Last weekend I was lucky enough to be posed with the following decision; hit the surf or not? The weather was unspectacular (and it turns out so was the surf), my family was keen and the wetsuits were ready. So, I made the call and off we went to Porthcawl. Lovely.
But how did I arrive at that decision? After all, there were many, many other things I could have invested my time into. Was it all about the pleasure, the learning, shared experiences or something deeper, more meaningful? Or, was it a combination of ideal circumstances that made the marginal gain worth it? To be honest, I don’t know for sure but what I do know is that I had to make many other ‘decisions’ before I settled on what I was going to do with my time. It got me thinking about what is the right thing to do and why making non-financial decisions is so challenging.
In my last blog I noted that sustainability is inherently complex being both spatially and temporally diverse. We ask executives to make judgments all the time but, in my view, very rarely with such an array of variables as those posed by ESG. So, how are ESG decisions made today and what are the weaknesses in the prevailing approach?
Of course, much depends on who the decision is made on behalf of, but let’s look at this from a general perspective to start with. ESG decisions are becoming composite in business decisions and that means it may well come down to an individual but that is certainly the exception, not the rule. Therefore, we find that it is often resultant from multiple stakeholder views, widespread data sources and shifting business imperatives which ultimately lead to a rather foggy view of the road ahead.
And this is what I think strikes fear into the heart of the folks responsible for these decisions. Being held accountable for a decision today that may have profound impacts in the future is an uncomfortable position to be in, even if you are strong enough to withstand the scrutiny. It’s also why many decision makers want to try and frame ESG decisions in the rather more comfortable, and stable, world of numbers. I understand this, of course, but sustainability really doesn’t play by those rules and that’s why we have a persistent discourse between the ‘numbers’ guys and the ‘hippies’.
I recall, at a BCSD event in Birmingham, U.K., a presenter claiming that ’accountants would save the world’ and there’s some truth in that.
However, when you’re charged with thinking about inter-generational timeframes, non-human stakeholders and predicted future events with such complexity I do think there’s a place for listening to what your instincts tell you. It requires nerves of steel but to try and quantify absolutely everything ESG-wise would be nigh-on impossible. But that doesn’t mean we shouldn’t strive to make smarter ESG driven decisions. Far from it, in fact.
We know that really good decisions typically come about through diligent approaches that, more often than not, think about the outcome side of the equation. But, is this the right approach for ESG decisions?
Starting with what makes a good decision, there is no single answer. We’d all agree that it all ‘depends’ on something. Whether it’s context, timing, applicability, maturity or some other aspect it’s really difficult to arrive at what a clear definition of a good decision is. Therefore, we often find ourselves defaulting to making an increased number of decisions in a bid to unravel such complexities.
Now, more than ever, we tend to stage our decisions and base these on the interdependencies between different factors in a bid to ‘achieve’ some distant objective. Reflecting on the ‘outcome-led’ approach is important when it comes to ESG decisions. Radical as this may at first seem, the problem is that there will inevitably remain a sizeable delta between what we hope and want to achieve versus the reality of what’s attainable.
This is amplified when thinking about ESG factors such as carbon reduction or soil degradation which really don’t give us much time to fiddle with decisions or develop and then scale-up solution; let alone deal with behaviour change. The natural world, for example, responds in many different, non-linear ways and over timeframes that are very tricky for us to comprehend when set against our current modes of thinking. This does require a paradigm shift in how we make our decisions and tasks us with using the tools we have at our disposal to the best possible effect when optimising our decision making.
Reconciling this, for the majority, is about being able to make smarter, value-based decisions that are a compound of many pieces of information but in such a way that actually reduces the total number of decisions we make. This is a sizeable challenge because the range of variables and interdependencies we have to factor-in necessitates a holistic view to be created. And that takes great data, strong modeling and a willingness to think laterally. Simply defaulting to a prevailing mechanism within the dominant system will, in all likelihood, result in failure.
Now is the time to act wisely and think very carefully about the information you need to gather to best serve decisions for tomorrow. Ignorance is no excuse!