ESG Mirage … Brutal Honesty … Funding Governance for Systemic Transformation … Organising a free conference … Sunday Thoughts


Edition 15 | September 2022

This Lighthouse Keeper comes to you one day before the start of the 9th International r3.0 Conference, presented in hybrid mode, in-person in Amsterdam and online, with a 700 people strong audience globally from 6 continents and 50+ countries. Wait, it’s the day before the conference, and you have time to write a Lighthouse Keeper, I hear you say? Yes, that’s right; as this is the 9th conference, there are certain routines we learnt over the years, even if you organise the conference (and a Partner Day right afterwards) with a team of just 4 people. One of these routines is to create a ‘calm before the storm’ for the last 48 hours. You know you’ve done everything that needed to get done and you can take a deep breath and an evenly deep thought what you’ve created and what will shortly see the light of day. I am writing from that calm space.

ESG Mirage

One of the things we at r3.0 always wanted to do is a systemic nearing to explore the deadlocked cognitive dissonance of the ESG disciple(s), just not wanting to pay tribute to the fact that ESG and sustainability are two different things. Instead, we are hearing excuses over excuses, that ESG was never meant to be that, that it is single materiality-biased for a purpose, it was made for risk assessments and investment decisions (even now in a double-materiality setup), etc.; at least there is acknowledgement of that! However, I was in many of these discussions between 2002 and 2006 while at GRI, and the intention was totally different: giving the financial and SRI world a ‘starter’ to integrate E, S and G factors into their models, allowing proper ESG performance measurement, to then add thresholds and allocations later as per GRI G2’s Sustainability Context Principle (data was the problem at that time, and only partially still is) in order to get the homework done, so that we would have proper ‘sustainability measurement’ by the time of GRI G3 or G4. Unfortunately, by that time, those that had that initial intention were gone, replaced by people who had other priorities, and that got us to what I for long call #ESGLaLaLand. And so the story goes, ESG developed a life of its own, and I repeat: that ‘pure ESG’ is useless for creating sustainability or regeneration. But also, it is ‘necessary’ if combined with thresholds and allocations to create a ‘necessary AND SUFFICIENT’ sustainability measurement regime. I have referred to r3.0’s work with UNRISD in the last Lighthouse Keeper (UNRISD to the Rescue), the report ‘Thresholds of Transformation’ that we published and the soon-to-come Manuals for Corporations and Social and Solidarity Entrepreneurs, plus the platform UNRISD will offer to cover all that. Behind the scenes, a plethora of discussion was ongoing of what and how to present the results, but the job is done and it’s up to the designers and programmers to sweat this out now.  More soon!

But evenly important for us was to gather those critics in the ‘Transcending ESG’ arena to get our heads together and find common ground, since we’re already in opposing direction with what I?SB and EFRAG (for the C?RD) have delivered so far. Pure ESG again…sigh! Our r3.0 comment letters have been very clear about that.

In an asynchronous virtual dialogue on the online platform Currnt in June 2022, r3.0 gathered a hand-selected group of Positive Mavericks who have shared diverse critiques of ESG. Our goal was to survey the broad spectrum of ESG critique to develop a preliminary taxonomy or typology of critiques, as a means of mapping synergies, intersections, and complementarity between lines of critique, as well as divergences. The ultimate goal was to test for potential alliances where those who advocate for various lines of critique can understand and align on areas of common ground, to enable a more unified front of collective action to better leverage positive change in transcending ESG. Find the full report here.

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Here are our key learnings from that interaction:

  • Perhaps the biggest “key learning” of this virtual dialogue was the unexpected validation of Environmental Social Governance (ESG) — but only insofar as it “stays in its lane” as an incrementalist toolset for assessing risks and opportunities related to enterprise value, and doesn’t “stray out of its lane” into the lane of sustainability impact assessment affecting system value — as Mark McElroy of the Center for Sustainable Organizations points out: “We can encourage ESG and sustainability to co-exist and stay in their respective lanes, while also taking steps to (a) crack down on ESG whenever it illicitly crosses the line, and (b) by doing everything we can to ensure that sustainability, for its part, is authentically practiced as well… [with] thresholds and allocations in its formulations.”
  • The big problem, in other words, is not ESG per se, but rather the conflation of ESG with sustainability, often taking the form of claims that ESG can “make the world better.” It can do no such thing — as Columbia Center on Sustainable Investment Director Lisa Sachs asserts — but sustainability can
  • The problem is that the conflation of ESG and sustainability is rampant — and to be expected, as Ethical Systems Executive Director Alison Taylor points out: “The existence of ESG suggests we are being naive about how our dominant systems co-opt and reframe ideas with a certain valence.” As virtual dialogue Provocateur Desiree Fixlerstated, “ESG was originally a well-intentioned attempt to widen investors’ aperture, but we all know that ESG has ended up turning into a detrimental tax on society.” 
  • How is ESG detrimental? Former Generation Investment Management Partner Duncan Austin and former Timberland COO Ken Pucker — as Provocateurs in this dialogue — proposed a typology of ESG critiques, the centerpiece of this dialogue’s intended outcomes.
  • Picking up from here, r3.0 Advocation Partner Alice Kalro proposed a Minimum Viable Outcome (MVO) of “mainstream awareness of the two-lane system” and then she mapped the ESG critique typology categories into an MVP ESG Critique that aimed at securing the above MVO, and other possible packages of critique around which alliances could be built, to chart a path toward the ideal Ultimate Outcome.
  • In terms of when our field may be ready to pursue Ultimate Outcomes, r3.0 Advocation Partner Glenn Frommer had a sobering perspective: “Unfortunately, it is my opinion that we will need to wait for the crises to become considerably worse before anyone will listen to our r3.0 cult of mavericks.” That said, Kalro identified the Ultimate Outcome as mainstream adoption of Context-Based Sustainability. And we at r3.0 would add, riffing on Limits to Growth Lead Author Dana Meadows’ embrace of the Daly Triangle (first proposed by Ecological Economics Co-Founder Herman Daly), which articulated the Ultimate Ends of Wellbeing. 


Brutal Honesty

Our response to the standard setters re-opened some discussions about r3.0 being ‘brutally honest’, and my Senior Director colleague Bill Baue picked up on it with some clarification that found great validation in the comment thread here on Linkedin. Here’s what he said:

“I’ve said it before, and I’ll say it again: we need to re-examine how we label candor in this time of collapsing systems. I contend that calling honesty “brutal” misses the target, when the honesty identifies brutal and destructive systems. Here’s something I recently drafted for inclusion in our “Funding Governance for Systemic Transformation” Blueprint: 

r3.0 content is often considered “polemic,” as if it is intended to be “hostile” (“brutally honest” is a term that has been used to describe our work); we resist this characterization. While we accept that we do indeed make strong assertions, we note that many status quo practices invisibly embed brutal hostility, so our accurate identification of these dynamics is neither hostile nor brutal, but simply “honest” – and hopefully clear sighted.”  

The term “brutally honest” essentially embeds classic psychological projection, where the brutality of what’s being identified gets projected onto the person doing the identifying, and thereby diverts attention (and agency and accountability) from the thing that is actually brutal — ie many of our status quo systems and institutions. 

In order to transform the brutality of existing systems and institutions, we’re gonna need a hell of a lot more “brutal honesty” — and we’re gonna need a hell of a lot more support, from folks shifting from being passive bystanders to being active allies.

Of these 3 ways of being — “brutal” truth-teller, active ally, passive bystander — I invite you all into the former two categories.’

Paul Barnett Advocation Partner of r3.0,  chimed in in that thread by saying: ‘I’d go with RIGOROUSLY HONEST’ and continued ‘I proposed it as I see that all you do you try to do with rigor. “Rigorously” as a word is a bit of a mouthful, but I think the vast majority of people have a pretty good idea what it means and I think will get the kind of attention you want.’ We at r3.0 agree with Paul, but invite others to chime in.

Funding Governance for Systemic Transformation

Today one of our biggest r3.0 project outcomes of the year 2022 got released, the ‘Funding Governance for System Transformation’ Blueprint, in lieu with the specific r3.0 Conference Plenary that will see Ben Roberts, Blueprint Lead Author and Project Steward and Farhad Ebrahimi (Chorus Foundation), Nena Jain (Regen Network) and Suzanne Bowles (Cattail Strategies), presenting exciting case studies of the changing environment for getting systemic transformation funded, traditional philanthropic funders take note!

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Here’s an excerpt from the preface of the Blueprint: ‘As with all r3.0 Blueprints, the Funding Governance for Systemic Transformation Blueprint (BP8) challenges the fundamentals of status quo practice and ambition – in this instance, existing funding governance systems that steer resource flows toward social and ecological benefit, such as private philanthropy, public subsidization, and marketplace “fixes” – and points to alternative practices and ambitions that are already emerging to displace the dysfunctions of extant systems with regenerative funding governance.

BP8 represents the last in a cycle of nine Blueprints that comprise the r3.0 Work Ecosystem developed over the past seven years (2016-2022) in two phases of four Blueprints each, with a single synthesis Blueprint dividing the phases. We call this oeuvre a Work Ecosystem instead of a Knowledge Ecosystem (which it certainly also is) purposefully, as the ultimate goal is to activate this co-created knowledge in the world – as work. In this sense, BP8 is perhaps the truest to our vision, since we integrated this activation directly into our work as we went along, and now have a specific plan (and modest funding) for taking next steps after the release of this Blueprint.

This innovation from the existing r3.0 Due Process is not an anomaly, but rather a hallmark of BP8, which improved upon the status quo in so many ways that actualized underlying Positive Maverick values of r3.0. We at r3.0 attribute this innovation in large part to the zeitgeist cultivated by Ben Roberts, the Lead Author and Project Steward, and to the emergent, network-weaving approach he brought to the role. In this Preface, seven noteworthy aspects of our process are highlighted: Emergent Process; Co-Creation; Dialogic Invitation; Resilient Redundancy; Who Are You?; WhoAre We?; and Activation.’

Read on from there here and get ready to have your head going into a whirlwind of opportunity!

Organising a Free Conference

This conference, our ninth in total, is in many respects an experiment (e.g. being hybrid), but also in respect to the price: we offered it free of charge. And that created a whole new range of experiences that we didn’t foresee and that we’ll need to assess very carefully. At this moment I am tempted to say: never again! Well, that might not be our last word, but the sheer amount of unnecessary and partially unbearable extra work this created was stretching us up to and – at one moment – even beyond our limits. To summarize our experience: Something that doesn’t cost money isn’t worth treating it diligently. We had people that registered for a ticket up to 3 times (which means us inquiring why, and often without answers, just to find out that they didn’t put it in their agenda); people that registered in-person (while living in India, Pakistan, Bangladesh, etc.; that causes another thread of emails and clarifications); people that booked both types of tickets (that’s again a discussion to have then about why and what went wrong); and we had people that were unable to give us their real names, in which case – after three warnings – we canceled those tickets. Finally, we experienced quite a number of people to be rude, and we had cases of people that had extremist opinions, which means we needed to interrogate who’s coming to the event (we normally know our audience quite well, and it turned out that bots now also try to sneak into blowing up events with bullshit registrations). What worked well for one staff person to accurately manage the registration process was blown up into 3-person full-time job (which we didn’t have). It seems that paying by credit card, even if it is just small amount of money in future instances, hopefully takes us back to a more normal registration environment. What happened to us this year I will not allow to happen again. I’m happy to hear if others in this reader community have equal or differing experiences. Let me know by PM or under this newsletter in the tread. I’m really interested to know.

Sunday Thoughts

I continued to issue my Sunday Thoughts over the last 6 weeks, including the time I took care of my mother and arranging the funeral service. That particular Sunday Thought in the week of her passing, in which I dealt with ‘Finality’, was the most looked at of all so far, with more than 40.000 views. Thank you, it means so much to me, also seeing that the community around those thoughts grows by the week. 

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Taking a Break

r3.0 closes its office from September 10 until mid-October due to absolutely necessary downtime and a Transformation Journey Program at Audencia Business School in Paris thereafter. As these Transformation Journey Programs are going deep and broad, all attention is needed for the participants. Expect a next Lighthouse Keeper by end of October. Be well and embrace post-collapse readiness for what’s to come when life won’t be the same as it was before. It’s time worth spent! And wish us luck with the conference ;-).