in sustainable principles. Amid all of the ESG data analysis, disclosure, rulemaking, and polarization of perspectives - is the economy actually becoming more sustainable?
The Widening Chasm Between the Reality of Corporate Disclosure and Stakeholder Expectations
Unfortunately, the emphasis on ESG and sustainability reporting and disclosure has muddied the waters of corporate sustainability strategy, innovation, and impact. Reporting, while an element of contextualizing and understanding corporate sustainability, has served more as a proxy for “everything sustainable.” Many sustainability practitioners understand the nuance, but many stakeholders do not. Anyone can do good on a test (particularly when the questions and ground rules are known in advance). A truer measure of [sustainable] performance is marked by intent, action, and impact, not just the careful preparation of curated data.
There is a large and widening chasm between the purpose, product, and functionality of ESG and sustainability reporting and disclosure and the idealistic hopes and expectations of the beachgoers watching the wave rise and accelerate toward the shore. Corporate transparency and disclosure have a big role in legitimizing sustainability. That said, sustainability is never a “one and done,” metric, report, or financial filing. Business sustainability is dynamic and requires not only a retrospective accounting of investment and impact, but a pragmatic and principled stance on every singular moment. Retrospective reports cannot ascertain “in the moment” principled leadership, strategy, or intent. They can retrospectively provide a glimpse into corporate reasoning. Business happens in the moment, and our future sustainability is predicated on what business is doing right now and how it is envisioning its future.
Real and Lasting Sustainability Happens in the Moment
Having a future-focused long-term intergenerational perspective is a cornerstone to sustainable development. Meeting our needs in the present without limiting or hindering the ability of future generations to meet their own needs is the classic sustainable development definition. The natural resource choices and decisions we make today have a direct correlation to the capacity of future generations to meet their own needs.
We do not know what the future needs of society may be. We can make logical assumptions and projections on where the economy is heading, and what the future may look like. For example, we can reasonably assume, based upon our current knowledge, data, and understanding of society that population will continue to grow creating competition for natural resources. Advanced technology offers enormous potential for resource optimization and enhancing our quality of life, but only if we intentionally design and integrate technology with humility and within moral and ethical principles.
We cannot (yet) predict however, with more than a few minutes or hours of notice, when a volcano may erupt; when a tornado may hit; or where, when, and how any number of planetary or societal extreme risks may spiral into something devastating. Thus, the future needs of society are comprised of generalizations and unknowns.
Change is omnipresent. While we like to try to predict change, managing it can be fleeting, and often, we fail. We cannot predict, at least with any great precision or certainty, the state of the economy or society in twenty, fifty, or a hundred years from now. We can only generalize. This should not deter us from trying to see into the future. Although our soothsayer skills are limited and we cannot foretell the future, we can influence it in the here and now. The actions, behaviors, and decisions we take and make today (i.e., political, social, economic, professional, just and ethical, etc.) directly impact the future.
On a personal level, our decisions and activities in the moment impact the health and wellbeing of our mind and body. There is a delay in time between our decisions and the outcomes of those decisions. Sometimes the impact of our decision may be felt immediately, yet in other instances, the impact may not be seen or felt for a very long time. Famed MIT systems scientist, Peter Michael Senge[i], discussed the time and effect phenomena as one of his “11 Laws” in his book, “The Fifth Discipline: The Art & Practice of the Learning Organization.” Senge noted in his Law 7, “Cause and effect are not closely related in time and space,” meaning that we may not see positive or negative consequences of our actions for weeks, months, or years. Consider any bad habits such as smoking, drinking alcohol excessively, eating a diet of fatty and sugary foods, or having a sedentary lifestyle. All these behaviors may not have an immediate negative consequence on the mind and body, but if sustained over time, these choices can lead to serious health consequences including diabetes, obesity, heart disease, cancer, and stroke. The decisions we make now, in the moment, are a portal to our future self and society. Making lots of good decisions can lead to an optimistic future. Making an abundance of poor decisions leads to a challenging future.
How an “In the Moment” Sustainability Posture Will Drive a New Prosperity
American (and human) prosperity is increasingly being called into question. The affordability of housing, food, education, healthcare, energy, transportation, and consumer goods and services are top-and-frontline concerns for consumers and voters. Further, entrenched and longstanding market failures perpetuate environmental, social, and economic issues which continue to plague disadvantaged peoples and communities, further exacerbating equity and justice concerns. Topically and pragmatically, focused attention on "a new prosperity" gets to the beating heart of the pervasive divisiveness that continues to pit many Americans against each other and shape the unfolding political landscape and agenda.
While some politicians (and citizens) long for a prosperity of yesteryear (one by the way, that is a romanticized relic of the past), others are focused on the seemingly endless firefight for a prosperity that has never really actualized for them. Mired in “the good ‘ol days” of what could have been of the past and overburdened and exhausted by the rhetoric of the present, most people simply don’t have the energy or focus to pull together to formulate a new and shared prosperity. To do so would require unprecedented leadership, something which we are all starved of and desperately in need of. The leadership we need needs to transcend the echo chambers of tech elite, political pundits, partisan politicians, and (un)social influencers. It's a tall task and big, likely thankless job. But for those with courage, tenacity, and humility, there are multiple job openings that need this new kind of pragmatic and principled leader.
However, if we allow ourselves the opportunity, sustainability can provide the foundation for all people to positively and proactively shape our prosperity today, and well into the future. Americans (and all nations) are in a fight to adapt, survive, and thrive. A new prosperity is emerging, one defined by a deeper innate wisdom, a keener application of intellect, and a more dignified and humanistic value for all people and living things. We live, work, and play in an imperfect global society. The longing for a prosperity that dates back one, two, three or more generations ago should not be our aim. Looking toward the past is a distraction from the realities of the present, and requirements of the future. The focus of our attention must be here, in the present moment. Our pursuit of prosperity should be measured, unified, and resolute. We can get there by having more constructive dialog, actively listening and learning about each other’s needs and perspective, and shedding ego and irrational behaviors that prevent people from working together.
Sustainability is not just a corporate scorecard relegated to quarterly earnings, reputational jousting, and securing new investments. If conceived and deployed as a foundation for adapting to change, enhancing quality of life through innovation, and enabling a new generation of principled leadership to emerge – then sustainability will finally and unequivocally "be in the moment, and have its moment" toward achieving a new prosperity for all.
[i] Source: Wikipedia. “Peter Senge.” Accessed June 10, 2024. https://en.wikipedia.org/wiki/Peter_Senge
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