PESTLE & Water

This week, I’ve worked on an integrity and sustainability assessment with an agribusiness (fruit plantations) operating across Southern Africa. One of several exam questions my client (an investor) set concerns the agribusiness’s ability to handle corrupt demands.

When I opened the “dynamic scenario analysis and planning document” they shared, I wasn’t expecting to find a rather nifty variation on a risk assessment, tweaking the conventional PESTLE model and adapting to PELE. I learned a lot, specifically:

🤔 Pick models that work for you and play with them. ISO-whatever might not. Nor will regulatory guidance written in abstraction by people who’ve never been in your shoes.

🤔 Develop measurement frameworks (in this case, an axis) that work for you axiomatically 😅. Each page (political, economic, legal/regulatory, and environmental/social) of their assessment had an X and Y axis adapted to their markets. For instance, the legal page went from “constrained” to “independent” on the Y axis and “regressive” to “democratic” on the X axis.

🤔 Think in bets. On these axes, in bubbles, they mapped out scenarios in three “rivers” that flowed across the page (blurred image below): optimistic, realistic, and pessimistic. The following page sets out the triggers necessary for each ‘bubble.’

🤔 From the bubbles, they condensed the current top risks (8) requiring priority attention. The analysis following the risks focused on mitigation, contingencies, triggers, and assumptions to be tested.

🤔 The whole thing spanned eight graphically attractive and straightforward slides, which a senior management team can understand.

Was it perfect? No. Nothing is. Was it considerably better than many much larger and more resourced organisations? Yes. Why? They’d set risks in context, captured the dynamism of risk in scenarios, consider triggers, and prioritised succinctly.

So, why PESTLE and Water (not “Pestle and mortar” for the cooks among you)? Water is essential for growing fruit, but it’s increasingly scarce, politicised, and unpredictable. As their most significant risk, they’re doing some clever things. For instance, building dams, using drip-feeding technology, and cover crop planting (to improve biodiversity, soil quality, water retention, and create mulch to go around the base of the trees and retain moisture and enable beneficial microbial activity). These steps will be a much more effective mitigator to corrupt or capricious demands from state utilities or government officials than an ABAC policy.