Cobalt59 has just taken part in the Australian Graduate School of Management (AGSM) program on ‘Leadership for a better world’ at the University of NSW. The program was about creating sustainable leadership — sustainable meaning not destroying the world, but still creating increasing benefits for all human society.
This is particularly relevant because we are presently undertaking two evaluations of the NSW Government Climate Change Fund. We are lucky to be involved. Our evaluations are both peer reviewed and published, which is rare. While this is consistent with best practice, it is generally avoided in the political space.
The AGSM program on ESG (Environmental, Social and Governance) was set up to present the problem, look at the analytics, consider the investment space, then consider what can we do about it all. We were left seriously wondering how the insidious problems of greenwashing will be solved.
Professor Tommy Wiedmann (UNSW Sustainability Assessment Program) quoted the IPCC 2022 Report to highlight that we are currently not on track to limit global warming to 1.5%C, which is where we need to be. We will struggle to keep it under 2%. This means that CO2 will need to be extracted from the environment to avoid the worst effects of climate change.
If we had started CO2 mitigation in the year 2000, on track would have required a mitigation rate of 4% a year. In 2019 it would require 18% a year. We haven’t started reductions yet (slight drop for COVID). If you were a systems theorist, you would likely have read The Limits of Growth by Donella Meadows et.al., in 1972 predicting all of this.
Prof. Wiedmann believes the answer is ending our obsession with economic growth. This means ending over-consumption and over-production…a deliberate downscaling of physical throughput (energy and materials). This has led to the creation of a new theory called ‘Doughnut Economics’ (Kate Raworth). That’s our pick – the other theory choices were agnostic growth, post growth, steady state economy, prosperity without growth.
ESG (Environment Social and Governance) is the framework designed to manage sustainability risks and opportunities for enterprises. Companies are encouraged to consider their internal businesses, the supply chain and the life cycle of what they sell.
70% of the ASX200 have set emissions reductions targets, however ESG also covers many other aspects besides emission reductions. Most major companies produce a sustainability report. A lot of these companies use the Sustainable Development Goals set by the UN. The UN Sustainable Development Goals provide a kind of pick-a-box of things to have a go at. There are 17 goals and 169 targets. So, many companies and many superannuation funds are reporting on and investing in ESG. This produces ‘ethical investment’.
This sounds quite straight forward, until as good evaluators and system theorists we dive into the detail:
Some companies do minimal or no actions. They just advertise that they do (cuts out the confusion, and the middle people). This is ‘greenwashing’. Chevron (the oil company) started it all with their ‘People Do’ campaign showing employees protecting bears, butterflies, sea turtles and all kinds of cute and cuddly animals (…is everyone thinking ‘koalas’ here?). They won advertising awards and were a case study by Harvard Business School. While they spent millions of dollars in advertising, they spent a few thousand in animal protection. What a bargain!!!
Without regulated standards on reporting, which don’t exist in Australia, this happens continually.
Some things are happening. The Australian Securities and Investment Commission (2022) has just released a response to ‘greenwashing’.
For a more comprehensive systems orientated response to ESG, we can only hope that the present momentum means a continual questioning that means standards and regulation evolves to a far more sophisticated level than present.
Kara and Brian in Melbourne during the lead up to the AFL Grandfinal. They took time out to visit the MCG press box after the workshop finished for the day. They had a fantastic group of participants who joined them for the day at Victoria University.
If you have a particular situation you would like to discuss, please get in touch.
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