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Reporting 3.0 Reporting & Data Blueprint Exposure Draft 2.0 ReviewA P R 0 2 - A P R 0 7 , 2 0 1 7
4 2 P A R T I C I P A N T S / 1 4 3 P O S T S
w w w . c o n v e t i t . c o m
P O W E R E D B Y :
Background AGENDA
REVIEW MATERIALS
This engagement provides an opportunity to give critical feedback to Reporting
3.0 on Exposure Draft 2.0 of the Reporting Blueprint and Data Blueprint. The Lead
Authors will integrate this feedback into the final versions of the Blueprint Reports
that will be released at the 4th International Conference of the Reporting 3.0
Platform at KPMG in Amsterdam May 30-31, 2017. In particular, we seek input on the
Recommendations in each Blueprint.
Day 1
CH
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R 3
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R 4
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R 5
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Day 2
Day 3
Day 4
Day 5
Introduction Chapters
Purpose
Integration
Success
Contextualization
Scalability
Activation
Synthesis
Reporting
Reporting
Reporting
Data
Data
Data
Bill BaueReporting 3.0 PlatformFACILITATOR
“Reporting Blueprint Exposure Draft 2.0”
“Reporting Blueprint Summary Deck”
“Data Blueprint Exposure Draft 2.0”
“Data Blueprint Summary Deck”
3Executive SummaryDay 1
Day 3
Day 2
Day 4
Day 5
The first session of this virtual dialogue reviewing the Reporting 3.0 Blueprints focused primarily on the issues of materiality, principles, graphics, and specifics on the Data Blueprint.
Discussion on the “Success” chapter in the Reporting Blueprint focused on the proposed New Disclosure Elements of Measurement, Target-Setting and Incentives, as well as the Tools listed in the Chapter. A self-described “philosophical” discussion questioned the existence of sustainable companies, particularly in the extractive sectors.
The Data Blueprint discussion affirmed the stance asserted in the “Contextualization” chapter that the current practice of Net Positive is indeed context-free, and hence problematic. And the underpinnings of capital theory were explained.
Discussion on the Reporting Blueprint “Scalability” Chapter honed in on the question of value creation for investors -- and more broadly. The dialogue also proposed “justification” as an addendum to “education,” “advocation” & “acceleration,” and noted the inherently disruptive nature of the Reporting 3.0 agenda.
The Data Blueprint “Activation” Chapter discussion covered the blockchain pilot, knowledge creation and positive mavericks.
Future Fit Business Benchmark Co-Founder Bob Willard mapped Reporting 3.0 in comparison to other standards and frameworks, which spurred in-depth discussion over how best to represent this framework comparison.
The final Discussion Tab focused on synthesizing the week’s dialogue, conveying parting input, suggestions, and recommendations to the Reporting 3.0 Operations Team and Community.
What’s the ideal position and scope of sustainability in the Reporting 3.0 Strategy Continuum? That was a primary topic of discussion in the Reporting Blueprint thread, which also addressed the question of coherence of mindsets and strategic commitment to sustainability across different levels of the enterprise, as well as the key role of collaborative NGO advocacy in scaling / accelerating sustainability.
Is “value creation” contrary to “sustainable performance,” or can the two be aligned? That emerged as a key topic of discussion in the Data Blueprint thread, which also addressed questions of the (un)will(ingness) to disclose contextualized performance and radical easing of the data/reporting burden.
Intro Chapters
Success & Contextualization
Purpose & Integration
Scalability & Activation
Synthesis
4ParticipantsBill BaueCo-Facilitator, Reporting 3.0 Platform
Innovation Architect at EnigMatrix
Researcher, Radboud University
Sustainability, Sustainable Supply Chain Management, Project Management, Sustainable Chemical Management, Strategy
Associate Professor, Associate Professor, University of International Business and Economics China
Sanford Lewis, Attorney
Senior Sustainability Consultant- Buildings + Places at AECOM
Academic Director at Impact Centre Erasmus, Erasmus University Rotterdam
Consultant bei Systain Consulting Founder, Sustainability Advantage
Chief Architect: Decko and WikiRate
Associate Professor at Ryerson University Strategic Sustainability Expert
Accounting Academic Partner, Terrafiniti
Director CRI ALDI SÜD Directora de AgendaRSE
President of Responsible Business Forum
Lecturer at Saxion University of applied sciences
Kansai University Founding Director Sustainability Advisory Group
Strategy & Collaboration for Sustainable Production
Senior Lecturer Marketing and Sustainable Business
Founder of WikiLCA Founder, Center for Sustainable Organizations
Director at KPR Associates, former Partner PwC
Director Global Responsibility
Editor at Integral Leadership Review
Advisor: Sustainability and Corporate Social Responsibility
Manager International Accountancy Coordination at Nederlandse Beroepsorganisatie van Accountants (NBA)
21st Century Financial
Vice-President, Corporate Social & Environmental Responsibility at Flex
Pm2 - Performance Measurement & Management
Senior Vice President for Sustainable Investing at Pax World
CEO at ECO-OS
Managing Partner, ESG Matters Limited
Sustainable Innovation Consultant at InsideOut Sustainable Innovation Consulting
Director, BSD Consulting
Founder at Impact in Context
World Bank
Senior Consultant CSR / Marketing bei organic Marken-Kommunikation GmbH
Senior Consultant Sustainability Strategy bei BASF
Sustainable innovation consultant
Director of Sustainability, Cabot Creamery Coopera
Ralph ThurmCo-Initiator Reporting 3.0 Platform
Stefan HuggenbergerIntern, Reporting 3.0 Platform
Jed Davis
Désirée Lucchese
Christian Meyn Flo Segura
Mirella Panek-Owsiańska Kees Tesselhof
Niels Faber
Julie Gorte
Reiner Hengstmann
Henk Hadders
Monika Kumar
Julia Hameister
Christian Heller
Sanford Lewis
Roland Bulten Ethan McCutchen Cory Searcy Jennifer Woofter
René Orij Dominic Tantram
Beat Grüninger
David Baxter Karen Maas Christina Schampel Bob Willard
Michiyasu Nakajima Maria Sillanpaa
Martina Prox Simon van Renssen
Jakob Raffn Mark W. McElroy
Kurt Ramin Ambreen Waheed
Eric Reynolds Linda Wedderburn
Paul Hurks
Rob Jacobs
Bruce Klafter
Brett Knowles
Li Li
Glenn Frommer
Noam Gressel
FACILITATOR CO-FACILITATOR CO-FACILITATOR
Day1:
Intro Chapters
Intro ChaptersDay 1 6
Materiality
“While [the Reporting 3.0] framework integrates context to go beyond existing materiality definitions...the contrast with the existing frameworks is unclear and therefore less useful as a practical reference against existing efforts.”
“I do think a case can be made for expressing non-financial impacts in financial or monetized terms, but only if such impacts have first been contextualized...”Monetization without contextualization is tyranny!” ;-).”
“Because of the lack of focus on the pervasive context of un-internalized impacts, monetization as practiced by an organization like SASB may dramatically distort reporting toward short termism and a narrow focus that contradict genuine sustainability.”
“Nowadays more than 70% of stock trades (decisions) are made by algorithms. What does this mean for the concept of materiality: is it a line of code that is to be programmed into the algorithm?”
Sanford Lewis
Mark W. McElroy
Rob Jacobs
Intro ChaptersDay 1 7
“I like how your use “relevance” instead of “materiality,” but would prefer “transparency” to “reciprocity,” “collaboration” to “mutuality,” “systems thinking” to “connectedness,” “obsolescence” to “redundancy,” “resilience” to “adaptability,” and “science-based” to “humbleness.” Those labels might also help use see that you have already addressed openness, transparency, and morality.”
“Strong support for the principle “relevance”, as it is well understood...strong support for “circularity” and all the others, except redundancy isn’t as clear as it could be. Resilience would be better or even anti-fragile.”
Bob Willard
Principles
Martina Prox
Intro ChaptersDay 1 8
Graphics
“Is there a way for the descriptive text, ovals, and arrows in the three micro-meso-macro layers to support this better?”
TECHNOLOGICAL & HUMAN EVOLUTION
GREEN, INCLUSIVE & OPEN ECONOMY DESIGN
Inte
gral
Thi
nkin
g &
Tru
e M
ater
iall
ity
Focu
s A
reas
: Rep
orti
ng, D
ata,
Acc
ount
ing,
New
Bus
ines
s M
odel
s
WHAT GROWTH?
Bob Willard
MARKETINICIATIVESMACRO
INVISIBLEBAND
INVISIBLEHAND
MESO
MICRO
LEVEL PLAYING FIELDS
PURPOSESUCCESS
SCALABILITY
REGENERATION
ADVOCATION
POSITIONINGCONTRIBUTION
CONSTEXTUAL MULTI-CAPITAL
ACCOUNTING
ACELERATION OFPOSITIVE IMPACT
COLLABORATION
EXTERNALITIES
INDUSTRIES
EDUCATION
ORGANIZATIONS
HABITATS
Societal Values [ What do we want to be?]
Corridors of Transition [ Where do we want to be?]
Trust, Innovation & Resillence [ How do we achieve what we want to be?]
Real Economy Financial Markets
TAXATION
Intro ChaptersDay 1 9
“I really like this Daly triangle as it illustrates beautifully the notion of sustainable wellbeing as a goal/end, which is integral wellbeing (=top) adjusted to planetary boundaries (=bottom) or living the good life within our means.”
“While thresholds are key to Meadows’ thesis, their importance is not brought to life in the graphic representation by Daly (the triangle).”
Henk Hadders
Noam Gressel
“I wonder of a modified version of the Daly Triangle that embeds the six desiderata in the descriptors of each level would reinforce their value.”
Bob Willard
Daly’s Triangle
Graphics
Intro ChaptersDay 1 10
Data Blueprint
“The Data Blueprint does a terrific job of making the context- and capital-based case, but...I’m not sure the draft goes far enough in terms of providing a general specification for metrics.”
“The other rule [on anthropogenic (or anthro) capitals for] adding to Daly’s three rules...might read as follows: “The rate at which anthropogenic capitals are produced and/or maintained should not fall below the rate at which their flows are required to ensure human well-being.””
“It seems to me that R3 is now moving beyond ecological economics. I also think it might be worthwhile to use system dynamics to transfer these static models into dynamic models for learning and simulation purposes.”
“I need to see how these [on the Daly Triangle and multiple capitals] points are practical to business. We need to appreciate their view of ‘What’s in it for me?’. Our mental jujitsu will need to appropriate that strength to our advantage, and we will need all the help we can get.”
Mark W. McElroy
Henk Hadders
Glenn Frommer
Day2:
Purpose & Integration
Purpose & Integration Day 2 12
Reporting Blueprint: Strategy Continuum
“”Sustaining” is positioned as a stage before “Net Positive” and “Thriving” on the continuum, whereas some of us may feel that “sustaining” embraces both those concepts.”
“Net Positive is an incrementalist idea in which sustainability performance is, strictly speaking, not involved.”
“The most useful row in the graphic is the Mechanism row. The others may invoke defensive reactions and feel like value judgement, especially the bottom row.”
“As for Thriving, I’ve long felt that it is an idea that is already embedded in Sustainability.”
Bob Willard
Mark W. McElroy
Business as Usual
Improving
Regime Survive Comply Repair ThriveRegenerate
Mechanism Max Profit Doing less bad
(i.e. CSR)
Meet thresholds
LEAPFROG
LEAPFROG
Gross Positive
Net Positive
HandprintFootprint
Focus React Mitigate Balance Innovate & Breakthrough
Adapt
Value System
Opportunitists /Diplomats
Experts / Achievers
Collectivists AlchemistsStrategists
Sustaining Net Positive
ThriveAble
STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5
Purpose & Integration Day 2 13
Reporting Blueprint: Transformational Coherence
“The hearts and minds of the leadership of countries (or divisions or business units) need to be engaged for a shift to happen. In essence, the leaders need to be willing to change themselves, to enable the systems they lead to also change.”
“It could be that a global leadership view and the local leadership view could be very diverse. Is that a problem? Yes, if undetected. No, if made visible and gets discussed.”
“To truly work at scale, NGOs need to collaborate and co-create solutions to the contexts in which they operate. The educate-advocate-accelerate model could be useful in helping them to start their conversations.”
David Baxter
Ralph Thurm
Purpose & Integration Day 2 14
Data Blueprint: Value Creation / Sustainable Performance
“The position Reporting 3.0 is proposing is that value creation is only problematic in the absence of sustainable performance, but that it is desirable when aligned with sustainable performance across the multiple capitals.”
“Integrated sustainability [performance and] reporting is not about value creation in the incrementalist sense, and we should therefore distance ourselves from it as much as possible.”
Bill Baue Mark W. McElroy
Purpose & Integration Day 2 15
Data Blueprint: The Will to Report Contextually
“Organisations do not report their context and...their most material ESG risks...for two reasons:
They do not know;
They are unwilling to report it.”
“If somebody tells me data is not available in today’s world of sensors, big data and artificial intelligence I am simply seeing an unwillingness to know, and therewith an unwillingness to manage. That is why ‘empowered right holders’ stand front and center of the Reporting 3.0 efforts. They do not only have a stake, they have a right to know.”
“When we talk about activating reporting, we are assuming that if important stakeholders ask for / demand the information, companies will have to produce / report it. If they report on it [and] manage it [and] then performance will improve...There are several leaps of faith in this chain of logic, but it may be the only way change ever happens: people with clout demand it.”
David Baxter
Ralph Thurm
Bob Willard
Purpose & Integration Day 2 16
Data Blueprint: Easing the Burden
“Without adequate information technology and a compelling value proposition the cost per value of adopting a multi-capital approach is much too high for the majority of businesses (not just in financial terms - also in terms of time and expertise that need to be brought in).”
“The basic idea of both pilots is to embed contextualizing metrics into the blockchain, thereby creating contextualized information out of uncontextualized “raw” data from companies...mingled with data from external sources.”
“it’s essential to ensure information technology that radically eases the burden is developed as well as realistic context and value-driven “stepping stones” for adoption.”
Noam Gressel
Bill Baue
Day3:
Success & Contextualization
Success & ContextualizationDay 3 18
New Disclosure Elements & Tools
“I find [Measurement, Target-Setting and Incentives] useful, but I would like to add: Transparency and Accountability. Companies say many things in Sustainability Reports. However, they are very rarely held to account for their sustainability plans, unlike their financial plans.”
“I see companies setting science based targets [but] it is unclear where the measurement and incentives fit into such a target.”
“All of the tools cited have advantages and challenges. There are already significant resources invested in many of them and we will need to re-focus those tools towards the Ultimate Ends.”
David Baxter
Glenn Frommer
Success & ContextualizationDay 3 19
(Un)Sustainable Business Models
“What do we do with completely unsustainable organisations such as the extractive industries?”
“Arguably no company is sustainable.”
“The discussion on the New Business Models Blueprint will explore this dilemma about extractive industries ever being “sustainable.””
David Baxter
Bob Willard
Success & ContextualizationDay 3 20
Context-Free Net Positive
“Net Positive...fails to take limits and thresholds in the carrying capacities of vital capitals explicitly into account (not to mention organization-specific allocations). NP is an incrementalist construct, not a sustainability one.”
“The manner in which Net Positive adds and subtracts putatively positive and negative impacts to/from one another on different kinds of resources (capitals) commits the methodological error of treating unlike capitals as if they are substitutable for one another.”
Mark W. McElroy
Success & ContextualizationDay 3 21
Capital Theory
“”Capital” in the sustainability literature is often defined as “a stock of anything that yields a beneficial flow of goods or services into the future” -- beneficial for human well-being, that is, which itself depends upon the health and well-being of ecosystems.”
“If we want to maintain such flows, we need to safeguard and maintain the stocks that produce them.”
“So capitals and the carrying capacities of their stocks and flows provide us with a very valuable organizing principle that can be used to (a) identify and define sustainability limits and thresholds, and (b) measure the carrying capacities of resources and the effects of our impacts upon them.”
Mark W. McElroy
Day4:
Scalability & Activation
Scalability and ActivationDay 4 23
Reporting 3.0, Investors & Value Creation
“There is a causal link between strong ESG performance and greater investor returns. Once this hard base of evidence is established the investor community would shift there position more quickly.”
“The beauty of the Reputation Dividend work is that it shows how shareholder value can grow in cases where the corporate behaviors involved are NOT shareholder-centric.”
“[To] scale this framework...is going to require exemplars from the leading companies, it may have to take the form of requirements from procurement organizations, it will be fueled by inquiries from investors ... and it’s going to take a lot of time.”
“Two key stakeholders who I feel are under represented and under engaged are the investor community and academia.”
David Baxter
Mark W. McElroy
Bruce Klafter
Scalability and ActivationDay 4 24
Reporting 3.0 & Justification
“Education, collaboration and advocation are necessary means of scaling the changes we seek, but perhaps not sufficient. Unless we include “justification” under “education” or “advocation,” I think it deserves consideration as a fourth means.”
“Education may very well be the main instrument we can use to plant the seeds we need to move from a side operation to common practice. On the matter of justification, I would argue that this links to education but also goes beyond that.”
Niels Faber
Bob Willard
Scalability and ActivationDay 4 25
“Reporting 3.0 is essentially going to be viewed as a disruptive and foreign approach to most corporate reporters...Most companies are still mired in a risk avoidance and management paradigm where radical transparency and exposure of strategic thinking is exceedingly rare.”
“R3 is “disruptive” not for sensationalism, but rather because circumstances demand it -- we have no other choice. Incrementalist business-as-usual, even in the “sustainability” space, is demonstrably not fit-to-task....Reporting 3.0 gathers a community of “Positive Mavericks”...that is open to all who similarly see the urgency.”
Reporting 3.0 is Disruptive
Bruce Klafter
Bill Baue
Scalability and ActivationDay 4 26
“Blockchain technology may be an interesting angle to resolving the government / corporate / commons gap. Using Blockchain technology to register information about corporate, governmental, and commons’ activities would at least provide transparency of the actions of each of society’s actors.”
“Less information processing is needed, more knowledge coordination...Our societies and all our activities in it should be more concerned with creation of new capabilities that improve adaptive and innovative capacity, and with correction of failures in processes of coordination of knowledge.”
“In terms of activation and acceleration I think we should also hold space here for all those positive mavericks and pioneers out there, who are trying to realise their vision for the Common Good in mainstream organizations, ….who get bogged down, or even fired or….”
Data Blueprint: Blockchain, Knowledge Creation & Positive Mavericks
Niels Faber Roland Bulten Henk Hadders
Scalability and ActivationDay 4 27
Reporting 3.0 and Other Frameworks
“The table that shows how key features of Reporting 3.0 are reflected in other frameworks... highlights that a key feature of Reporting 3.0 is its effort to align reporting on progress by companies (micro-level), industries (meso-level), and governments / economies (macro-level).”
“Maybe we should just call them “frameworks””
“This discussion confirms the existing ideas in R3.0 on joint actor involvement on macro-meso and micro-level, including the science arena. Many companies (micro) may postpone ‘real action’ because issues in related Knowledge Areas have not yet reached the same phase of development.”
“The table should differentiate between standards and methods.”
Bob Willard
Paul Hurks
Mark W. McElroy
Scalability and ActivationDay 4 28
Frameworks & Scorecards
“I would add the MultiCapital Scorecard and GISR to the matrix, since both are also active players in the reporting space.”
“Of course we should add a column for the Multicapital Scorecard if needed, but I would suggest to position the presence of a Scorecard as another aspect/ dimension/attribute in a new row under the group “Other Reporting 3.0 features”.”
“I know from experience that companies reward executives based on goals anchored in the balanced scorecards. How do we motivate organizations to transition to a multi-capital balanced scorecard, and what sorts of goals could we envision rewarding executives for achieving?”
Mark W. McElroy
Henk HaddersGlenn Frommer
Day5:
Synthesis
SynthesisDay 5 30
Reporting 3.0 Synthesis
“I deeply admire your efforts in this R 3.0 initiative to raise the bar in sustainability measurement and reporting, which is so badly needed in this world.”
“The Blueprint recommendations cover the material in the documents and aspirations reasonably well... For me the next step is to apply them and show achievements.”
“R3.0 is undoubtably ambitious. And I agree...that we should just get cracking. The major challenge, is that the playing field will not be level...There is a complete and fundamental lack of understanding about multicapitalism and context based sustainability in mainstream politics.”
Henk Hadders
Glenn Frommer
David Baxter
SynthesisDay 5 31
Reporting 3.0 Strategy
“There is a unique agility that we need to develop in our sustainability leaders: the genesis of acceleration. Our leaders need to work within a command and control business environment and yet have the skills to step out and work within the societal adaptive environment, where co-generation of value joins the command and control to generate trans-formative well-being.”
“I am mindful of the need for the institutionalization of R3...R3 does not fit as an extension of GRI, , CDP or other frameworks, but I cannot visualize what type of institution would fit best. We will however need considerably more format to impress the money and agencies, and time is of the essence.”
“I think the most important thing is try to convince the company that do business in a more responsible and sustainable way will do good to themselves...We need to be careful that Reporting is not for supervising only, it’s more for improvement and moving towards sustainability.”
Glenn FrommerLi Li
32Conclusion
Facilitator’s Thanks
Dear Reporting 3.0 Community,
Thank you so much for the depth of engagement in this week’s Virtual Dialogue! Your input has been invaluable, guiding Ralph and me on revising the Reporting Blueprint and Data Blueprint for final publication at the 4th International Conference of the Reporting 3.0 Platform at KPMG headquarters in Amsterdam May 30-31. We look forward to seeing many of you there.
We give particular thanks to those of you who took time out of your busy schedules to provide detailed feedback and engage in exploratory dialogue. Mark McElroy from the US, Bob Willard from Canada, and Dave Baxter from South Africa earned “MVP” status, but all of you are key players in the Reporting 3.0 ecosystem. As I mentioned, we recognize the value of both active contributors and witnesses, who ingest the deliberations and integrate it into your work, thereby spreading the R3 consciousness.
Bill BaueReporting 3.0 PlatformFACILITATOR
