The Adventure Of Sustainable Performance – McLachlan & Sanders

The One-Sentence summary: In the new era, leaders need to move beyond ESG compliance to create total value.

 WHAT THE BOOK SAYS

  • Compliance is not the route to sustainable business conduct. Relying purely on compliance misses the point and is fundamentally short term.
  • The book begins with a story about one of the authors being charged by an elephant, which becomes a metaphor for the oncoming problem of climate change. The day after their encounter, they are able to canoe calmly below elephants grazing on the riverbank.
  • After analyzing the components of what they then call ‘the charge’, the bush analogy continues with a ‘campfire’ of reflections, and a recommended ‘reapproach.’ This translates roughly to a transition from the compliance of day 1 to the opportunity of day 2.
  • We must turn the tide within the next 10 years, with a 50% reduction in carbon emissions, and a fully green economic model within 30 years.
  • Management focuses on quarters, margin and profit. That’s why so many goals and pledges stretch into the 2030s, 40s and 50s. No one will be in their current roles when these dates come around, so why solve today what you can put off till tomorrow?
  • Most companies remain attached to strongholds – old ways of doing things that they don’t want to change.
  • IWAI is the Impact Weighted Accounts Initiative, which looks at the true profitability of companies. It becomes apparent that in many cases their environmental costs exceed their total profit. Of 1800 companies looked at, 15% would have their profit wiped out altogether, and 32% would see it reduced by 25%.
  • Recent years have seen an explosion in climate litigation cases. The number of these has more than doubled since 2015, bringing the total number of cases to 2000. A quarter of these were filed between 2020 and 2022.
  • Dame Polly Courtice of the Cambridge Institute for Sustainability Leadership says that they only exist because so many business schools aren’t doing their jobs properly. It’s all capitalism and numbers, with little long-term thinking.
  • Shocking statistic: Coca-Cola makes 200,000 bottles a minute.

WHAT’S GOOD ABOUT IT

  • Consumers are trying to do their bit. 59% are only buying what they need (up from 39% in 2021); 30% have opted for low-emission or shared modes of transport (up from 19%), and 39% said they had reduced meat consumption (up from 30%). Meanwhile, 57% said they would do more if it was more affordable.
  • 60% of clothing is made from plastic, 99% of clothing waste is landfilled, and over-production rates run at 40% because it is made on expectations, not true demand. Circular clothing company Rapanui closes this loop by using computers to make orders the moment they are placed, and they save so much on production they can source better organic materials and attach a QR code to all products so that they can be scanned for easy return at end of life.
  • The Carbon Majors Database has found that 71% of emissions since 1988, and 51% since the Industrial Revolution, have been traced to just 100 companies. These include Exxon, Mobil, Shell and BHP Billiton. The leaders of these businesses have more power than democratically elected governments.
  • The authors suggest a refreshed version of the ESG acronym standing for Entrepreneurship, Spirit and Grit.

WHAT YOU HAVE TO WATCH

  • There are arguably too many forced constructs involving elephants, canoes, day 1, day 2, the charge, campfire, and reapproach.
  • There is also a certain amount of consultant speak involving drivers, unpacking and pivoting, which culminates in a methodology for the company run by the authors.