Edition 19 | May 2023
Welcome back to another edition of the Lighthouse Keeper. At r3.0 we are busy bees, very focused on our UNSDPI Trainings and our 10th edition of our International r3.0 Conference, again in hybrid format in Amsterdam and online on 12/13 September. Much of the buzz in #ESGLaLaLand, ridiculous claims and surreal anti-woke-ism I just delete these days, but one issue I do pay attention to, just simply as it is part of a major delusion that needs to be brought up, namely the idea that what sustainability (reporting) standards setters are doing would be in our common human interest. Colleagues, that’s a farce. I offer some examples and thoughts.
It was a delight to see growing attention to criticism on the role of consultancies as problem-solvers for our multi-issue sustainability and regeneration agenda. Already in 2021, I loved Ed Gillespie’s piece about the ‘Consulting Omertà’. This year I was specifically triggered by several posts of the brilliant Alice Kalro (see for example here and here) as well as Mariana Mazzucato’s and Rosie Collington’s new book ‘The Big Con – How the Consulting Industry Weakens our Business, Infantilizes Our Governments and Warps Our Economies’. I have my own ‘from the inside’ thoughts about consultancies, and will offer those in the form of a light caricature, namely a triangulation between ‘assaultants’, ‘opportusultants’ and ‘prosultants.’ All consultancies I have met fit into that triangulation, and their very own development from one to the other type helps as a great analysis of learning what humanity-toxic, humanity-indecisive or humanity-nurturing pathways are in the design of consulting business models, their own definition of success and future potential. But the analysis also shows how stuck consultancies are in their ability to ever change. Feel free to have a go at it and see what you think.
I’ll finish this Lighthouse Keeper with a little celebration of two years since the release of ‘The Corona Chronicles – Envisaging a New Normal For Regeneration And Thriving’, and will offer a couple of thoughts on what I’ve learned since then. As the printed version is sold out on platforms (I have about 15 copies left at home) we decided to lower the price of the Kindle version to just 9,99 USD. Grab a digital copy or PM me for one of the last printed copies. I expect they’ll go fast.
Last but not least of course the latest Sunday Thoughts are added at the end.
The ‘Public Comment’ Sham of (Sustainability Reporting) Standard Setters
You have by now understood that to my (and others) opinion, we do not have ONE Sustainability Reporting Standard that is delivering what it should, although there are now three that claim to be just that: GRI, the draft ISSB’s standards and the draft ESRS. Readers of the Lighthouse Keeper have read my thoughts/struggles about their ‘false claims’ in the last couple of editions. They have built a fortress of self-indulgence by creating what they call ‘interoperability’, creating a myth of why users need to comply with more than one of them to be able to offer full ESG reporting (no, still not sustainability reporting); EFRAG created ‘Double Materiality’ as both ISSB and GRI have strangely given in to just their two distinct forms of ‘single materiality’ (GRI ‘inside-out’ and ISSB ‘outside-in’), while none of all three integrate context-based materiality, really the only way to assess completeness in materiality assessments that respect all rightsholders. This complexity just drives users mad and makes consultancies happy, so much money to be made to help manage that complexity (do you recognise the explosion of trainings right now around the CSRD and ISSB, dreadfully repeating false claims around ‘sustainability’?), and still achieve nothing for true sustainability. So much energy goes down the drain by this delusional setting, and – still – I have no doubt that most of the corporate lemmings will all follow without serious reflection. They do what most others do, compliance over reason, like so often. No sustainability will be achieved, but wasn’t that what we all wanted in the first place?
I’ve learned over the decades, both within and outside of organizations, that governance is 50% of the success of both doing things right and doing the right things. And here we now come back again to the sustainability (reporting) standard setters. After my colleague Bill Baue addressed major governance shortcomings at SBTI (both methodological and regarding their governance processes in recruiting for important functions and the management of complaints (see here for a full account of his official complaint, more than 2 years underway), we see these shortcomings at all three reporting standard setters as well. For this Lighthouse Keeper I’ll just address one example: the validity of so-called ‘Public Comment Periods’. In particular, serious governance shortcomings lead to the fact that these are just a sham and will not lead to what we think is necessary interaction:
- The process of ‘public comment’ and the transparent documentation of what was done with it or what led to change is mostly missing or at least blurred;
- The lack of a continued opportunity for civil society to address necessary changes, for example through a proper complaint mechanism in the governance of these organizations, is evenly non-existing.
Or in short: do well addressed factual problems (by whomever) have a chance to be addressed changed in a structured, described, effective, transparent and fair process? The answer is: not to our knowledge. None of the three ESG reporting standard setters have these proper processes in place. And I would say, they’re also not interested to have them in place, simply because they’re not accountable to anybody, really. They simply carry out a public comment process, and sometimes offer a ‘Basis for Conclusions’ (EFRAG and GRI) that doesn’t explain at all how public comment was taken into consideration; or potentially ridicule asks without no further possibility to intervene (at r3.0 we have such examples where the response was an answer to a question we never asked). These papers are coming out either with the release of the final standards or even after the fact. Standard setters act as they wish, are transparent as they wish, take the freedom to answer in nonsensical and circumventive ways or, or just bluntly silly. That’s all part of the fortress. They only seriously react to external powers that can potentially really endanger their position. And that’s where most of civil society gives up, no chance for real engagement.
Part of the issue is that all that immense amount of work of public commenters is unpaid (and by that already precludes a huge part of civil society to make their claims, simply due to the lack of time and money to comment). The possibility of commenting is often just possible in standard forms online, questionnaires, and hardly allow open comment. A public comment letter is the only way to then send comments in, especially when the critique goes to the heart of the matter. In r3.0’s case we simply question the validity of actually delivering sustainability proof, arguing that the standard setters just remain at a pure ESG Progress level, and by that questioning if these standard setters should carry the ‘S’-word in their name. Well, half a dozen of these letters we did sent in the last years all remained unanswered, not one word of recognition of this existential issue that the world depends on. Note that standard setters also invite to information sessions online and in-person. Our experience is that even repeating made arguments in such sessions leads to absolutely nothing. And who can travel to all this when all feedback asked for is unpaid.
You want a practical example? Take the new ‘EFRAG Due Process Procedures For EU Sustainability Reporting Standard Setting’, approved by their General Assembly on March 16. A 24 pages long document. Read yourself if you have time, but here are a couple of nuggets of the ‘official language’, followed by my comments:
‘EFRAG launches public consultations on its exposure drafts and discussions papers to stimulate comments and the expression of views by stakeholders. Comment letters and other forms of contributions (e.g., responses to online surveys) received are published on the EFRAG website […] Public consultations may include outreach events and fieldwork including field tests and surveys. […] Bases for Conclusion are made available to stakeholders during the consultation periods and provide context for the decisions made by the EFRAG SRB in drafting Exposure drafts of proposed draft standards or draft amendments.’
‘The due process allows all stakeholders to put forward their views for consideration by EFRAG. It ensures that the diversity of environments (including economic environment) and stakeholder views are taken into account in an inclusive way in developing ESRS. […]Through open and transparent public comment periods indicated on the EFRAG website, any interested or affected party may provide comments and input.’
So far the official language. Now the practical implications:
- Is work I put into public comment in any way remunerated by the standard setter (e.g. through a flat fee reimbursement, or paid out by a neutral third party to avoid the argument of a conflict of interest)? NO!
- Is the ‘Basis for Conclusion’ available to stakeholders during the consultation periods? NO! ONLY AFTERWARDS! As was the case with the last GRI Universal Standards Public Comment Process and the EFRAG Draft ESRS Process
- Do I receive individual feedback on my public comment made? NO!
- Will I be informed when my comment will be taken into consideration? NO!
- Do I see anywhere in the ‘Basis for Conclusions’ (delivered after the fact) how my comments were discussed and what was decided? NO!
- Do I have a chance to object after the standard got released through a standardized complaint mechanism? NO, NOT EXISTING!
- Is there any way I can intervene? What’s left for me to do? NO! LEGAL ACTION?
- Can I trust that the political players (like in the EU’s case) and steering boards involved know and will decide based on science and ethics (or better said: on what is necessary and not what is politically opportune)? NO!
- Is there a clear assessment of the System Value Contribution of what the standards demand? NOT AT ALL! It’s all just based on a ‘cost/benefit’ analysis, an instrument deeply engrained in just Enterprise Value Creation.
Now let me add one more very concerning issue: most work done for the reporting standard setters in delivering standards is done by secondments from those firms that will afterwards benefit from the existence of these standards. All of that work is unpaid by the standard setters, it’s the employers of the secondments that pay their salaries. The foot soldiers doing the work within the fortress are all sponsored by those that can afford to help build the walls. The service to humanity…not really in sight. This is what is reads like in EFRAG’s terms:
‘Participation in the EFRAG work at technical level is based on expertise in sustainability reporting and is not conditional on any financial contribution.’
Now let’s flip this statement around and look at what it really says: If you are interested in working in technical working groups, being asked for a huge amount of your time, you need to be sponsored by somebody else than EFRAG, most likely only possible if your employer can afford it. Those from Civil Society with decades or experience in standard setting are literally excluded as they can’t commit to the asked for time burden without budget or are simply rejected for reasons that don’t hold water; well, that leaves them with making ‘public comments.’ You’re back to square one. And no complaint mechanism in sight to address the problem.
Do you need an even more striking example of the consequences of a missing complaints mechanism? As r3.0 (and the Sustainability Context Group) we aimed at convincing GRI of the inclusion of proper Execution Guidance on their very own Sustainability Context Principle (thresholds and allocations, enabling context-based materiality assessments) for more than a decade. We have now documented our many approaches in public as the ‘Sustainability Context – An Annotated Bibliography’, covering over ten years of purposeful neglect. It’s unbelievable, but also logic in terms of securing a role for GRI in the legal environment it now positions itself in, the fortress of self-indulged incrementalism for Enterprise Value Creation, or short: ESG Progress.
As r3.0 we took the consequence and worked with UNRISD in developing the UNSDPI (Sustainable Development Performance Indicators). It is our answer of a ‘third way’ to not let the standards setters get away in their false claims. The solution is so easy: we recommend all users to simply start their measurement and reporting processes using the UNSDPI, and then be rock-solid to report on true sustainability performance. In addition, users can then add whatever they deem necessary from the ‘ESG Standards’, and still uphold their claim to report real sustainability performance. Above all, this adds ‘simplexity’ and bypasses the fortress (have fun over there), while still adhering to what’s legally required. Friends, it could all be so much easier! Our UNSDPI Trainings are hugely successful, so there is active hope that this all sinks in deeply and leads to the necessary transformational change!
Consultancies: ‘Assaultants’, ‘Opportusultants’ or ‘Prosultants’?
Yes, I’ve been one myself. And it was a necessary development step in my life. But at a certain moment I had to step out, realizing that the business model of consultancies as we typically know them aren’t in any way conducive to life. So, to be called a ‘sustainability consultancy’ is a fabulous oxymoron. The classical consultancy business model offers advice to clients to generally increase Enterprise Value (through strategy advice, tax advice, financial management advice, risk management advice, IT strategy advice, or other technical advice) and are often brought in to help achieve what the client isn’t able to do any longer, or looks for new ways of Enterprise Value Creation, or to reduce risk of failure. Consultancies build up business lines that can actually contradict each other, but well, if one client wants this, and another wants that, here we go. The focus is normally on achieving a certain planned budget through value propositions, and ensure a bonus history is minimally stable. Best if the value propositions are replicable and can be sold to many without extra effort. If not, consultancies are in trouble. It is a treadmill that squeezes young people form junior to senior expert, from manager to senior manager, from director to senior director, and finally partner. That’s the end goal of mostly everybody that enters the consultancy door at the beginning of their career. Sustainability consulting is often organized as a business line in bigger consultancies, one of many, and is in internal competition. Not delivering a couple of years of good revenue, and you’re out. The impact of wellbeing of own employees, their clients, and much more important, humanity as a whole on a finite planet, is … well … at least difficult.
Is this too black and white? A bit maybe, so it makes sense to try to look at prototypes. I’ve come across hundreds of consultancies in my life, and what became a sort of triangulation is what I want to sketch here: welcome to the world of ‘assaultants’, the ‘opportusultants’ and the ‘prosultants’. I differentiate their positioning in the light of being conducive to all life on this planet, especially to us humans. Given the immense challenges of the polycrisis and the collapse we’re in, my belief is that ‘assaultants’ are humanity-toxic, ‘opportusultants’ are humanity-indifferent, and ‘prosultants’ are humanity-nurturing. Here’s a first nearing to all three groups:
- Assaultants: their reason for being is creation of Enterprise Value for their clients, whatever it takes. More pressure on the client’s employees (by for example laying off people as a standard first step), more pressure on the client’s suppliers (go to hell living wage or environmental or health safety standards), supporting to blur unsustainability in humanity-toxic industries (tobacco was the first example, fossil fuels is evident right now). They’re exploiting their own employees in the treadmill, asking for over hours and availability 24/7/365. Their frame is a colonial, exploitative and degenerative economic system. It’s all not their fault and responsibility, it is what the system allows, it is what the client asks, and the client is king. As is cash. I am pretty sure we all have examples in our minds.
- Opportusultants: most likely the majority of sustainability consultancies belong to that group. They see the need for change, but hang on, don’t overburden the client, they wouldn’t understand and not want transformational advice. They still have to make money and secure jobs, so let’s design small steps in the right direction, and advise them over many years, step by step (quite nice for a reliable yearly budget, isn’t it?). Let them understand what the minimum compliance is, let them follow the ESG standards and help them with language that they became ‘a bit more sustainable’, in the end that’s all they want anyway. Make sure this isn’t immediately risky to be called out for greenwashing and have lines of defence ready when stakeholders or investors call for more. Blur language yourself, call ESG ‘as if’ it was sustainability (and vice versa), and make clients believe they’d have until 2050 to become ‘Net Zero’, and help them offset emissions in between. Help clients join all sorts of initiatives with great names (make sure it has the word ‘positive impact’ in it, that sounds so great). Yes, the problems are severe and challenging, but ‘muddling through’ is the master of all strategies. Your clients love you for that. You’re building the wave breakers that the kids on the beach can play save, while the water level rises.
- Prosultants: A small tribe of positive mavericks, stepping out of the classical consultancy business model, and weaving in service of nurturing humanity. These are not consulting gigs, but using traditional and new know-how to overcome the existing economic system impasse. Co-creation is leading to arrive at finance, technical and design solutions for bioregions, explore degrowth understanding, and mentally leave the path of exploiting scarcity for the few towards abundance of mental space for the creation of regenerative and distributive solutions. The Prosultant brings in own potential amongst a group of likeminded others (by that allowing they’re not in the lead), all focused on the greater whole of the Commons. Potentially some of that work is replicable, but needs a lot of customization to respect culture, region and environmental conditions of bioregions. Above all stands the creation of System Value, measured through a context-based and multicapital-based approach of success for humanity, and by that securing healthy and liveable working conditions of own co-weavers. Bonuses got replaced by joy, fun at work, and community.
Why is this characterization important? As said in the intro I’ve come across all forms of consultancies, the most difficult thing is not to identify their position in the triangulation, but creating maturation pathways from assaultants to become opportusultants, with the goal to make them prosultants. I can say from experience it’s close to impossible to change assaultants, they will need to die out by macroeconomic system change. I’ve given up on them as long as the economic system remains humanity-toxic itself. But in our work at r3.0 we have seen individual opportusultants becoming prosultants, driven by the need to make sense of life. Even sometimes ex-assaultants change the camps, exhausted and full of grief of what they helped to cause, but that’s rather exceptionally. Grief is a major enabler, and if well received also a big opportunity. Luckily there’s a number of great books that could help make the transitions: Pablo Servigne’s books ‘How Everything Can Collapse’ and ‘Another End Of The World Is Possible’ (boy, they helped me big time), Stephen Harrod Buhner’s book ‘Earth Grief – The Journey Into And Through Ecological Loss’, or Jem Bendell’s just released ‘Breaking Together – A Freedom-Loving Response to Collapse’ (next on my reading list after already skimming through it). For all on any part of this spectrum, look out for the next Prosultant near you, they are fantastic fellows.
Two Years Corona Chronicles – Envisaging a New Normal for Regeneration and Thriving
On April 30, 2021 my book ‘The Corona Chronicles – Envisaging a New Normal for Regeneration and Thriving’ got released. The printed version is now sold out for a while, but the Kindle version is since April 30th available for 9,99 USD, to celebrate the birthday of the book and to allow new readers to make use of a cheaper price. We were thinking about a second print edition, but then Putin’s aggression against Ukraine started and attention and priorities changed. I avoided the word #Collapse too prominently in the book to allow more headspace for the rigorous changes our economic system needs to undergo to ever get regenerative, distributive and by that: restorative. What could we all learn from #Flattenthecurve? Could we better understand a global approach to regeneration & thriving, not based on our Northern hemisphere stereotypes of incrementalism and continued colonial patterns? Would we find a way to let ‘love’ come back in ways our cold ego-centric economic system design disallowed us to do?
But those who read the book and saw the analysis presented often voiced the potential ‘necessity of #Collapse’ themselves in their responses to me. Also the fact that we are in #Collapse not only since the war in Ukraine, but actually since ‘Limits to Growth’ got released in 1972, just unevenly distributed globally, helped me to better understand the genesis of all the crises that led to where we are today. New vocabulary now calls this inevitable and culminating breakdown a ‘polycrisis’. But I also see that the concepts the book offers, e.g. bioregionalism, localization, sufficiency, context-based information, regenerative currencies and governance, decolonisation or degrowth, just to mention a few, are slowly getting into parliaments and even the UN General Assembly. I don’t think any of these existing democratic formats will actually craft the action at the size needed to avoid #Collapse, but I see that more and more of the concepts creep into a global consciousness needed as ‘post-collapse readiness’, a best possible summary description of my work today, with many others. I can say that the book delivered a lot of clarity for me as the author (writing and re-writing as a way to create new brain synopses), may it continue to help a new group of readers to get into restorative action as well!
Over the two years many readers sent me a selfie with the book. This helped me to stitch together a Readers Collage. To all of them a great thank you on not just the selfie, but the many comments and messages I received. The book has struck a chord with many!
As always at the end of a Lighthouse Keeper, here are the Sunday Thoughts of the last couple of weeks. I normally reflect back on the week before and do a little exercise what hit me most during work, and I appreciate the ad-hoc nature how some come up only on Saturday, or even on Sunday morning. Enjoy all!