The data and divergence deluge and chaos in ESG data is not a weakness, but the plural approaches are a strength as it is a ‘Whole of Society’ problem. How can we approach wicked problems through a simplistic lens?

The faulty assumption behind the Eurocentric understanding of net zero transitions is that all of us have 24×7 power. Many parts of the world are energy insecure and energy inequity should be addressed as a part of the ‘just’ transition.

Many communities in mining areas in fragile states are fueling the metals needed for the EV race. Is access to energy for them a part of the net zero journey?

Responsible mining is a part of net zero transition by ensuring the dignity of communities through inclusive community development plans via marshalling of impact funds.

The ‘S’ in the ESG trifecta stands for Social, which is a shorthand of sorts. Social is ‘Social License to Operate’ where buy-in from your employees, consumers, communities, and vendors in a Global Value Chain is a dynamic process, and it needs a F5 routinely.

With the advent of the digital, each stakeholder is a whistleblower with a camera phone. Reputational risk impacts the brand, and in turn valuation. That should be a material rationale for the ‘fuzzy’ S.

A lot of companies conduct social listening to gauge sentiment to measure reputations.

Funds which integrate ESG factors can be considered as ‘shallow green’, while additionality if proven can be categorized as ‘light green’

Authentic if the funds are directed towards the just transition, then it can be considered as ‘dark green’.

Sustainable finance spans the spectrum. The right nomenclature is key to avoid green washing.

BHR, DEI & Human Capital matters or the ‘S’ in the ESG, the cultural elements, the so-called soft variables are indeed the blood which runs in the circulatory system of responsible capitalism. There is ample scope for innovation in methods for quantification too, yet the fuzzy nature of the ‘S’ in terms of transnational torts amplify the risk, which ESG is a meta framework towards capturing non-financial risk.

Water Risk as a measure of local and global materiality risks, as the virtual water count are better tangible metrics than carbon as the immediacy is felt.

#water

ESG is compliance for a purpose yet is a window for innovation. Interdisciplinary at best, the strength of the meta framework is reporting as it is drawn towards transparency. Impact Reporting is like what peers in the nonprofit space have been doing for decades in Monitoring & Evaluation, where every grant dollar is accounted for.

ESG professionals can exchange notes with the development sphere on how to better report their E&S spending.

#innovation #nonprofit #development #esgreporting

Solving hard problems is always hard. Wicked problems such as climate adaptation or preparing for the next pandemic will need a different level of thinking, doing, and building.

The question is what are the incentives available for the actors to configure together to make sure there is enough in the process for all?

The pillars of the ESG trifecta are all deep subject matter areas in themselves. Yet they make sense or matter not for the green premium but as a calibration factor. Environmental & Social elements are both externalities which are priced in a fashion to internalize them. The Internal Price of Carbon or a Biodiversity Price in the future through impact accounting are mechanisms. Carbon and Biodiversity are tangled with each other. Governance is an input. ESG are tied in through an ANT network as nodes in a risk map.

ESG risk and impact accounting are joined at the hip. Reporting to Ratings Journey has impact accounting somewhere in the middle of the continuum. ESG as a future making approach channelizing funds for a just energy transition is a real end goal. ESG is a core aspect of the ‘Just’ in Just Energy Transition. Making sense of the interlinkages is vital as understanding is patchy at best even among practitioners.

#esgstrategy

The cascade of reporting ‘upgrades’ in the ESG space is disclosure driven. Disclosure as a driver reflects the climate zeitgeist, we reside in. The reporting pull will enable creation of sustainability data architecture within organizations and organizations will report in turn to various regulators and proxy regulators. The data architecture will create the impulse to comply and win in the unique environment where aspects of the triple bottom line are no longer. It is the way businesses are done. Impact is Business as Usual.

Impact will shape capital flows as well as recipients of that capital. A circular economy of impact is emerging. The M&E of the impact capital is the frontier of reporting that will entail creativity as materiality is context based.

The paradoxes of context and standardization will be features rather than bugs of the ESG data architecture.

#sustainability #environment #data #impact #esg