Over the holidays, I got stuck into some further studies - ESG.
Going back to the source information, the “Core Metrics and Disclosures”, a lot of discussion focuses on data availability and the challenges it causes. To summarise:
👉 Sentiment data 👉 Self-reported data (e.g., sustainability report) 👉 Metrics
The first is often about trawling the ether for negative or positive reviews, reports, etc. But how is this done evenly - linguistic comprehensiveness, factoring censorship and press/personal freedoms in countries or operations, access to the internet, etc? - is lacking. The middle one is problematic, as there’s an interest in relaying good news and muffling bad stuff. But the metrics confused me and led me to the tongue-in-cheek alternative acronym in the title 👆.
The image below better illustrates the challenge, showing how various rating agencies scored companies - Amazon and Apple - very differently. Why?
Well, we don’t have agreed metrics. How do we rate Amazon’s employee treatment? What about Apple’s promises around conflict metals and minerals, juxtaposed with the relentless pressure to bring out new models and build in obsolescence?
In the face of this chaos, some call for standardised rules and frameworks. I get that. But it makes me very nervous because:
🫨 “Solutions” bring new problems that we seldom fully understand (at the beginning) - we heralded the arrival of the automobile as it cleared our cities of horse manure pollution.
🫨 We disagree on the parameters - for example, the debate continues around soil health and its ability to capture carbon when “plant-based alternatives” are heralded as saviours despite negatively impacting soil health and biodiversity (often using intensive monoculture practices).
🫨 S and G elements cannot be measured consistently globally - avoiding human rights issues in Finland is much easier than in Cambodia.
The last point I touched on a little clumsily in this recent interview with Ethikos. I paralleled an aid agency (yes, I know they’re not ESG-rated yet) having to placate unsavoury warlords to reach starving people versus a smug beer brewer who grandstands on social issues from the comfort of the UK. Is it fair to give the latter a better rating? Should ESG not consider the purpose and intention of the organisation?
So, what to do about ESG? Go beyond. Yes, you may need to report on certain data points, but it’ll help to have a broader risk, sustainability, and impact focus that mirrors what you do, your purpose, and your strategy. More simply, don’t treat all 20-30 metrics (typically) as equal, risk-rank, prioritise, and focus on those with multiplier benefits to your organisation (and its mission). Are you confused about how? Get in touch.
Keys and souls
Konstantin Stanislavski said, “The language of the body is the key that can unlock the soul.” I love learning words or phrases in other languages that are untranslatable or reveal insight about another culture. What then to make of this list (from Big Think):
🤔 In Swedish, a common phrase meaning “don’t worry about it” translates to “there is no cow on the ice”. 🤔 If somebody sneezes in Mongolia, locals say “bless you, and may your moustache grow like brushwood”. 🤔 In Polish, you might say “not my circus, not my monkeys” (essentially: “not my problem”). 🤔 And whereas in English we might end a story saying “and they lived happily ever after”, in Norway they go for: “and if they’re not dead, they’re still alive”.