Time to Talk About the Public Interest
Time to Talk About the Public Interest
The TakeAway: Current global activity about “materiality” and “multiple capitals” seek to embed environmental, social, and governance considerations within corporate and investor commitments to accountability and sustainability. But they’re the latest iteration of an ancient ethic waiting to be reborn. In addition to embracing these efforts, and addressing seriously the wider sustainability context in which they exist, our current challenge is to take the next leap: Engage in a serious and sustained conversation about “the public interest” capital markets profess to support, and unveil the civic moral ethic at the heart of the fiduciary ethic.
It’s been awhile since I’ve posted anything, but I’ve been busy, writing up a storm for different clients. One piece, called Redefining Materiality II: Why It Matters, Who’s Involved, and What it Means for Corporate Leaders and Boards, finally was released last week by AccountAbility. It provides an overview of several current and overlapping global conversations about “materiality” and “multiple capitals”, and the ways in which environmental, social, and governance (ESG) issues need to be part of the risk/reward equation for investors and corporate leaders.
On that front, there are at least 4 major activities underway, exhibited by (in no particular order) the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB), and the Global Initiative for Sustainability Ratings (GISR). The first 3—GRI, IIRC, and SASB—are about improving corporate disclosure; the GISR is ratings, not disclosure, and about discerning corporate leaders from laggards. I’ve had direct involvement with all of these initiatives in one way or another, have many friends and colleagues working there, and find it a lovely challenge to keep up with them. If you read my AccountAbility report, you’ll learn about others, too. They’re all superb, and worth engaging and following.
That’s because they’re contributing to a 21st century definition of capitalism, and providing frameworks that incorporate nonfinancial considerations into the valuation process. In doing so, they’re making important contributions. (Although I think we’ve enough new "frameworks" to last awhile. What we really need is more "execution”, "education", “empowerment", "experimentation”, and "engagement". But I digress…)
However… with the exception of GISR, in addition to falling short on situating corporate and market behavior within asustainability context of thresholds and baselines (see Allen White’s superb piece in last week’s Guardian), they’re also relying on intellectual frameworks that, in my mind, are too narrow and tilted too far towards quantitative reasoning and market-based outcomes.
That’s understandable, as you can’t change the world by being too weird. To paraphrase Harvard’s Ron Heifetz and Marty Linskyin Leadership on the Line (thanks to my old pal Joan Gallosfor referencing this, and go read her blog, The Leadership Professor!), better to make change and speak the language that people can absorb, prodding them to take up important issues rather than ignoring them—or killing the messenger.
So what’s missing?
It’s very simple. What’s missing is the connective tissue that holds all these metrics and “capitals” together, the normative context in which we humans live our lives. Ethics. Values. Civic virtue. Public decorum. Kindness, compassion, and respect for each other, for our communities and future generations, and the earth. Fairness. All those “intangibles” that are deeply felt and pack a punch, the product of centuries of human wisdom and truth claims, be they religiously or philosophically rooted. (...continue reading)