Adam Garfunkel is co-owner and managing director of Junxion Strategy, and has a long history of helping companies to report on their sustainability performance.
Apple made a film. About their sustainability reporting, of all things. With CEO Tim Cook and an A-list Hollywood actor.
For longtime advocates of corporate transparency like me, this is exciting news. Apple films are notoriously effective. Here is one of the largest businesses on the planet investing big bucks in making sustainability sexy – or at least accessible. What’s not to like?
To be clear, I am very glad the film was made and I hope this critique is taken in the right way because I don’t want to discourage companies from trying creative ways to tell their sustainability story. I applaud the effort to make the topic engaging and of course, Apple’s film is well made, with some wit and warmth.
That said, the content is still very much within the current paradigm: there is no mention of making less stuff and offering lifetime repairing for example. And while talking about carbon-neutral products is fraught with definition issues and even risks of greenwashing litigation, the item that pulled me up short was the use of the ‘Impressive Very Big Number’.
Context is King
As I wrote in 2020: I am simultaneously an advocate for corporate transparency and a critic of almost all reporting. Why? The simple answer is reports fail to tell readers anything valuable about how sustainable the business is. They fail at the key thing they exist to achieve.
Assessing whether a business is sustainable or not can only be meaningfully done in relationship to planetary boundaries and ethical norms. Planetary boundaries are a scientifically determined framework of nine limits (for example ocean acidification or climate change) beyond which our environment would no longer be able to regulate itself. As of September 2023, many experts believe we have passed six of these nine boundaries. Ethical norms refer to foundational needs society has collectively agreed everyone should be able to meet, such as access to housing or education. Globally we are falling short here as well.
Every business has a duty to maintain vital resources in a way that is sufficient for human well-being. To do that, a company first has to consider who else has rights to the resources it wants to use, and then compare its use against what would be a fair share of that resource given those other demands on it. Ideally, that would be what sustainability reports covered.
Mostly, they include the company’s resource usage figures alone. That is the numerator in an equation that needs both a numerator and a denominator. Donella Meadows, one of the authors of the seminal 1972 Limits to Growth, said…
“[S]ustainability indicators should be related to carrying capacity or to threshold of danger… Tons of nutrient per year released into waterways means nothing to people. Amount released relative to the amount the waterways can absorb without becoming toxic or clogged begins to carry a message.”
Water, Water Everywhere and Not a Drop to Drink?
Which brings us to that jarring big number mentioned In the Apple film. Apple says they have reduced their (suppliers’) water usage by 63 billion gallons. The film sees Mother Nature played by Octavia Spencer check if the Apple employee misspoke. “Million?”, she queries. “Billion!”, the Apple person proudly responds.
Apple no doubt liked this big number and wanted to draw attention to it. But that’s all it is. A big number. Yes, it’s a lot. But sixty-three billion gallons of water tells us nothing about how sufficient that performance is.
I went digging to see how Apple arrived at this number. In ‘People and Environment in their Supply Chain 2023 Annual Progress Report’, their global supply chain leader Sabih Khan proudly refers to it in his cover letter (p3) and there is more detail in the water stewardship section (p85).
What we learn is 63 billion gallons is a cumulative saving over ten years. It’s across ten regions and countries. To assess the sustainability of water use in the annual sustainability report, we would need to know how much water was used this year in location x (the numerator), and that would be assessed against a denominator, which would be the company’s fair share of water in that location. Some areas are more water-stressed than others so what’s fair would vary site by site.
In short, 63 billion gallons doesn’t tell us if Apple’s suppliers’ water consumption is fair. We need to know if Apple’s suppliers’ water use allows for everyone in those watersheds to have enough clean water for their needs.
Keeping it Simple
Context-based sustainability isn’t easy. In fact, it’s complex. But we can’t let that be an excuse, the world needs companies to make these assessments.
I am currently part of the first cohort on a course called ‘Sustainability as the World Needs’ or SWoN. We have been discussing how only through transforming business models to be sustainable can companies expect to endure into the not-very-distant future. Either our late, late response to the climate and nature crisis will ban much of today’s traditional corporate activity, or society will fail to respond sufficiently and up to three-quarters of the world’s population won’t be able to live where they do today. Either way, business as usual is not an option.
The clarity of this position is striking. As is that it’s impossible to identify a well-known, all-good sustainable business. They just don’t exist. Sustainability really is one of those topics where simplicity lies on the other side of complexity.
Applying the Lessons of Reporting
So how would a company improve its sustainability assessment? By calculating whether their significant harmful impacts are within fair-share allocations. Yes, that requires some clever thinking and some time. But there is a guide that exists to make this easier. The conclusion of a four-year process undertaken by UNRISD (the UN Research Institute for Sustainable Development) and r3.0 (an open-source community of leading sustainability thinking) has culminated in a set of contextualized performance indicators that can provide business leaders and their stakeholders with a meaningful assessment of their corporate sustainability performance.
As the new EU Corporate Sustainability Reporting Directive requires, companies should be using an assessment of its most material impacts to review its business model.
And this brings me to the mad blind spot in so much reporting. Of course, reporting serves to demonstrate accountability to stakeholders, but there is also another critical use: a good reporting process should allow management to understand what is going well and where more attention is needed. A sustainability report should give management information so it can course-correct. Why wouldn’t management want to know how sustainable the business is?! Ensuring the viability of the enterprise is—or should be—their primary concern!
Apple: Will you ‘Think Different’?
What we could have seen in that Apple film was Tim Cook turning to his colleague who proudly states the 63 billion gallons figure and asking ‘Is that big number a good number? Is it enough?’
If Tim Cook really wants to strike a pose as a sustainability leader, he is in a unique position to galvanize the business community to embrace the challenges of establishing performance in context. If he takes his company Apple on that journey, others will follow.
He can show the world’s CEOs that through embracing this complexity, a beautiful simplicity lies: That we need companies to think differently, and to practice ‘business as the world needs’, for their ends and ours.
For over 25 years, Junxion has been helping organizations tell their stories and embrace accountability. Are you eager to measure your impact and report effectively? Get in touch.