What does Advocation and Leadership for a Green, Inclusive, and Open Economy Look Like?

By Ralph Thurm & Bill Baue

This article rounds up our practical tools and recommendations in the Reporting 3.0 Work Ecosystem that supports mindset and paradigm shifts. We have presented basic exercises to understand our transformational challenge and strategic and operational step-by-step guidance to become future-ready by aligning with the needs of a Green, Inclusive and Open Economy. Switched-on leaders that enable the necessary shifts in thinking and doing enable organizations to close the sustainability context gap, the organizational transformation gap and the socio-cultural leadership gap.

What’s the issue?

The Ultimate End of our society is wellbeing for all within the Ultimate Means of earth’s bounty, a set of bounded goals that our current economic system transgresses on both ends, clearly necessitating economic system transformation. Triggering such change requires nano (personal) level insights and mindset shifts that lead to micro (organizational) level reformation that scales up to meso (industry, habitat or portfolio) level transitions that create pull effects on macro (economic, social, and ecological system) level transformation.

This pull will only come through ‘irresistibility’ of sustainable economics, and understanding of the need to transform. Scalable change doesn’t happen automatically; it needs leadership and advocation to become reality. ‘Yes, but…’ arguments abound, and can all be dismissed by calculating the ROI of humanity’s survival — and the realization that only sustainable business models will survive the transitions into the new economy.

Why it’s important?

Throughout this series, we have clearly established the need for scalable transformation, but we see insufficient evidence of planning and activation by current leaders. The “mainstreaming” of sustainability lags the pace and scale needed, through a combination of denialism by incumbents and incrementalism by progressives. Predatory delay, as Alex Steffen points out, encompasses not only insidious blocking of needed change, but also well-intentioned gradualism that similarly props up “unsustainable, unjust systems” (as he calls them) because faster, broader change would disrupt the continuity of career plans, entrenched business models, portfolio returns, and economic “stability.”

What’s lacking is a “North Star” or “Southern Cross” to guide the integration of reporting, accounting, and data in support of the emergence of new, integral business models that scale up to sustainable, regenerative and thriveable economies. To help fill this gap, Reporting 3.0’s four Blueprints advances a “minimum viable product” approach to an interrelated work ecosystem designed to scale transformation.

Now, how to get everyone behind it? Necessity and irresistibility. On the former, climate change and other megatrends are locking seismic changes into our systems, requiring inevitable, fit-to-task responses. Lagging leaders cling to outmoded approaches that only serve to solidify failing systems; visionary leaders grasp the path to 2050 and beyond, framing attractive new avenues to prosperity reconciled within ecological and social imperatives.

How can you tackle it?

This series on the Transformation Journey initiated with mindset-shifting at the nano/personal level, then outlined the necessary steps for transformation at the micro level. Meso level shifts are the key step for scaling up toward macro level transformation in support of the emergence of a Green, Inclusive and Open Economy. So, we outline the needed meso and macro level shifts here:

Meso — Industry sectors are collectives of players with similar business models. While each competes to outperform the others, they all face common threats and challenges that operate outside the realm of competitive advantage. Survival and thriving in the 21st Century increasingly requires collective action, lest all suffer. The responsibility of each individual leader is to create collective followership towards that necessary transformation. Industry federations often act from a “lowest common denominator” approach, with the weakest setting the bar and the federation as a whole defending the status quo. Now, such retroactive approaches need to be augmented (if not replaced) by forward-looking perspectives that keep your industry at the forefront of change. We recommend taking the lead in a couple of federation-based activities:

• Create new benchmarks that set industry-level thresholds and allocations, to clearly define the “safe and just operating space” at the industry level, and thereby identify the “playing field” for competitive advantage. Individual players can then follow the Transformation Journey to set sustainability maturation pathways and corresponding roadmaps using the r3.0 Strategy Continuum.
• Support initiatives that create collective consciousness in your industry sector. Learning from each other and then collectively advocating for change to level playing fields at the industry level will help all players. Your industry will thrive or fail together. As we say ‘there is no sustainable business in an unsustainable world.’

Meso — Habitats, bioregions and cities are the geographic places where impact and contribution to system value really happen, in connected ways. Stocks and flows of vital resources (the multiple capitals) are deployed, transformed, or destroyed here. While “economies of scale” may help companies optimize their very own products and services, they often simply “offshore” negative impacts elsewhere geographically. The Transformation Journey calls for taking a more holistic approach that recognizes the interconnected of habitats, and seeks to build “economies of reciprocity” in value cycles (as opposed to value chains) where system value can be generated in ways that scale mutually beneficial positive impact. Given that this geographic scale is where market and state meet the commons, this is a vital space for innovation that generates collective benefits, transcending the monocapitalist approach of “enclosing” and “privatizing” value while socializing costs, the Transformation Journey calls for a more harmonized approach that justly distributes value and engineers “costs” into regenerative cycles.

• As with industry sectors, new benchmarks can be developed at the bioregional / habitat level. For example, Economic Democracy Advocates is developing a thresholds & allocations-based approach to agriculture at the bioregion of the San Francisco Bay Watershed. It identifies the thermodynamic “biocapacity” of the bioregion, and then sets allocations based on the nutrition needs of the population, to assess the degree that human need can be met more efficiently and effectively at the bioregional level than through global agcicultural supply chains.
• Bioregional habitats also represent a coherent sphere for system value creation, tapping into cooperative business models that prioritize the wellbeing of its members, not the extraction of wealth for a superset (as the doctrine of shareholder primacy dictates). These collectives can collaborate across regional boundaries for mutual support.

Meso — Portfolios represent a third category of meso level scaling potential, as they aggregate micro level companies into a “basket.” However, investors’ focus on “portfolio risk” has blinded them to the emergence of “systemic risk” that comes when incremental negative impacts at the micro level (which often seem negligible) aggregate at the meso level into outcomes that overshoot ecological carrying capacities, for example, thus creating threats at the systemic level (that are now aggregating to threats at the existential level that call into question the ongoing viability of human systems as we know them.)

• We address this opportunity in much more depth in the next article (21), so we direct you there for more insight.

Macro — Advocation by leaders is necessary to enable economic system incentive change. In article 4, we described the four main areas of change needed. All these need governments to help implement them, but the basic advocation of this necessary change needs to come from a collective consciousness in industries, habitats and portfolios.

What will you have achieved?

The Transformation Journey from nano through micro and meso to macro will take time, possibly a whole generation. But every journey starts with the first step, and those steps are needed now (if not even yesterday). Advocation is fuelled by the shift from envisioning “The Future We Want” to activating “The Future We Design.” This requires backcasting from this desired future to connect with the needs of today in order to build out a proper advocation infrastructure to serve as guidance. Such steps remedy the “action for the sake of action” conundrum, replacing it with action vetted against desired outcomes.

What will we discuss next time?

How can investors help to create system value. Please find part 21 here.

[Context of this series: This is part 20 of the Reporting 3.0 series that forms the basis of an Implementation Guide that summarizes the total value of Reporting 3.0 in implementing a future-ready sustainability strategy and disclosure approach, in line with the idea of a Green, Inclusive and Open Economy. By posting these articles here Reporting 3.0 seeks feedback in the writing process of the final document, to be released as Blueprint 5 at the 5th International Reporting 3.0 Conference in Amsterdam, The Netherlands, on June 12/13, hosted by KPMG, see www.2018.reporting.org]