By Bill Baue, r3.0 Senior Director
“Sustainability requires contextualization within thresholds. That’s what sustainability is all about… 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.”
Global Reporting Initiative Co-Founder Allen White
Interview with Bill Baue, 8 November 2013
A car is speeding toward a cliff at 60 miles per hour (mph). As the severity of this situation becomes clear, standard setters emerge to address the problem. An independent group of experts in acceleration reduction and direction reversal humbly suggest to standard setters that they should call for slowing down and turning around the car, to avoid hurtling off the cliff and crashing into the chasm.
“Duly noted” the standard setters respond in a calm but distracted voice, and proceed to spend an entire decade setting standards that recalibrate the speedometer to read half the actual speed (60 mph = 30 mph) and replace the steering and braking systems with a GPS system programmed to display the vehicle heading in the opposite direction (despite the fact that the car is still heading straight for the cliff…)
The new standards are met with widespread celebration (“Hurray — we’ve averted the hurtling-off-the-cliff-and-crashing-into-the-chasm crisis!”). When the group of acceleration reduction and direction reversal experts point out that speedometer recalibration and oppositional GPS displays are actually anti-solutions, and that actual solutions that exhibit common sense (namely: slowing down and turning around) have been readily at-hand all along, these experts are dismissed as alarmist. The experts shake their heads over the lost decade and so much more…
This lost decade for sustainability standards carries much broader implications as a lost opportunity for sustainability writ large! Just imagine if advances had been made in sustainability standards: those would ripple through to curbing adverse corporate impacts and enhancing beneficial impacts; which would ripple through to supporting deeper investor activism on sustainability; which would ripple through to greater government legislation and regulation for sustainability; which would ripple through to greater societal awareness and action for sustainability; which could ripple through to transform to a world that values all life with such depths of love that we humans treat each other, and our precious earth home, with profound respect by perpetually planting seeds to nourish our children’s children’s children.
Contrary to the superficial case made by many, 2023 was a catastrophic year for sustainability standards, capping off a decade of lost potential whereby sustainability standard setters have ultimately sabotaged sustainability, setting back sustainability efforts by a decade or more — precisely at the time when humanity needs to be rapidly advancing to sustainability…
This r3.0 Common Good Resource Paper (part of our Positive Maverick Thinking series) places a robustly evidenced analysis into humanity’s collective knowledge commons for contemplation and scrutiny to support critical reflection and undergird strategic decision-making at individual and institutional levels.
After providing a concise Interactive Timeline summarizing milestones in the past two decades of sustainability standards sabotaging sustainability, the Paper opens with an Introduction laying out the case for how sustainability standards sabotaging sustainability, by
- ignoring the need to assess sustainability across scales (for example, by isolating assessment to the enterprise scale); and more significantly,
- ignoring the normative thresholds and limits in ecological and social systems that literally define sustainability.
The Introduction anchors the analysis to the idea that normative institutions (such as sustainability standards) play two interdependent roles: a conservation role of enforcing existing social norms that have served us collectively to date; and an innovation role of stewarding the cultivation of new social norms in response to emerging realities that warrant transforming our collective understanding and responses.
As the evidence reveals, despite the fact that all of these sustainability standards emerged within our current generation (ie within the past quarter century), these normative institutions are playing a conservation role of enforcing outdated norms, instead of performing the role one would expect of emergent institutions of stewarding the cultivation of new norms befitting the emerging realities of collapsing ecological and social systems.
The remainder of this Paper advances a Robust Analysis in two parts:
- Part I establishes the Historical Context of the genesis of sustainability standards in their first decade (2002–2013), and identifies the first instances of sustainability standards sabotaging sustainability;
- Part II documents the Lost Decade (2013 — Present) when sustainability standards cemented their sabotaging of sustainability.
Part I kicks off with GRI’s 2002 establishment of the Sustainability Context Principle, which calls for assessing organizational performance in the broader context of sustainability thresholds (“limits and demands”) in the ecological and social systems within which organizations operate. This keystone development inaugurated the advent of what was later labeled Authentic Sustainability Assessment.
We move to GRI’s 2006 addition of the Materiality Principle, which it married to the Sustainability Context Principle by integrating not only traditional materiality thresholds borrowed from financial reporting, but also sustainability thresholds drawn from the physical and social sciences as well as ethical imperatives. We soberly note that this period (2002–2011) marks the apex of the development of sustainability standards — it’s all downhill thereafter… :-(
GRI’s 2011 revision of its Materiality Matrix represents “the beginning of the end,” as it initiated the process of sabotaging sustainability by repudiating the systemic focus of the original Materiality Matrix, with its horizontal axis reflecting the Significance of Economic, Environmental, and Social Impacts, and replaced it with the narcissistic focus of the new Materiality Matrix, with its horizontal axis reflecting Significance to the Organization.
The year 2013 introduced a number of new dynamics, including the emergence of new normative institutions in the sustainability standards space: the Sustainability Accounting Standards Board (SASB), and the International Integrated Reporting Council (IIRC). A broader dynamic that applied across the board (at both existing and new standards) was the emergent pattern of Public Consultation Processes that systematically ignored Public Comment Letters that made clear requests to respect the public interest of assessing sustainability performance authentically (ie in the context of sustainability thresholds).
The Robust Analysis devotes Sections to each of these Public Consultation debacles in 2013:
- In the Public Consultation for the 4th generation of Sustainability Reporting Guidelines (G4), GRI ignored the proposal to provide sufficient guidance to implement the Sustainability Context Principle, despite the fact that 66 prominent sustainability experts signed onto the Public Comment Letter, which also provided a general specification template. (This example established the pattern of sustainability standards ignoring public input that advocates for measures that clearly advance the public interest — a pattern that persists consistently to this day.)
- In the Public Consultation for its Conceptual Framework, SASB explicitly rejected the application of the ecological and social thresholds that define sustainability. (How can an institution claim to be a “sustainability accounting standard” while simultaneously rejecting fundamental defining features of sustainability?)
- In the Public Consultation for its International Integrated Reporting Framework, IIRC refused to integrate the carrying capacities of the capitals, despite the fact that it embraced the multiple capitals (natural, social, human, built, financial, etc) upon which sustainability praxis is predicated (Why in the world address the capitals unless you’re going to address their carrying capacity constraints?)
The Paper pauses between decades to assess the situation in this pivotal year of 2013, which we summarize as a period of Lost Opportunity.
Part II exploring the Lost Decade (2013 — Present) kicks off with a few glimpses of progress before focusing on the failure of sustainability standards to divert from their trend of sabotaging sustainability.
From 2014 to 2021, the European Union entered the sustainability standards space with EU Non-Financial Reporting Directive (NFRD) that shifted framing in 2021 to the EU Corporate Sustainability Reporting Directive (CSRD) as a platform for developing a set of European Sustainability Reporting Standards (ESRS). This development paralleled work under the Sustainable Finance umbrella developing a Taxonomy that unfortunately adopted a politicized definition over a scientific definition for sustainability thresholds.
In 2020, IIRC rejected public pleas to integrate the carrying capacities of the capitals when it updated its International Integrated Reporting <IR> Framework, even though it acknowledged that humanity is approaching “planetary limits.”
In 2021, GRI eviscerated “the heart of sustainability reporting” by removing the performance assessment requirement from its Sustainability Context Principle in its revised Universal Standards, despite public input urging against this move.
In 2023, the International Sustainability Standards Board (I?SB) — formed two years earlier by the International Financial Reporting Standards (IFRS) Foundation by merging IIRC and SASB — issued Sustainability Disclosure Standards in which I?SB advanced a nonsensical definition of sustainability (enacting definitional cooptation) and a sociopathic approach to materiality that has been likened to focusing on gunpowder wounds on the trigger finger.
Also in 2023, the EU issued final ESRS versions, integrating sustainability thresholds into almost all the Environmental Standards, but not into the overarching Standards nor the Social and Governance Standards. The Delegated Act that formalized the Standards diluted them from mandatory to voluntary. Promisingly, the EU frames the ESRS as a performance standard, as compared to GRI’s repudiation of Sustainability Context as a performance standard.
Having arrived at the present, we pause to reflect back on GRI Co-Founder Allen White’s reflections from a decade ago:
“Sustainability requires contextualization within thresholds. That’s what sustainability is all about… 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.” [emphasis added]
White’s utterance remains as true today as it was a decade ago — things have not improved substantially since 2013 when it comes to sustainability standards embracing the ecological and social thresholds that define Sustainability Context.
In this context, the Paper concludes by projecting two scenarios for the coming decade:
- In Scenario One, which we consider most likely, sustainability standards double down on sabotaging sustainability, painting lipstick on this pig by slapping the term “interoperability” on their ex post facto attempts to present themselves as consciously coordinated (r3.0 Managing Director Ralph Thurm calls this entrenchment “Fort Interoperability.”)
- In Scenario Two, which we consider the most vague of possibilities, sustainability standards make an abrupt about-face to integrate the thresholds that define sustainability and thereby advance authentic sustainability as a coherent “Sustainability Reporting System.”
The latter would have to overcome an incredible amount of inertia, in the form of institutional lock-in, embedded incrementalism and predatory delay, political intransigence, ego entrenchment, corporate capture, systemic bias against sustainability thresholds, shareholder primacy, economic growth fetishization, and ultimately, the inherent violence and unsustainability of the predominant colonizing economy and culture.
But we suspend judgment at least momentarily, and imagine if advances are made in sustainability standards: those would ripple through to curbing adverse corporate impacts and enhancing beneficial impacts; which would ripple through to supporting deeper investor activism on sustainability; which would ripple through to greater government legislation and regulation for sustainability; which would ripple through to greater societal awareness and action for sustainability; which could ripple through to transform to a world that values all life with such depths of love that we humans treat each other, and our precious earth home, with profound respect by perpetually planting seeds to nourish our children’s children’s children.
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Note: this Medium article links directly to an openly available Google Doc. A pdf version is also available on r3.0’s ‘Common Good Resources’ rubric.