Are you ready for radical transparency? — 7 Key questions

by | Jul 23, 2024 | Blog

Radical transparency has been as the antidote to greenwashing. It requires companies to be accountable and responsible for the impact of their products, services and operations and to make full and frank disclosure about how the issues are being addressed.

Radical transparency provides all stakeholders with greater information, enabling collaboration and empowering action on systemic issues that could not be tackled by any one player in isolation.

Brands can build trust in their operations, enhance their reputation and potentially gain competitive advantage by being totally — and often brutally — honest about their sustainability efforts. That means not just going public on how a company has improved its products and operations, but also being open about what they are yet to do, what they got wrong and what they have learnt along the way. It shines a light on the actions that are working — and the ones that are less effective — enabling businesses to focus their sustainability efforts in the areas that count.

While businesses should be encouraged to progressively shift towards radical transparency, it is not without its risks and timing is everything. It can open the business up for increased scrutiny — including in areas not covered by mandatory reporting requirements. Some stakeholders may misinterpret a company’s admission of shortcomings, especially in the absence of any comparisons — if competitors aren’t equally honest, any challenge the business encounters may appear to be a company-specific issue, rather than a systemic risk affecting the whole industry. It is also essential to back up statements with data demonstrating clear progress, not just awareness of the issues.

Growing reporting requirements, including the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), mean that companies will have to report on their activities in ever greater detail. How does a business determine if it is ready to go beyond the statutory minimum and embrace radical transparency?

Sarah Walkley, Senior Sustainability Writer at Context Group explores the key questions that you should ask yourself before your company takes the plunge.

  1. Are you doing it on your own terms?

First, it’s crucial to be clear about why you are considering boosting transparency. Is it because other companies, particularly your competitors, have gone down that road? Are their actions forcing your hand, or raising customer expectations for you to be ever more explicit about your activities?

Companies such as Ace & Tate and Noah, that are highly transparent about their activities, have done their preparation and evolved their approach over time. They have been collecting data on all aspects of their business, developed and tested the messaging and ensured they can tell a coherent story.

They have embraced a more transparent approach on their own terms — not been cajoled into it by those around them.

  1. Are you prepared for employees to ask anything?

Does your company provide every opportunity for employees to ask questions about corporate and sustainability strategy as part of regular townhalls and updates? And are they provided with full and frank answers?

The most transparent companies have ‘Ask me anything’ sessions in place. They provided a testbed for what companies are ready to talk about publicly. If a company is not yet ready to put its cards on the table and talk about its sustainability progress internally — both the positives and the negatives — then it is not ready to share that information externally.

  1. How do you think other stakeholders will react?

If your company is already fully open about its activities internally, the next step is to think about how other stakeholders would react to you telling all — and potentially doing so in a way that may be quite different from how you communicate now.

Ace & Tate made no secret of the fact it had made some bad decisions on its journey to becoming a B Corp and had ‘f*cked up’ at times. It made a break from the typically staid tones of corporate communications to indicate that it was not just saying something different — it was also doing things differently, for example reversing a decision to use polyurethane in its glasses cases, which helped to reduce emissions but increased water consumption.

For other organisations, including Noah, Ganni and Patagonia, it starts by acknowledging that they are not sustainable companies. Their focus is on being the most responsible businesses they can be.

If suggestions that your company follows a similar approach are greeted with consternation and worry about what shareholders, suppliers or customers would say, then maybe now is not the time for radical transparency. However, just having the conversation should help to flush out the biggest areas of concern which need to be addressed to unlock a willingness to be more open.

  1. Could you go above and beyond?

The European Sustainability Reporting Standards (ESRS) list the data points that companies subject to CSRD will have to report on. There are over 1,000 data points in total — most companies will be required to publish data on a few hundred points covering the material sustainability matters that are most relevant to their business.

Companies can choose to be even more transparent and report against additional data points.

But the mandatory reporting requirements under ESRS and CSRD are already a big ask, especially for many private companies that fall within the scope of mandatory reporting for the first time.

Does your company have capacity to go above and beyond the base requirements at this stage?

  1. Are you prepared to reveal the full picture?

Are you ready to share the truth, the whole truth and nothing but the truth?

Specificity is the key to avoiding greenwashing. The Directive on Empowering Consumers for the Green Transition (also known as ‘the Greenwashing Directive’) has made that abundantly clear in restricting the use of generic terms such as ‘green’ and ‘eco friendly’ and regulating the format of acceptable claims, e.g. ‘this bottle is made of 30% recycled plastic’.

But focusing so specifically on one aspect of a product raises questions about other, less favourable attributes, or even other products. Why is the product not made entirely of recycled plastic or even a different material, for example? Or why are other products still sold in non-recyclable sachets rather than recycled and recyclable bottles?

It is as important to reveal what you are not doing and why as it is to communicate where you are making progress. Like Noah, Ganni and Patagonia, that may mean setting the record straight that there is no such thing as a truly sustainable company — only ones that are trying to make a difference where they can and minimise any inevitable impact.

  1. Are you willing to share what went wrong?

No initiative ever goes entirely to plan. Things take longer than you think. Projects cost more. And unexpected challenges always emerge along the way. But these setbacks all bring valuable learning, enhancing future initiatives. They enable companies to identify where greater collaboration would help to tackle systemic issues.

Radical transparency requires humility and openness about what went wrong, what you have learnt from the experience and how that is shaping future activities. Bragging only about what went right will sound hollow.

  1. Are your stakeholders already using AI to judge your efforts?

Are your stakeholders using artificial intelligence to assess your actions? Tools such as ChatIPCC, ClarityAI, GreenwatchAI and ClimateBert enable users to compile information from a disparate range of sources and draw their own conclusions about whether your organisation is living up to its sustainability ambitions.

The most robust response is to be more open about your approach and consistent in the way that you talk about activities. The technology can flush out a poorly considered press release issued in a minor market or an unguarded comment uttered in an interview, making it easier than ever before for stakeholders to question your strategy. Consistent messaging is essential to prevent this and is the foundation to radical transparency.

 

Context supports companies to hit the right tone with their sustainability strategy, reporting and communications — encouraging transparency and building credibility and enabling delivery of impact-led sustainability strategies. If you would like to talk about your organisation’s needs, please get in touch via www.contextsustainability.com or helen.fisher@contexteurope.com.

Three trends that will shape corporate sustainability in the future

by | Feb 15, 2017 | Blog

Phots: Flickr – mattwalker69

If one thing is constant in our modern world, it is that we are constantly changing.

The same can be said for the field of corporate sustainability. It feels like every day there is a new framework, a new ranking, a new concept that promises to change the field. What are the next generation frameworks and ideas that will shape the strategies of corporate sustainability leaders over the next 5 or so years? Looking into our crystal ball, we’ve identified a few – what do you think?

1. Beyond science based GHG targets

One trend gaining traction in the field of corporate sustainability is setting science based targets- GHG reduction targets (those in line with the level of decarbonization required to keep global temperature increase below 2°C compared to preindustrial temperatures, as described in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC)). Already this year, a number of companies have set new goals and strategy under the Science Based Targets Initiative (SBT), including Walmart, Tetrapak and Kering. While there is still a long way to go before this concept is commonplace, we’re looking to see what’s next.

  • Land and water targets: WRI and Mars Inc. have worked together to develop new science based targets around water and land use. Employing the SBTs GHG methodology, the targets into account the latest science on theglobal carbon budget, water stress and other ecological limits.[1]
  • Social impact goals: At the heart of SBTs is a desire to set goals that are based in fact and backed up by research. In the future, we expect to see this rigor applied to companies’ social as well as their environmental goals. As an example – research shows that the most gender diverse companies are 15% more likely to outperform the least gender diverse companies, while the most ethnically diverse companies are 35% more likely to outperform the least ethnically diverse.[2] In the future, will we see companies setting goals based on such research, aiming for the workforce balance that is show by research to correlate to higher performance?

2. Matrixed approach to impacts

In how companies set sustainability strategy and goals, organize their reports or communicate with stakeholders, ESG topics are often presented in silos. In particular, environmental issues are presented in isolation from their related societal impacts. But how companies understand and communicate on these topics is changing – a more complex, matrixed approach is emerging.

For example, the circular economy is most often presented as a framework for reducing use of non-renewable resources, including materials and energy. This model keeps products and materials at their most productive for as long as possible, circling what would have been “waste” back into a circular manufacturing cycle. But, the circular economy isn’t just about reducing resource use, it is about improving social and economic outcomes as well. This new model opens up new service economies in product repair and refurbishment and raises the income potential from waste collection and processing. By some estimates, potential revenues from recycled e-waste in the EU could total more than two billion Euros (2014 estimate).[3] And, of course, with less waste comes less environmental degradation, particularly in those communities that are often the recipients of this waste – such as China which, according to United Nations data, receives about 70% of electronic waste globally.

3. Radical transparency to radical collaboration

Over the last several years, we’ve heard a great deal about radical transparency – the idea that companies, rather than limit their communications to carefully crafted annual or quarterly sustainability publications, would throw open their doors and provide stakeholders with real time updates on the progress and performance of their sustainability programs. As an example, since 2013, H&M has published a full list of its suppliers down to Tier 2 fabric and yarn suppliers. The move was made to demonstrate that H&M has worked hard to develop transparent, strong relationships with suppliers, and the company intends to update the list every three months. This drive toward greater visibility into supply chains and operational performance is leading to new innovations that hold real promise – the new platform, “Trase” (TRAnsparence for Sustainable Economies) aims to bring “radical transparency” to global supply chains, tracking commodities from producers to end purchasers.

Over the next three to five years, we expect this trend toward greater openness and transparency to morph into what we are calling “radical collaboration.” In the quest for faster change, better results, more impact, companies will find new ways to partner with others to solve big challenges. The SDGs are a first step in this direction – providing common goals for multi-sector actors to rally around. Particularly as companies move into parts of the world with lower purchasing power and more constraints, we’ll see big corporations partnering with social entrepreneurs to learn how to do more with less and to innovate for new use cases. These collaborations will be bolder, more strategic and more integrated into the business than ever before, with a high potential for impact

What do you think will be the major trends shaping the future of corporate sustainability? Share with us @Context_Group on Twitter!

 

[1] http://www.wri.org/blog/2016/10/how-mars-and-wri-developed-science-based-sustainability-targets-climate-land-water

[2] http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters

[3] https://www.elsevier.com/atlas/story/planet/is-there-a-future-for-e-waste-recycling-yes,-and-its-worth-billions