An Introduction to Context-Based Sustainability · An Introduction to Context-Based Sustainability...
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An Introduction to Context-Based Sustainability
Mark W. McElroy, Ph.D. Center for Sustainable Organizations
SB’14
June 2, 2014
Taking Sustainability Literally
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• Quick tutorial
• What kind of thing is CBS? – New management doctrine for corporate
sustainability management (CSM) – ~10 years old
Context-Based Sustainability (CBS)
1 Copyright © 2014 Mark W. McElroy, Ph.D.
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• What are they? – Competing or alternative schools of thought or
practice that managers rely on – Reflective of different worldviews or paradigms
• Sustainability performance management
Management Doctrines
2 Copyright © 2014 Mark W. McElroy, Ph.D.
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• CSR
• Eco-efficiency
• Citizenship
• TBL
• Other?
Mainstream Doctrines in CSM
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• Literalist in its orientation
• Others are incrementalist
• CBS is also explicitly capital-based – Grounded in Multicapitalism
CBS as an Alternative Doctrine
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Multicapitalism
5
Available flows of valuable goods and services
(carrying capacity)
Appropriations of goods and services by people who need them
Resulting levels of human well-being
Source: McElroy, 2008
Stocks of natural capital
Stocks of human capital
Stocks of social capital
Stocks of constructed capital
Copyright © 2014 Mark W. McElroy, Ph.D.
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Vital Capitals and the Triple Bottom Line
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• Incrementalist – Absolute – Relative (Intensity)
• Literalist – Context-based – A 3rd way – Quotient-based
Metrics Vary by Doctrine
7 Copyright © 2014 Mark W. McElroy, Ph.D.
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Context-Based Metrics
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A General Specification for Context-Based Metrics
S = A N
(Actual impacts on a vital capital)
(Normative impacts on a vital capital)
For impacts on natural capital, all scores of < 1.0 are sustainable; > 1.0 unsustainable For impacts on other capitals, all scores of > 1.0 or sustainable; < 1.0 unsustainable
Copyright © 2014 Mark W. McElroy, Ph.D.
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• Materiality criteria also differ by doctrine • Incrementalist
– Narrow investor-based interpretation carried over from financial to non-financial domain
– e.g., SASB • Literalist (CBS)
– Broader, stakeholder-based interpretation • All impacts on vital capitals important to stakeholder
well-being • All duties and obligations to all stakeholders to have
such impacts
Materiality Implications
9 Copyright © 2014 Mark W. McElroy, Ph.D.
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Quick Illustrations
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CSO’s Context-‐Based Carbon Metric
World’s 1st Context-Based Carbon Metric!
Science-‐Based Targets
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Quick Illustrations (cont.)
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Quick Illustrations (cont.)
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2019 – Company ABC
Bottom Li
ne
Areas o
f Impact/
(Cap
itals)
Progre
ssion Sco
re
Weight
Weighte
d Score
Fully Susta
inable Sco
re
Gap to Fu
lly Susta
inable
Area of I
mpact B
ottom
Line
Triple
Bottom Line
NotesA B C D
A x B B x 3 D - C C / D
Living Wage (H) 3 1 3 3 0 100%
Workplace Safety (H,S,C) 3 5 15 15 0 100%
Innovative Capacity (H,S,C) 1 2 2 6 4 33%
Equity (E:IF) 3 5 15 15 0 100%
Borrowings (E:IF) 2 1 2 3 1 67%
Competitive Practices (E:EF & ENF) 2 1 2 3 1 67%
Water Supplies (N) 3 3 9 9 0 100%
Solid Wastes (N) 2 2 4 6 2 67%
The Climate System (N) 2 5 10 15 5 67%
62 75 13 83%
Economic 90%
Environmental 77%
Overall Performance
Social 83%
Notes
The MultiCapital Scorecard™
World’s first integrated context-‐based measurement
and reporting system!
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Uptake by Standards
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“Sustainability Context”
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• One reason only: – You care about whether or not your
organization is sustainable • No other way to assess the sustainability
performance of an organization • Not just about non-financial performance,
either – Integrated form of CBS includes treatment of
financial performance, too
Why Embrace CBS?
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Implementation Template (AoIs)
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Step 1 Vital
Capitals TBL Sustainability
Norms (Thresholds)
Data Types and Sources Ares of Impact
(AoIs) Stakeholders
Climate / GHGs Humanity Natural En Mitigation Targets Own Emissions
Livable Wage Employees Economic Ec Regional Norms Own Payroll
Copyright © 2014 Mark W. McElroy, Ph.D.