CSDDD: resistance is futile

The EU Corporate Sustainability Due Diligence Directive (CSDDD) was meant to be a done deal, yet support for it collapsed in spectacular fashion last week, with the Directive failing to secure final approval in the European Council. Undoubtedly a setback for anyone who believes that big business should be held accountable for their activities’ impacts on people and planet, my sense is it can only be temporary, for multiple reasons I shall explain. But before I do, a wee bit of background…

What exactly is the CSDDD?

In short, it’s a major piece of EU regulation that would require big businesses based in the EU (or with significant revenues generated there) to conduct rigorous assessment of actual and potential environmental and human rights impacts across their operations, subsidiaries and value chains. Under proposed rules, they would have had a duty to prevent or mitigate any potential impacts identified, and to take steps to minimise or end any actual impacts. Additionally, the CSDDD would have been the first piece of EU law to mandate companies’ development of Paris Agreement-aligned transition plans.

So, why was it scuppered?

Guess what? It would appear that a lot of vested interests don’t want to be held accountable in this way. While many businesses have come out in support for the CSDDD (for reasons described below), other business groups have denounced it as too financially and administratively burdensome – a view echoed by the German Free Democratic Party (FDP), whose machinations have been widely reported as setting in train the domino effect that brought down the deal.

So, why should the setback only be temporary?

1. Because the necessity of robust due diligence processes is already firmly established

The corporate duty to identify, assess, and take action to mitigate or prevent adverse impacts is already core to globally recognised voluntary standards, such as the UN Guiding Principles on Business and Human Rights. Furthermore, supply chain due diligence and/or disclosure obligations are increasingly core to various national regulatory regimes around the world, as well as existing EU directives, such as on conflict minerals and deforestation-free products.

Ironically (given their de facto ‘nays’ to CSDDD), those national regulatory regimes include France’s Duty of Vigilance Law and Germany’s Supply Chain Due Diligence Act, as well as existing or proposed laws in Belgium, Norway and Holland.

In this context, the argument that the CSDDD represents an unnecessary burden on EU businesses seems odd, if not utterly ludicrous. As many have been keen to point out, including supportive businesses, it provides a much-needed means to harmonise fragmented approaches, and to provide clarity and certainty as to what businesses are required to do (and what liabilities they face if they don’t).

2. Because due diligence is inextricable from double materiality reporting

Double materiality reporting requires that companies assess and disclose not just how sustainability issues impact their business (financial materiality), but also how their activities impact society and the environment (impact materiality). Already core to mandatory disclosure requirements under the EU Corporate Sustainability Reporting Directive (CSRD) – which has already passed and takes practical effect from next year – a double materiality approach is also central to new sustainability disclosure guidelines published in China last month, which stands to establish it as the de facto global norm.

The addition of impact materiality assessment necessarily expands the boundaries of reporting to encompass the entire value chain, since that is where most outbound risks and impacts typically reside. Required disclosures include how material issues arise from – and may require adaptation of – business models and value chains, increasing the need for businesses to expressly consider sustainability-related risks, opportunities, dependencies and impacts in the development of corporate strategy.

Surely it’s impossible to make credible disclosures, absent effective due diligence processes to identify actual and potential impacts, and the requisite structures and processes for integrating findings into strategy and the development of appropriate transition plans? The notion that nixing CSDDD nixes these requirements seems suspect to say the least.

3. Because why wouldn’t business leaders want to understand and address their impacts?

Ultimately, it boils down to this. At the crossroads of impact and financial materiality (and, ideally, with consideration of context-based materiality), we find answers to some pretty fundamental questions, i.e.:

• Impact materiality: How do our activities (and the activities of our suppliers) impact the people, resources and ecosystem services that our business model relies upon to function?
• Financial materiality: How does the quality and availability of those resources and services impact our ability to create and sustain enterprise value?
• In combination (and ideally with regard to the wider context of planetary and social thresholds): How do our dependencies and impacts on those resource and services impact their quality and availability? How does this affect not only the resilience of our business model, but also the health and resilience of the social and environmental systems it’s part of?

In other words, due diligence is fundamental to understanding business model resilience in an era of rapidly changing frame conditions, and the rapidly rising physical, transition and litigation risks that go with them. When ensuring the ongoing viability and success of the enterprise is supposed to be company boards’ primary concern, it’s surely an act of wilful ignorance to deny the necessity of understanding and addressing dependencies and impacts.

More evidence that green growth doesn’t work. But how useful is it?

Much chatter, last week, about a new paper from doyen of degrowth, Jason Hickel, and Jefim Vogel, which ought to be another nail in the coffin for green growth (memorably – and rightly, IMHO – described by Timothée Parrique as a form of macroeconomic greenwashing).

Why is it significant?

The study focuses on 11 high-income countries that have achieved some level of absolute decoupling of GDP from trade-adjusted GHG emissions over a sustained period. What’s novel about it is how it evaluates the sufficiency of their decoupling rates – not comparing individual countries’ performance against the global average rate of reduction needed to meet Paris Agreement targets, but rather against a rate consistent with each country’s own fair share of the remaining Paris-aligned global carbon budget.

The significance of the study is therefore in terms of speed and equity. No one denies the possibility of decoupling economic growth from emissions to some extent. The real questions, however, are whether or not such decoupling is occurring at the pace and scale required to limit global heating to 1.5C, and in a manner whereby each country is shouldering its fair share of the burden.

The results? In a word, damning. On average, at the achieved rates of decoupling, it would take more than 220 years for these countries to reduce their emissions by 95%, emitting 27 times their remaining 1.5C fair shares in the process.

So, why do I find myself questioning its usefulness?

Given my own allegiance to the degrowth thesis, you’d expect me to sound more upbeat about this powerful piece of analysis, so why the reticence?

Two reasons…

1. Missing the bigger picture

I think I get the strategy of focusing narrowly on emissions. Evidence of decoupling of emissions from GDP growth is the ‘proof’ green growth apologists rely on for asserting that everything’s fine and dandy, so if you can undermine the validity even of this evidence, then (in theory at least) the whole house of cards comes tumbling down. But the risk of limiting the focus to emissions is that you implicitly play into the mistaken notion that climate change and the net-zero transition is the only thing that matters in terms of ecological sustainability.

We must never lose sight of the fact that climate change is but one of nine planetary boundaries that a sustainable society must operate within. There are five others that we definitely know we are overshooting – all more egregiously than climate change (especially in relation to biodiversity loss, chemical pollution and biogeochemical flows) – and some (most notably land systems change) where the direct correlation between economic growth and environmental harms is much harder to break.

2. Bringing a knife to a gunfight

If only facts changed people’s minds. They don’t though, do they? Sure, a study like this will bolster the cause of those who already believe that green growth is a myth, but how useful is it in moving the hearts and minds of those who still cling to its promise?

Do we really need an empirical study of this nature to prove that green growth doesn’t work? That proof is surely already around us, plain as day to anyone with eyes in their head. And it’s surely the epitome of common sense that, for example, more growth means more energy demand, which inevitably makes it harder to transition from fossil fuels to renewables.

It’s not an absence of evidence that’s stymying action, it’s an entire worldview that’s out of whack with how living systems actually work – a reality we’re blinded to by (among other things) the centuries-old indoctrination that humankind is separate from and superior to nature, the seductive simplicity of growth as the ‘rising tide that lifts all boats’, and the mainstream economic myth that externalities can be ignored as negligible market failures.

As I wrote in my degrowth article on LinkedIn a few months back, we’ve known for the best part of a century that GDP is an awful proxy for progress, so where’s the utility in seeking to ‘green’ it – or arguing over the technical feasibility of doing so?

The more relevant questions to be exploring – and new stories to be telling – relate to challenging the necessity and desirability of growth, not whether it can be greened. Illuminating how we can all lead better, happier, more balanced and fulfilling lives with ‘enough’, rather than being trapped on the treadmill of constantly pursuing ‘more’, feels like much more fertile ground for shifting opinion and driving action.

The IPCC synthesis report: let’s cut to the chase

Everyone should read the IPCC’s latest synthesis report. But because I’m sure many won’t, I thought I’d try to make its headline findings even more accessible by restating core thoughts in plain English. When you cut to the chase, is there really any doubt that incremental change, relative decoupling, outside-in-only ESG etc. won’t cut it?

	IPCC’s headline statement	Put simply
A1. Observed warming and its causes	Human activities, principally through emissions of greenhouse gases, have unequivocally caused global warming, with global surface temperature reaching 1.1°C above 1850–1900 in 2011–2020. Global greenhouse gas emissions have continued to increase, with unequal historical and ongoing contributions arising from unsustainable energy use, land use and land-use change, lifestyles and patterns of consumption and production across regions, between and within countries, and among individuals (high confidence). {2.1, Figure 2.1, Figure 2.2}.	The root cause of global heating has been, and continues to be, overproduction and consumption of energy and resources by the Global North.
A2. Observed changes and impact	Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred. Human-caused climate change is already affecting many weather and climate extremes in every region across the globe. This has led to widespread adverse impacts and related losses and damages to nature and people (high confidence). Vulnerable communities who have historically contributed the least to current climate change are disproportionately affected (high confidence). {2.1, Table 2.1, Figure 2.2 and 2.3} (Figure SPM.1)	While they’ve done the least to cause climate change, vulnerable communities in the Global South are experiencing the most severe impacts…
A3. Current progress in adaptation, and gaps and challenges	Adaptation planning and implementation has progressed across all sectors and regions, with documented benefits and varying effectiveness. Despite progress, adaptation gaps exist, and will continue to grow at current rates of implementation. Hard and soft limits to adaptation have been reached in some ecosystems and regions. Maladaptation is happening in some sectors and regions. Current global financial flows for adaptation are insufficient for, and constrain implementation of, adaptation options, especially in developing countries (high confidence). {2.2, 2.3}	…and we’re not helping them/can’t help them to adapt fast enough to the effects.
A4. Current mitigation process, gaps and challenges	Policies and laws addressing mitigation have consistently expanded since AR5. Global GHG emissions in 2030 implied by nationally determined contributions (NDCs) announced by October 2021 make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C. There are gaps between projected emissions from implemented policies and those from NDCs and finance flows fall short of the levels needed to meet climate goals across all sectors and regions. (high confidence) {2.2, 2.3, Figure 2.5, Table 2.2}	Despite all manner of political and financial commitments, there isn’t a single country whose plans are currently compatible, overall, with the 1.5°C Paris Agreement target.
B1. Future climate change	Continued greenhouse gas emissions will lead to increasing global warming, with the best estimate of reaching 1.5°C in the near term in considered scenarios and modelled pathways. Every increment of global warming will intensify multiple and concurrent hazards (high confidence). Deep, rapid, and sustained reductions in greenhouse gas emissions would lead to a discernible slowdown in global warming within around two decades, and also to discernible changes in atmospheric composition within a few years (high confidence). {Cross-Section Boxes 1 and 2, 3.1, 3.3, Table 3.1, Figure 3.1, 4.3} (Figure SPM.2, Box SPM.1)	We need systemic transformation now. Every day that passes without it – each and every further increment of heating – will only make it harder to deal with the ripple effects that follow.
B2. Climate change impacts and climate-related risks	For any given future warming level, many climate-related risks are higher than assessed in AR5, and projected long-term impacts are up to multiple times higher than currently observed (high confidence). Risks and projected adverse impacts and related losses and damages from climate change escalate with every increment of global warming (very high confidence). Climatic and non-climatic risks will increasingly interact, creating compound and cascading risks that are more complex and difficult to manage (high confidence). {Cross-Section Box.2, 3.1, 4.3, Figure 3.3, Figure 4.3} (Figure SPM.3, Figure SPM.4)	The effects we’re already seeing today are nothing compared to what’s coming, if we don’t act with urgency.
B3. Likelihood and risks of unavoidable, irreversible or abrupt changes	Some future changes are unavoidable and/or irreversible but can be limited by deep, rapid and sustained global greenhouse gas emissions reduction. The likelihood of abrupt and/or irreversible changes increases with higher global warming levels. Similarly, the probability of low-likelihood outcomes associated with potentially very large adverse impacts increases with higher global warming levels. (high confidence) {3.1}	We’ve already crossed vital tipping points and, without systemic change, feedback loops are likely to lead to even more abrupt and irreversible changes.
B4. Adaptation options and their limits in a warmer world	Adaptation options that are feasible and effective today will become constrained and less effective with increasing global warming. With increasing global warming, losses and damages will increase and additional human and natural systems will reach adaptation limits. Maladaptation can be avoided by flexible, multi-sectoral, inclusive, long-term planning and implementation of adaptation actions, with co-benefits to many sectors and systems. (high confidence) {3.2, 4.1, 4.2, 4.3}	When that happens, adaptation options that might look effective today will become increasingly useless at protecting us.
B5. Carbon budgets and net zero emissions	Limiting human-caused global warming requires net zero CO2 emissions. Cumulative carbon emissions until the time of reaching net-zero CO2 emissions and the level of greenhouse gas emission reductions this decade largely determine whether warming can be limited to 1.5°C or 2°C (high confidence). Projected CO2 emissions from existing fossil fuel infrastructure without additional abatement would exceed the remaining carbon budget for 1.5°C (50%) (high confidence). {2.3, 3.1, 3.3, Table 3.1}	Fossil fuel emissions are currently on course to overshoot our remaining 1.5°C-aligned carbon budget by 67%. So, let’s be honest: the idea that we can achieve net zero, while continuing to grow and burn fossil fuels, is nonsense.
B6. Mitigation pathways	All global modelled pathways that limit warming to 1.5°C (>50%) with no or limited overshoot, and those that limit warming to 2°C (>67%), involve rapid and deep and, in most cases, immediate greenhouse gas emissions reductions in all sectors this decade. Global net zero CO2 emissions are reached for these pathway categories, in the early 2050s and around the early 2070s, respectively. (high confidence) {3.3, 3.4, 4.1, 4.5, Table 3.1} (Figure SPM.5, Box SPM.1)	Simply put, there is no 1.5°C pathway without deep and immediate emissions cuts.
B7. Overshoot: exceeding a warming level and returning	If warming exceeds a specified level such as 1.5°C, it could gradually be reduced again by achieving and sustaining net negative global CO2 emissions. This would require additional deployment of carbon dioxide removal, compared to pathways without overshoot, leading to greater feasibility and sustainability concerns. Overshoot entails adverse impacts, some irreversible, and additional risks for human and natural systems, all growing with the magnitude and duration of overshoot. (high confidence) {3.1, 3.3, 3.4, Table 3.1, Figure 3.6}	We mustn’t allow overshoot to happen.   Even without it, it’s a stretch to assume that carbon removal technologies could be deployed on a scale necessary to bring us back within planetary thresholds.   And even if they could, it’s likely that further irreversible damage will already have been done.
C1. Urgency of near-term, integrated climate action	Climate change is a threat to human well-being and planetary health (very high confidence). There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all (very high confidence). Climate resilient development integrates adaptation and mitigation to advance sustainable development for all, and is enabled by increased international cooperation including improved access to adequate financial resources, particularly for vulnerable regions, sectors and groups, and inclusive governance and coordinated policies (high confidence). The choices and actions implemented in this decade will have impacts now and for thousands of years (high confidence). {3.1, 3.3, 4.1, 4.2, 4.3, 4.4, 4.7, 4.8, 4.9, Figure 3.1, Figure 3.3, Figure 4.2} (Figure SPM.1; Figure SPM.6)	Climate change represents an existential crisis for all human and non-human life, and it’s about time we started acting like it.   We’re in the last chance saloon. Either we go all-in on putting sustainability, equity and wellbeing first – and commit the remainder of this decade to redesigning our human systems and institutions accordingly – or we face screwing up life on this planet for millennia to come.
C2. The benefits of near-term action	Deep, rapid and sustained mitigation and accelerated implementation of adaptation actions in this decade would reduce projected losses and damages for humans and ecosystems (very high confidence), and deliver many co-benefits, especially for air quality and health (high confidence). Delayed mitigation and adaptation action would lock-in high-emissions infrastructure, raise risks of stranded assets and cost-escalation, reduce feasibility, and increase losses and damages (high confidence). Near-term actions involve high up-front investments and potentially disruptive changes that can be lessened by a range of enabling policies (high confidence). {2.1, 2.2, 3.1, 3.2, 3.3, 3.4, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8}	The case for change isn’t just about avoiding catastrophe, though. If we put sustainability, equity and wellbeing first – supported by appropriate policies, finance and incentives – we have the opportunity to create a thriving future for all.
C3. Mitigation and adaptation options across systems	Rapid and far-reaching transitions across all sectors and systems are necessary to achieve deep and sustained emissions reductions and secure a liveable and sustainable future for all. These system transitions involve a significant upscaling of a wide portfolio of mitigation and adaptation options. Feasible, effective, and low-cost options for mitigation and adaptation are already available, with differences across systems and regions. (high confidence) {4.1, 4.5, 4.6} (Figure SPM.7)	Systemic transformation is needed across all sectors and scales. A diverse (aka culturally relevant) range of better answers already exists and we need to scale them.
C4. Synergies and trade-offs with Sustainable Development	Accelerated and equitable action in mitigating and adapting to climate change impacts is critical to sustainable development. Mitigation and adaptation actions have more synergies than trade-offs with Sustainable Development Goals. Synergies and trade-offs depend on context and scale of implementation. (high confidence) {3.4, 4.2, 4.4, 4.5, 4.6, 4.9, Figure 4.5}	When we’re sensitive to the unique contexts of different communities and places, climate action can’t help but improve equity and inclusion too – because climate change and social inequality are deeply interconnected.
C5. Equity and inclusion	Prioritising equity, climate justice, social justice, inclusion and just transition processes can enable adaptation and ambitious mitigation actions and climate resilient development. Adaptation outcomes are enhanced by increased support to regions and people with the highest vulnerability to climatic hazards. Integrating climate adaptation into social protection programs improves resilience. Many options are available for reducing emission-intensive consumption, including through behavioural and lifestyle changes, with co-benefits for societal well-being. (high confidence) {4.4, 4.5}	Concepts, such as climate justice and just transition, embody this deep interconnection. They encourage us to join things up and to increase support for our most vulnerable communities.
C6. Governance and policies	Effective climate action is enabled by political commitment, well-aligned multilevel governance, institutional frameworks, laws, policies and strategies and enhanced access to finance and technology. Clear goals, coordination across multiple policy domains, and inclusive governance processes facilitate effective climate action. Regulatory and economic instruments can support deep emissions reductions and climate resilience if scaled up and applied widely. Climate resilient development benefits from drawing on diverse knowledge. (high confidence) {2.2, 4.4, 4.5, 4.7}	Virtually every structure and institution around us needs transformational change, including the governance, political, regulatory and economic systems that can support and enable it. Encouraging diverse approaches will strengthen overall resilience.
C7. Finance, technology and international collaboration	Finance, technology and international cooperation are critical enablers for accelerated climate action. If climate goals are to be achieved, both adaptation and mitigation financing would need to increase many-fold. There is sufficient global capital to close the global investment gaps but there are barriers to redirect capital to climate action. Enhancing technology innovation systems is key to accelerate the widespread adoption of technologies and practices. Enhancing international cooperation is possible through multiple channels. (high confidence) {2.3, 4.8}	Better answers exist and there’s plenty of money out there to scale them. Greater international collaboration is needed to help make sure that this capital flows in the right directions – toward technologies and practices that work in service of life.

Are we approaching a new era of consulting activism?

Alice Kalro is absolutely smashing it right now. Over the last couple of weeks, especially, she’s written some truly terrific posts on the future of sustainability consulting, including this first article in a series of four, which builds brilliantly on some seminal stuff from the likes of Ed Gillespie (his ‘Omerta of consultancy’ blog) and Adam Carrel et al (the ‘Enough’ report out of EY Australia). Prophesying a new era of consulting activism, anyone and any business involved in sustainability consulting would be wise to read it, and to reflect on and prepare for what feels like an inevitable reckoning.

I promise you it’ll be 30 minutes well spent. But just as a teaser and to hopefully encourage you to invest time in exploring Alice’s thesis in all its glory, allow me to share four key thoughts. These, for me, are the underlying headlines that we all need to get to grips with…

Context is everything

The quality and sufficiency of actions purported to help bring a more equitable and liveable future into being can only be fully understood and evaluated in their proper context. In the case of sustainability, that means planetary boundaries and social foundations (as elegantly illustrated and interwoven, for example, by Kate Raworth’s doughnut), and associated tipping points and budgets.

Yet, for the boundless number of company websites and annual reports avowing a deep commitment to doing business sustainably, trumpeting net-zero targets, and providing details of strategies and initiatives for getting there, how many have you seen that reference these thresholds as a means of contextualising their levels of ambition and action? (Not many, I’d wager, except perhaps for climate change.)

Herein lies the vital distinction between positive and necessary progress – between approaches that may incrementally improve performance at the level of individual organisations (but do little or nothing to address systemic risks and failures) and those that are genuinely capable of contributing toward systemic transformations at the pace and scale required to avert breakdown.

Herein also lies the reason why…

ESG ≠ sustainability

Given the feral abandon with which organisations use these terms interchangeably, you’d be forgiven for assuming otherwise. But take just a moment to think on this more deeply and it should become clear that they involve fundamentally different perspectives, and that we do ourselves (and the world) a massive disservice when we permit the pretence of equivalence.

As a linguist by background, I can’t help but point out that ESG isn’t a noun. Unpack the acronym (Environmental, Social and Governance) and you realise it’s an adjective. The obvious words it qualifies are ‘risk management’, belying that ESG (at least as commonly understood and practiced) is first and foremost about preserving enterprise value. Its fundamental concern is to assess and manage the inbound risk of social and environmental disruption on an organisation’s capacity to conduct business-as-usual.

By contrast, the noun sustainability describes a systemic condition or state of being – one of one planet thriving, where we can equitably meet the needs of current and future generations within the means of a flourishing planet. Our ability to achieve this state necessarily requires accounting for and addressing outbound risk – the impacts of organisations’ activities on the health and regenerative vitality of the social and environmental systems on which they and all of us ultimately depend. Sustainability, therefore, is fundamentally concerned with systems value and it follows that no organisation can be truly sustainable in isolation from the sustainability of the systems in which it is embedded.

Or to paraphrase the pithier words of Ralph Thurm, there’s no such thing as a sustainable company in an unsustainable economy, which is why…

Consultants selling incrementalism are part of the problem

At heart, it’s all a question of primacy. As long as systems value remains secondary to enterprise value, incrementalism rules. Ambition and actions are limited by the sanctity of short-term shareholder returns, and outcomes are compromised as the continued pursuit of growth wipes out the value of relative reductions in energy and materials use and emissions. At best, we decelerate our approach a smidge, but we’re still heading for the cliff.

Anyone with even the most rudimentary grasp of the context above knows that isn’t enough, yet vast swathes of the professional services industry continue to act as if it is. And by providing polished positional cover for business-as-usual incremental change (as Ed Gillespie memorably describes it), they distract attention from, and erode the substance of, the radical shifts that are really needed.  

Per Alice’s tale of an encounter with an unnamed Big Four bigwig, such approaches tend to be justified by maintaining that consultants’ job isn’t to make clients believe in the science and to embrace the systemic transformation that entails; it’s to meet them where we they are and nudge them in the right direction. If you want to change the world, said bigwig advised, go become an activist.

It’s a viewpoint that’s offensive on so many levels, not least the implication that consultancies are quite happy monetising ineffective incrementalism. Either ignorant of or wilfully blind to the science, that’s insulting to clients who approach consultants precisely because they’re supposed to be experts in this stuff, and can help them to plan and implement appropriate strategies. Shattering any pretence of being led by a purpose beyond profit, it’s also dismissive of the cognitive dissonance I know many sustainability consulting friends feel. When the daily reality of client engagements bears little relation to the level of change they know to be necessary, it insults their intelligence to imagine that they can’t see and feel the disconnect.

Such viewpoints further assume that consultancy and activism are mutually exclusive when the truth is that…

We all need to be activists now

Sustainability consultants occupy an important and privileged position as potential force multipliers for change. The choice facing all of us now is how to exercise that power and influence. Will we honour the people and planet we’re ultimately hired to protect, using it to help clients to co-orchestrate systemic change and deliver true sustainability, while there’s still time? Or will we be held complicit in the further transgression of planetary boundaries and social foundations, by persisting with incrementalist approaches that facilitate the continuation of business-as-usual?

In reality, that should be no choice at all.

How can we put sustainability first in executive education?

The sense of déjà vu is palpable. On the one hand, exemplified by an article from Paul Polman, another underwhelming COP is leading to renewed calls for enlightened business leaders to step up and fill the void being left by politicians. On the other, we have a piece from Raz Godelnik a couple of weeks back, highlighting research that shows almost half of senior executives still don’t believe that sustainability can be profitable.

While I don’t disagree with Paul that business can and should be leading, rather than waiting on politicians to change the rules of the game, I question if most business leaders truly appreciate (and are willing to go into bat for) the systemic transformations that are needed. As Raz rightly laments, that research finding above is merely symptomatic of the real elephant in the room — the persistence of a mental model where economic considerations of growth and profit maximization continue to transcend those of sustainability. Unless and until that changes, I fear we’ll remain on the treadmill of incrementalism.

It’s why Daniel Wahl is right to point out, in Designing Regenerative Cultures, that everything starts with mindsets. Yes, we need across-the-board transformations of our human systems and institutions, but the highest-order transformation required — the one that informs how we approach the redesign of our human presence on Earth — is in our own ways of thinking, our worldview and our value system.

Recognising the essential problem

Raz’s post gets to the nub of something I’ve been feeling for a long time now and which crystalised upon reading Roman Krznaric’s excellent book, The Good Ancestor, a couple of years ago. In a nutshell, while organisations may wax lyrical about transformation — dialling up all the right language about purpose, resilience, circularity etc. — the reality is that without also changing the transcendent goal, it’s actually a story rooted in prolonging the dying s-curve we’re currently on, rather than hastening the advent of a new one. (In Bill Sharpe Three Horizons parlance, these are H2- innovations, not H2+.)

(Adapted from Roman Krznaric’s The Good Ancestor)

For transformations to occur at the pace and scale required, achieving true sustainability — a state of ‘one planet thriving’, where we can equitably meet the needs of current and future generations, within the means of a flourishing planet — has to become the transcendent goal.

Or, more simply put, we have to start putting sustainability first.

As long as the belief persists that the only way for businesses and economies to keep going is to keep growing — and we ignore that this relentless pursuit of growth is the root cause of the staggering levels of environmental degradation and social inequality we see today — we’ll continue to tinker at the edges of the change that’s really needed.

Position the design values of purpose, circularity, regeneration etc. in the context of the sustainable end-state, however, and we open up the opportunity to tell a very different and more complete story about what gets done differently in a better working world — one that’s just and regenerative by design, and in which long-term business success flows from profitably solving the problems of people and planet, not profiting from causing them.

Change the subjects, change the frame

To change the dominant mental model, we need to change what and how we learn about sustainability. Revisiting a touchstone text — Marty Neumeier’s brilliant Metaskills — in light of new learnings about regenerative mindsets and principles, his diagnosis and prescription for change only become more compelling…

Marty’s core thesis is that industrial-age models of education continue to leave us ill-equipped to deal with complex (interconnected, non-linear, amorphous) challenges, such as the climate emergency and deepening inequality. It’s not that these challenges are insoluble, he argues, but that our skills and our thinking just aren’t fit-for-purpose.

Traditional teaching methods don’t help. Subjects tend to be taught in isolation, making it hard to connect the theories and concepts learned in each, and to appreciate their relevance to real-world challenges. Instead, suggests Marty, the primary goal of education should be to focus on cultivating higher-order human capabilities, such as our ability to feel our way through complex situations and problems, to see systems as fully integrated wholes, and to sense and respond to what actually emerges from our interventions.

Different frameworks, such as the Inner Development Goals and the P21 Framework for 21st Century Learning, may codify these ‘metaskills’ in slightly different ways; regardless, the central point is that these should become the real ‘subjects’ of our learning. Meanwhile, traditional subjects (maths, physics, history etc.) should become drilldowns, whose study can inform, and be informed by, the development of these higher-order capabilities.

The more I think on this — and on connected ideas around phenomenon-based learning — the more I’m convinced that this outlook is essential to transforming education generally and executive education especially.

Putting sustainability first

In contrast to traditional teaching, phenomenon-based learning is intrinsically interdisciplinary. Rooted in exploring real-world issues, it encourages learners to apply knowledge from whatever subjects may be relevant — for example, study of the climate emergency might call upon knowledge from science, geography, history, politics, economics and so on.

In the same way as Marty suggests viewing traditional school subjects, imagine we treated functional business disciplines (e.g., strategy, finance, marketing) as drilldowns from the transcendent goal of reaching sustainability. In one fell swoop, we’d be putting sustainability first — not an afterthought or an add-on to business-as-usual, but a fundamental design value and operating principle for everything a business does.

As drilldowns for exploring the phenomenon of the climate emergency — and associated themes of decarbonisation, circularity, climate justice etc. — all those disciplines cease to be viewed as isolated parts. Instead, viewed through the common lens of sustainability, they become different dimensions of a more integrated whole. Leading learners to reflect on and reimagine the role of these functions — explicitly within the frame of bringing a more equitable, liveable future into being — this would fundmentally change the focus of our studies and expose why incrementalism is dead.

Consider just a few examples…

When we start with the sustainable end-state in mind, the goal of strategy becomes to work back from the future to determine what would have to be true, from this point forward, to make that an achievable destination. From this, it would become clearer that incremental change won’t cut it and only systemic transformations will do.

When we start with an understanding of planetary thresholds and what would be required to operate within them — including everyone’s ‘fair share’ of resource use and emissions — it becomes plain that no amount of relative decoupling in the Global North can get us to where we need to be. And when overconsumption is the problem, it becomes harder for marketing to justify its complicity in convincing people to consume more than they need. The much-discussed shift from seeing people as consumers to seeing them as citizens necessarily involves moving from buying better to living better, and to the intentional design of products, services and business models as vehicles for advancing wellbeing.

When we start from the premise of achieving economies of cycle, rather than economies of scale, an entirely different view of supply chains hoves into view. Resource productivity replaces labour productivity as the primary concern and we see the logic of mimicking fractal structures in nature — not only providing for greater diversity and resilience, but also the opportunity to shorten values cycles by closing the distances between points of production and use.

Who will have the courage to lead?

So, where are we now?

An article accompanying Corporate Knights’ recently released Better World MBA Rankings for 2022 doesn’t paint a pretty picture. Seemingly as an example of current best practice, it cites a school where 26% of fulltime MBA content is linked to ethical, social and environmental issues.

If this is considered a current high watermark, then clearly we can do better. Quoted in the same piece, Peter Bakker, President of the World Business Council for Sustainable Development, comments that, “many [business schools] have added sustainability elements to their curriculum, but it’s still shareholder value that beats the drum.” And therein, as the Bard once wrote, lies the rub…

Adding or integrating more sustainability elements into an otherwise unchanged curriculum is just another example of the same flawed mental model and incrementalist habits we must break. Returning full circle to the Paul Polman article I mentioned at the outset, if we’re to prepare generations of business leaders with the chops to genuinely contribute to systemic transformations and the realisation of a regenerative wellbeing economy, then the MBA needs to be reinvented.

At all times, and across all disciplines, learners should be encouraged to interrogate the (in)compatibility of current principles and practices with the transcendent goal of sustainability. Where there’s harmony, they should explore ways to amplify and build on this to accelerate necessary transitions. Where there’s dissonance, they should get stuck into the different design values and operating principles that need to be established, examining key leverage points for change and how best to wield their influence — not just within their own organisations, but also the wider systems of which they’re part.

Others will know better than me, but that feels a long way from where most MBA curricula are currently grounded. I wonder who’ll be first to break the mould and do something radically different.