If you scratch the surface of what it means to meet ‘the needs of the present without compromising the ability of future generations to meet their own needs’, you will find many levels of complexity and no quick solutions.12 However, don’t let the complexity put you off — embrace it. Author Isabel Rimanoczy, in her book The Sustainability Mindset Principles, defines the sustainability mindset as
A way of thinking and being that results from a broad understanding of the ecosystem’s manifestations, from social sensitivity, as well as an introspective focus on one’s personal values and higher self, and finds its expression in actions for the greater good of the whole.13
Rimanoczy focuses on four content areas when teaching how to develop a sustainability mindset:
Ecological worldview. This is related to understanding the state of the planet and how we feel about it.
Systems thinking. Processing information using a systemic lens.
Spiritual intelligence. This is related to the questions of purpose, transcendence and oneness.
Emotional intelligence. This can include practices to increase self-awareness and explore personal values.14
Understanding ecosystems through systems thinking
Rimanoczy’s definition of a sustainability mindset references the need for ‘a broad understanding of the ecosystem’s manifestations’.16 A simple definition of an ‘ecosystem’ is a group of interconnected elements or networks, living and nonliving, that interact as part of a community. That could be the multiple parts making up a business or it could be organisms within an environment.
As finance professionals, we are conditioned to chunk up data, assign a numeric value, and process information in silos as ‘linear, short-term, cause-effect relationships’.17 With a narrow focus on cost and efficiency, we risk missing the multicausality relationships in the wider, complex ecosystem and failing to spot the unintentional impacts of our decision-making.
One of the challenges of the overwhelming amount of information available to us at every moment of the day is the difficulty to see changes not only as isolated facts, but ponder if and how the separate events may be linked. Our automatic processing system is to take in information in silos, and unless we pause to reflect, we may fail to realize that there are feedback loops, that seemingly distant or unrelated events are indeed connected and may serve as catalysts in each other’s occurrence.18
Rimanoczy encourages us to instead adopt systems thinking, which she defines as follows:
Unlike analysis, which fragments something into its separate components, Systems Thinking looks at the patterns, flows, processes, feedback loops, and systems nested in larger systems, and how they all integrate into a whole.19
When building a sustainability mindset, a systems approach helps us to understand that the different issues across the three pillars of environmental protection, social inclusion, and governance do not act in isolation. As a result, contributing to a sustainability factor in one pillar could positively affect other ESG issues that are not directly linked. Alternatively, a narrow focus on just one ESG factor may lead to a negative impact or unintended consequences on other ESG issues.
Moving from the shareholder perspective to a system value perspective
The goal is to develop your sustainability mindset to enable decision-making for long-term value creation, where governance is aligned with social inclusion and depends on environmental protection. This requires a shift from a narrow focus on costs related to one area — traditionally governance — to a bird’s eye view of value across environmental, social, and governance.
But what is meant by ‘value’? Mark Gough, CEO at the Capitals Coalition, says, ‘To value is to understand the relative importance, worth, or usefulness of something’.20
To help understand the journey finance professionals and organisations take when considering sustainability factors, AICPA & CIMA have fashioned a three-stage model. This will help finance professionals identify where their organisations and clients are in building ESG business resilience and highlight possible knowledge and skills gaps. The model diagram and descriptions that make up the ESG organisational maturity journey are based on the Future-Fit Foundation Business Benchmark methodology and PwC’s three stages of ESG evolution.
The changing sustainability landscape also mirrors how business responsibility has evolved from a narrow shareholder focus to an inclusive stakeholder focus. Key characteristics of each perspective include the following:
Shareholder perspective: lacking ESG identification, integration, or communication
Stakeholder perspective: strong ESG identification, limited integration and communication
System value perspective: coherent ESG identification and integration and transparent communication
In entities with a systems value perspective, the integration of ESG factors is seen as core to the way an organisation’s business operates. The integration of ESG factors measures activities to more fully understand the impact of an organisation’s actions; this is a focus that integrates sustainability into the strategic objectives, mission, and everyday decisions of an organisation. This evolution includes an expanded role of governance for the whole of the organisation’s value chain and longer-term responsibilities around issues such as climate change, nature loss and social inequality.
A ‘systems thinking’ approach will help organisations and clients implement sustainability processes. It is an approach to problem-solving that views issues as part of a wider, dynamic system. For example, in terms of climate change, a systems thinking approach would involve understanding how different factors influence climate change individually and also influence one another as part of a whole that includes biodiversity and inequality. It is also important to see patterns of change and the feedback loops between climate change, biodiversity and inequality.
As the authors Ian Thomson and Dominic Bates state,
Systems thinking stops the emphasis on how to make a company completely sustainable (which is impossible anyway) and shifts its focus to how it contributes to the sustainability of the planet.22
Emotional and spiritual intelligence
In addition to a systems thinking approach, a sustainability mindset includes characteristics of emotional and spiritual intelligence. Having a purpose and sense of oneness with nature along with reflection, self-awareness, and creative innovation are principles identified by Rimanoczy as being part of the journey to develop a sustainability mindset. While perhaps a bit counterintuitive to the typical financial professional, these qualities may actually be the ones that are most essential to facilitating a shift in sustainable adaptation and long-term personal or organisational change.
Arnold Toynbee, an English historian who studies the rise and fall of civilizations, indicates the critical element in the collapse of culture is the loss of flexibility:
When behaviors and social norms become rigid, individuals are so focused on holding on to what they know that they lose the ability to adapt to changing contexts. This creates the breakdowns and disintegration of a society or civilization. Versatility and flexibility are essential traits of resilient societies and result when structures and institutions make room for experimentation and creative innovation. But it should be noted that it is not organizations that are flexible; rather it is individuals that take the lead and influence structures and processes.26
Applying systems thinking and a sustainability mindset
Possessing a sustainability mindset will help finance professionals to make sense of the ESG issues and play a vital role in leading their organisation’s and clients’ journeys. It encourages finance professionals to do the following:
Provide sound advice and services as organisations, capital markets, and governments develop and implement sustainability mitigation and adaptation plans.
Use and implement existing and developing reporting frameworks such as those from the International Integrated Reporting Council, the Task Force on Climate-Related Financial Disclosures (TCFD), and the IFRS Foundation’s International Sustainability Standards Board (ISSB).
Contribute to the efforts of the organisations they work with to integrate sustainability risk into organizational strategy, finance, operations, and communications.
Support sustainable decision-making within the organisations they work for by allocating budgets and resources and by developing high-quality and timely information and insights through measurement and disclosure built on robust and transparent accounting systems.27
The science underpinning the sustainability landscape continues to evolve. The dynamic pace of change means that flexibility is key when deploying a sustainability mindset. Skill sets required for the finance professional will differ greatly for each sustainability process (such as those listed in table 1, ‘The sustainability issues a finance professional could encounter’) and will also change over time within each process to keep pace with the evolving science and market developments. A finance professional must build flexibility into their lifelong learning, embracing a continuous cycle of learning, unlearning and relearning.
Systems thinking in action — The Pitt Rivers Museum, Oxford
One of my favourite museums, the Pitt Rivers Museum in Oxford, is an example of a systems thinking and ecosystem approach in action. The Pitt Rivers is one of the world’s most important ethnological museums. Within its walls, the museum houses over half a million archaeological and ethnographic objects from all parts of the world. However, the museum’s layout is different to many traditional institutions. As the Pitt Rivers Museum’s website explains,
The museum has consciously cultivated its characteristic layout: artefacts are arranged by type into a ‘democracy of things’, rather than by time or region. This reveals fascinating distinctions and parallels across cultures, and encourages questions about the ways in which humanity tackles problems, and creates, understands and embraces life across the world.23
This conscious ‘serendipitous’ arrangement of artefacts allows the eyes and mind to make random connections between the different display cases and understand how together they provide a metaphor for the wider human planetary ecosystem. In the digital age, an internet search engine can satisfy our curiosity with an instant, precise answer to nearly any question. But few of us take the time to click beyond the top three recommendations. We need to reacquaint our curiosity with serendipitous external learning in the wider world.
I just love the way artefacts in the Pitt Rivers are arranged by type rather than by time or region. It makes for fascinating parallels across cultures, and every visit opens the mind to new, random connections. On my last mooch around the museum, this included early accounting technology — the tally stick — in the writing and communication cabinets, juxtaposed with cabinets of objects covering magic, ritual, religion and belief.24 That connection got me thinking about how possibly the first recorded accountant, ‘Kushim’, and his clay tablet dating to 3400–3000 BC, from the city of Uruk, may have been viewed and categorized at the time as practicing ‘magic, ritual, religion and belief’. However, by the time of the first published description of the double-entry bookkeeping system in 1494, from Luca Pacioli, an Italian mathematician, accountancy as a technology had moved to a different category, as reflected by its inclusion in the museum’s ‘writing and communication’ cabinets.25 The same recategorization journey from ‘belief’ to ‘science’ is currently happening to factors and issues developing within the sustainability space.
If you ever find yourself in Oxford, expand your mind with a trip to the Pitt Rivers Museum. As a favourite museum, it never fails to feed my curiosity and open up my mind to new possibilities.
