Value Proposition: Roles and Goals for the company
The roles and the goals of the company are the two axis of the value proposition. The role, how the company acts in relation to sustainability, is divided into six categories. The goals, what the company has set as the target and vision for its work, is divided in eight categories.
Many companies belong to multiple categories depending on what part of the company that is assessed. In addition, many companies are changing fast. This is why the assessment tool allows for multiple sources for the bench marking.
Six different categories of roles
The role the company has is at the core of the value proposition. Regardless of goals, the key is the actual role the company has in society. This is important to understand as too many companies focus on how they can communicate different goals, rather than focus on what the role they actually have. The current focus on scope 1-3 reduction, that is important, has also contributed to a situation where many companies look inwards to HOW they produce things and how they can report reduced emissions from their operational impact, instead of asking WHAT they produce and what their actual impact in society is.
A fact that is not discussed enough is that many companies are already significant solution providers, but due to the focus on scope 1-3 emission reductions that role is often not acknowledged. Sometimes the important climate impact in society of this work is not even known by the management team, or the ESG/CSR team.
Role category 1. Knowingly undermining sustainability
In the first category are those companies that are actively undermining sustainability. While this tool is for companies that are, or what to become, solution providers, it is important to acknowledge that significant numbers of companies are still actively undermining sustainability with the solutions they provide. Including companies that rank high on classical ESG rankings.
In addition to selling unsustainable goods and services, including using offsetting to continue sell unsustainable products, this category also include activities such as lobbying and marketing that result in increased emissions, as well as breaking of laws protecting people and the planet. Few companies will categorize themselves as belonging in this category. This is why data from external stakeholders, such as environmental NGOs and scientists, are an option during the self-assessment, as these can provide an insight to if the company might be seen as undermining sustainability.
Role category 2. Legal compliance (including unknowingly delivering sustainable solutions, or unknowingly undermining sustainability)
In this category companies see their role as ensuring compliance with legislation. This is an interesting category as many significant solution providers belongs in this category, as well as many of the most significant contributors to an unsustainable development.
Currently many management consultants, law firms, architects, social media platforms, gaming companies, PR-firms, etc. are doing exciting work in support of a sustainable development by using their capacity as enablers. There are even management consultants, law firms, PR-firms etc. that are dedicated to help new solutions reach the market. But, with the current focus on scope 1-3 emissions these companies and their contributions are almost always invisible to the outside world.
While many enablers are part of the solution, even more are part of the problem without knowing it. Many of the largest management companies, law firms, PR agencies, are helping polluting companies to do as little as possible and are aware of it, but smaller firms are often not aware of their impact. Their view on ESG/CRS is almost always risk/compliance driven. It is ironic that leading management companies claiming to be innovation leaders are in realty undermining sustainable innovation as their business models and value propositions are not reflected in the way they operate.
The most common and important group of companies in this category unknowingly delivering sustainable solutions are start-ups. These companies often do not have the resources to assess and understand the full sustainability impacts of their innovations. As they often challenge the current way things are done and use the latest business thinking and technologies they are often very resource efficient.
Role category 3. Addressing only own emissions (scope 1-3)
This is a category that creates a lot of confusion. Initiatives like CDP and Science-Based [reduction] Targets have played an important role in helping large polluters understanding the need to reduce their own emissions, but these and similar initiatives are mainly relevant for companies aiming for zero emissions from their scope 1-3 emissions, not helping companies become solution providers.
A main reason for the confusion is probably that “climate leadership” has been communicated mainly as reducing a company’s own emission, rather than delivering what is needed in society, and absolutely not how to deliver solutions to human needs in a way that allow 11 billion to live flourishing lives, e.g.
“All are recognised as climate leaders with either Science-Based Targets, a CDP A or A- score as of 2017, commitments to RE100, EP100 and EV100, and ambitious goals to be zero carbon or zero waste businesses by 2050.”
While the above-mentioned initiatives do not claim to support companies in becoming solution providers, or be compatible with a future where 11 billion people can live flourishing lives, many companies think that the best they can do is reach zero. The risk/problem approach has been further encouraged by most mainstream investors who have used an ESG approach to assess if the companies can manage sustainability as a risk.
This guilt/risk perspective where the focus is on what the company report as scope 1-3 emissions combine with a desperate demand for money in many organisations working with biodiversity, rather that its actual climate impact in society and the long-term sustainability, is probably why offsetting has become an accepted approach by many stakeholders.
For a solution provider the way the product is made must be sustainable, so they need to address scope 1-3, but the main question is how to ensure that human needs are met in a sustainable way that is compatible with a just and sustainable 1.5 C trajectory, not how to report scope 1-3 emissions. E.g. setting a net-zero target for steel production and then focus the marketing and innovation to provide this “green steel” to build oil platforms can obviously not be seen as climate leadership if the goal is a 1.5C globally sustainable development path.
The fundamentally different perspective shift in a climate opportunity agenda and a climate risk agenda is why it often is easier for companies that have not built a structure and identity around scope 1-3 emissions to become solution providers (role category 2) compared with those who have built up a staff and branding around communicating net-zero with offsetting (role category 3).
Role category 4: Delivering sustainable materials that potentially can deliver on human needs
In this category companies with sustainable materials and products belong. This is a interesting group as many companies belong to this group without acknowledging it, while others do not belong in it but try to define their products as sustainable in ways that require creative accounting with the use of offsetting.
This category covers three different approaches to sustainable material. The first approach covers the companies that deliver sustainable material that can be used to deliver on human needs. This can include anything from sustainable forest products, sustainable protein and fossil-free steel. However most of these companies lack a strategy to ensure that the use of their products are actually delivering sustainability. E.g. 1: sustainable forest products might be used for unsustainable fast food packaging, or unnecessary packaging that support fast fashion. E.g 2: sustainable protein being used to promote unsustainable fast food that contain large amounts of red meat. E.g. 3: Fossil-free steel that is used to build oil platforms and fossil SUVs.
The second approach covers companies that moves beyond a product focus and provide the product as a service to support a more resource efficient economy. Instead of selling per ton/m3 etc. these companies sell the function in order to support smarter system solutions and support resource efficiency. These companies tend to move up the value chain as more optimal use tend to require that the products and systems are designed for maximum utility rather than maximum number of units sold.
Moving to a “product as a service” approach also challenges the planned obsolescence trend in parts of the industry that encourage overconsumption. However, it is important to note that in areas where rapid technological development is happening, designing for upgrades is more important that making whole products that last extremely long as these can be energy inefficient and polluting.
The last approach covers companies that deliver sustainable materials in support of a future where 11 billion can live flourishing lives. These companies are part of clusters with a focus on human needs and how to build systems that are extremely resource- and cost-efficient.
Role category 5: Providing enabling services that potentially can deliver on human needs.
In this category enablers can be found that acknowledge their role as supporting sustainable ways to deliver on human needs. Enablers are often ignored when simple product substitution and scope 1-3 approaches are applied, but for system changes they are at the core. These are companies that themselves do not deliver a specific product or deliver on a specific human need, but they enable these to happen.
Hence, providing enabling services is one of the most important categories when more than incremental improvements in existing systems are needed. In this category a wide range of companies are included that enable system change though activities in areas such as marketing, advocacy, law, business model development, digitalisation, etc.
In the same way as the category above, this category also covers three different approaches. The first approach covers the companies that provide enabling services with the potential to deliver on human needs. This can include marketing, legal support and business model support for companies that deliver sustainable materials.
The second approach cover those companies that also support solution providers to a shift from business models where increased sales of physical products equals increased revenues to a business model that is based on product as a service.
The third approach cover those companies that also add a proactive communication and advocacy work to their enabling work in support of a future where 11 billion people can live flourishing lives.
What is not included in this category are companies that enable unsustainable systems, even if they are less carbon intensive compared the solutions they replace. E.g. those providing support for low-carbon oil platforms and airports are not included in this category unless they can prove that the investments support systems that are 1.5 C globally sustainable. Hence, the financial institutions and consultants, like CICERO who provided a “deep green” rating for an airport, would all be excluded from this category.
The consulting firms, large and small, will play an important role. But most of them are either part of the problem by helping large polluters become more “efficient”, or apply a climate risk perspective. The challenge is that most staff working with companies in academy and NGOs are only trained in 1990’s climate risk agenda and do not understand who companies operate. In addition many NGOs, UN organisations have made themselves depended on offsetting and philanthropic funding that makes it difficult for them to shift perspective and become enabler of solutions rather than enabler of scope 1-3 reductions and offsetting, with “zero” as the goal for companies.
Role category 6: Delivering sustainable solutions meeting human needs
In the last category very few companies can be found by themselves, as clusters are often needed to deliver on human needs and few business models today focus on the delivery on human needs rather than products that might support them. As most human needs require a balance, where both too little and too much is unsustainable, traditional business models that are based on trying to sell as much as possible often becomes part or the problem. Fast food and fast fashion are perhaps the most well-known sectors that are linked human needs, shelter and nutrition, but have become fundamentally unsustainable by making the products unhealthy and unsustainable and then a business models that want to increase the demand for these products. Without any focus on human needs and empowerment of people they have developed business strategies and business models that create a vicious circle where they try to increase the demand for their unhealthy products.
This category covers three different approaches. First, those that focus on providing sustainable solutions that meet human needs. Second, those that delivering exponential uptake of sustainable solutions that deliver on human needs. Third, those delivering exponential uptake of sustainable solutions meeting human needs while supporting values and regulations that enable more equality and environmental sustainability while delivering sustainable solutions meeting 11 billion humans needs.
Six different categories of goals
While the role of the company is what actually delivers, the goals of a company are important as they provides directions for the company. However, it is all too easy to set vague goals that sounds great, but are not reflected in the actual role and activity of the company. Still, goals are important as they can provide a direction and inspiration. When it comes to goals the importance of multiple benchmarks is even bigger than for roles as there are usually very different goals in the company, from the communication driven external goal, to internal goals by intrapreneurs exploring new opportunities.
Goal category 1: Goals that increase emissions in an unsustainable way
There still many companies with goals that result in increased emissions and even more that have goals that result in reductions that are too slow. It is very common for companies to have goals in this category, while also have goals in other categories.
Goal category 2: No specific climate goals
A large groups of companies do not have any specific climate goals. Such companies might have statements like “contribute to reduce/ avoided emissions”, or “to help create positive, enduring change in the world”, while also have general statements like “To help our clients make distinctive, lasting, and substantial improvements in their performance” that can mean anything and often are used to support some of the most unsustainable activities on the planet.
Goal category 3: Scope 1-3 reduction goals
In this category we find companies that only have scope 1-3 reduction goals, but no goals for avoided emissions. This is a large category of companies today. However this tool is mainly for companies that already have solutions and either have no specific climate goals, or already have goals as a solution providers. The tool can also be used by companies with only scope 1-3 goals, but it is usually a longer and more complicated journey as a solution driven company is very different from a compliance/risk driven company.
Goal category 4: Providing solutions that reduce emissions in society
In this category we find companies that have goals related to avoided emissions. It can be sold units, it can be in revenues, but preferably it should be in avoided emissions even if that is still not very common. Regardless if avoided emissions are assessed or not, there is no assessment of potential high carbon lock-in, or if the reductions in other ways are not compatible with a 1.5 C development path.
Goal category 5: Providing solutions that support a 1.5C trajectory in society
In this category we find companies that have goals related to avoided emissions that are in support of a 1.5 C trajectory. Preferably referring to IPCCs most sustainable 1.5C pathway the Low-Energy Demand pathway (LED).
Goal category 6: Providing solutions that support a 1.5C trajectory in society and are compatible with a half-earth future where 11 billion can live flourishing lives
In this category we find very few companies. Here we have companies with goals to provide what is actually needed for global sustainability. These are companies that have as a goal to provide solutions that support a 1.5C trajectory in society and are compatible with a half-earth future where 11 billion can live flourishing lives.