Thanks to Victoria Dmitruczyk for taking the time to connect with me over the important issues surrounding climate change and her work in Canada on AI, energy, and cellular agriculture. I'm always astounded by the abilities of young people pushing to drive change and reinvent the broken systems upon which many of the sustainability challenges are predicated. With collaborations such as this, our hope is that we will inspire and educate someone else into taking action and spreading the positivity and possibilities of building back better from COVID and building back greener as part of a responsible and regenerative economy and society.
Following the launch of our CCFF (COVID Corporate Financing Facility) study I reached out to Victoria Dmitruczyk, a prominent writer on the popular online publishing platform, Medium. Victoria’s articles have always struck a chord with me, especially considering her considerable technical knowledge and the ability to transform complex ideas into simple, easy to understand concepts.
Our meetings have taken place entirely online from our homes in the UK and Canada during the COVID-19 outbreak. We wanted to share our views on the powerful topic of environmental, social and governance (ESG) disclosure, the importance of good communication and how the world waking up from the pandemic has a commitment to clear, transparent and detailed disclosure.Read Victoria's article on Medium
Alexander Pond: As companies have begun shifting more of their marketing towards addressing the climate crisis, at AG, we have been looking closely at ESG disclosure. When Rishi Sunak, Chancellor of the Exchequer, announced the CCFF (COVID Corporate Finance Facility, a commercial paper issued by the Bank of England to investment grade companies to assist with short term liabilities) we took the opportunity to explore how well these companies disclosed their impacts on the environment in our CCFF research study. I think that’s a topic that resonates with you, right?
Victoria Dmitruczyk: I think it’s a super important topic. Back when I was 14, I attended a talk by Al Gore where he talked about climate change and the crisis we were (and still are) undergoing.
Pond: Sounds amazing, so what did you take away from that talk?
Dmitruczyk: I remember coming home that day, hopping on my laptop, and just learning about climate change. I tried to force myself to understand what really contributes to our Earth’s warming and see if there was a way I could make a difference. I noticed that no company really had clear stats on how much and where their emissions come from.
Pond: Yes, I believe that a lot of people have found motivation out there to be proactive about reducing their carbon footprint but it’s such a minefield and there’s a lot of conflicting information out there. What I believe is that in order to move forwards, to develop and create a future we want, we need our economies to contribute to societal needs, that starts with accountability.
Dmitruczyk: Looking for specific data that was consistent around multiple sources wasn't that easy, however, during this search, there was one stat that stuck out to me.
Just 100 companies make up 71% of the world’s global greenhouse gas emissions.
Now, this makes sense. Most of the companies on this list are associated with energy and oil production and in order to get their resources, they need to mine out large areas of land, filter their materials, and build stations to bring those resources to consumers.
Pond: That’s a great statistic, I also flip that kind of stat around and talk about influence, I believe we can influence the top 100 companies from the bottom up, there are some great startups pushing these companies a heck of a long way.
Dmitruczyk: Interesting, but with such a huge footprint, and climate change being such a well-known problem, you’d assume these companies would have information out online on what contributes to their impact and how they’re directly trying to offset this right? But, they don’t.
Pond: True and it’s the identification, classification and global visibility of these key ethical metrics that should, by now, have already become a mainstay, possibly even a regulatory component. It amazes me how many organisations still fail to provide clear accurate and consistent records for basic disclosures on carbon emissions, energy, water and waste.
Dmitruczyk: Well, that is a bit misleading. Lot’s of companies do show how they’re planning to offset their impact, they just don’t show what leads up to having this impact in the first place. The assessments are completed, they just aren’t public or they’re super complex.
Pond: That’s what amazes me. From a strategic and entrepreneurial perspective the lack of disclosure on even the most basic environmental metrics indicate potential areas of inefficient practice. These are often the operational pain points and cost centres.
Dmitruczyk: You're right. As a result of this, we're missing critical data regarding what specifically is contributing to the climate crisis, at least from the perspective of these companies. Right now, our approach to climate change involves prioritizing activism over actual tangible solutions, and having this data could greatly help us. For social issues, activism is definitely a key role, and is super important in bringing the issue deeper into the spotlight. However, for climate change specifically, we are at the point where most people are aware it is a serious concern.
Pond: Yes I agree, forward-thinking organisations such as Lexmark and Vestas have recognised that disclosure assists with the development of new partnerships and working relationships that influence performance, is that the kind of thing we should be championing right now?
Dmitruczyk: Definitely, it’s time for us to be laying feasible climate solutions on the table. It’s time to switch from awareness and move to action. This is exactly what disclosure helps push forward, and those organizations specifically are definitely moving in the right direction.
Pond: I hear that a lot, this move to action, that’s why I believe...
SMEs (Small and Medium Enterprises) are in the ideal position to lead on basic disclosure.
Dmitruczyk: Maybe, perhaps just having access to records explaining exactly how companies are impacting the environment can help us activate and implement solutions that make sense and aren’t just ‘cute, little ideas’.
Pond: Ok but the traditional risk is that disclosure uncovers bad practice and can be used comparatively to shame companies at different stages of their sustainability journey. How do we combat that?
Dmitruczyk: It has to be understandable. The thing about people and putting ideas into action is that we’re pretty lazy. It’s easier to hop on a trend once someone else has already activated an idea.
Pond: It is, I believe consumers interpret iterative improvement positively and find unethical practices that are exposed in the press very uncomfortable. The cost of transparency and improvement is more cost-effective than failing to disclose. When factoring in the rate of change, volatility, and the opportunity cost of not acting, it is now often the case that the "cost of planning," as MIT Media Lab director Joi Ito puts it, is higher than the "cost of trying" and recovering from failure if need be. Source: Legible Practices - HDL Recently fashion retailer Boohoo, had a scandal uncovered regarding the working conditions and pay for staff in some of the UK production suppliers. The resulting fallout from the media revelations caused their stock price to fall, rocking shareholders and damaging consumer confidence in the process. Whilst their price is recovering, it isn’t without the huge expense of reinventing supply chains, investigating practices and facing potential lawsuits.
Dmitruczyk: Right, but preventing adverse reactions starts with making things easy to understand. It’s certainly much harder to convince people that your ideas make sense, or to even start activating their own ideas if the information you give them can only be understood by a select amount of people with specialized degrees.
Pond: It is costing considerably less to disclose but increasingly it can cost a brand everything not to...
Dmitruczyk: This is the same reason why you’ll see your aunt Becky sharing those random fake facts posts (you know the ones, ex. ‘carrots are the cure-all to all diseases’). Often, they’re untrue but they get to the point, are easy to comprehend, and are visually appealing.
Pond: Gotcha. Ok, so how can we actually take complex ideas and simplify?
Dmitruczyk: A couple months ago, I looked into biological (neuromorphic) computing, a process in which we’re trying to use DNA and molecules to complete complex calculations, store and retrieve data, etc…
Pond: This already sounds interesting...
Dmitruczyk: I read a bunch of different research papers surrounding the topic. Papers like these (the one above) are important. They talk about the specifics and unlock a deeper level of research and understanding. However, these papers aren’t for everyone.
Pond: I can imagine it’s a tough read.
Dmitruczyk: It definitely took me quite some time to get through! If you showed some random individual this paper, it’s unlikely they would understand what most of the terms in that paper meant. It’s a niche and difficult topic. When it comes to environmental issues, in order to motivate individuals to try and make a difference, or to show key players the importance of such a problem, the information should be able to be understood by most people at a high level.
Pond: OK, so we’ve hit the reset button following COVID-19, this is the opportunity to leap into disclosure, to take responsibility for action and drive green growth and recovery, how can we engage with key players on both sides? Businesses I talk to often point towards authorities, governments and infrastructure to support green growth, whilst these traditional authorities try to stimulate an entrepreneurial fix or oblique innovation.
Dmitruczyk: Well, let’s take a step back to that paper. What if instead of formatting the paper above in that structure, there were two options? One in which we could view the original paper, and one which was summarized.
This is what a potential summary of the paper page shown above could look like. Much more concise, less terrifying for someone starting to get into the topic for the first time.
It’s likely that less people would veer away from reading the paper on the basis that it’s ‘too complicated’. The same thing applies to disclosing on resource use and other environmental stats.
Pond: Good point.
Dmitruczyk: Okay… But Why Would Companies Even Want to Release This Data?
Pond: Good question, this is something we need to get right, it’s a vital first step on the road towards a greener future. My belief and what my research is aiming to prove, is that ESG aligned companies are not riding a trend wave. Instead the shift towards sustainable development that we’re seeing today is actually a long-term, driven process that is going to continually develop and reshape industry for generations to come.
Dmitruczyk: Let’s get to the point. It pays to be green. Not only do customers prefer environmentally friendly companies, but, if you disclose information on these issues, there are fantastic companies out there willing to provide additional support, whether it be monetary or socially.
Pond: Ok and taking that leap to make this available for everyone to see, setting clear targets to improve and goals to work towards that will achieve these targets shows a progressive, growth mindset that consumers take confidence in.
Dmitruczyk: Yes, let’s talk marketing first. Younger generations care about climate change. Don’t believe me? Take a look at some of these stats: For millennials and Gen Z’ers… 70% consider climate change a more important issue than terrorism 54% consider climate change a more important issue than healthcare 65% have stopped using plastic bags 54% believe your diet can help save the planet 68% believe plastic straws should be banned 60% have switched to a zero-waste lifestyle
Pond: Yes and I think there’s a degree of hypocrisy today. Whilst many of us scoff at big businesses who fail to disclose and act on their ethical responsibility we still operate businesses which are relative to revenue, more inefficient, more carbon-producing and less constructive on influencing new standards and initiatives. So we need to act, right?
Dmitruczyk: Yes, those aren’t small numbers. It’s clear that many people care about this issue. Imagine you’re presented with two companies with a very similar idea/purpose, and you have $50k to invest into one of them.
Company A has disclosed how they impact the environment + what they’re doing to offset their impact, while Company B has not. It’s likely that you’d choose to invest in the first company.
Pond: yes the responsibility for growing a green economy falls upon us all...
Dmitruczyk: Yes, it’s the same thing with buying products. If you know a company is doing something that aligns with your personal values, then, you’re more likely to support them as well.
Pond: Absolutely, I’m a big Simon Sinek, Start With Why, believer so this resonates with me.
Dmitruczyk: Exactly and also there are grants and funding that exist for startups that do work that align with the UN’s SDG goals, or present interesting cleantech solutions.
Pond: Yes that’s certainly a great help, and I think the pioneers of today are ready to question what can be done and if held accountable by their children, partners, customers, shareholders - whoever, to respond with confidence.
Dmitruczyk: But, at its core, public perception of a company is a key component to helping it grow. By disclosing emissions and ensuring that individuals can properly understand where they’re coming from, and how environmentally friendly a company is, it ultimately benefits the business, the consumer, and the environment.
Pond: Therefore material producers, manufacturers, logistics and distributors all have an equally important responsibility to operate with clear, honest and recognisable disclosure.
Dmitruczyk: Alex, This is necessary. In order to help prevent us from reaching a catastrophic average global temperature, we need action to be taken immediately. But we can’t take action without data. We can’t solve the climate crisis solely through activism. It’s time businesses started being more transparent about their environmental data.
Pond: That’s why we want a call to arms for small businesses to recognise that the small step of disclosure is only the beginning, but, it is a vital first step on the road towards a greener future.
Victoria and I wanted to share with you some key takeaways from our chat that we think can help us all to direct our efforts and some ideas about what the future might look like for the different groups we discussed on the call. I for one am fascinated by Victoria’s approach in order to simplify complex issues that cross-sect the environmental and the social aspects of sustainability. But this is only one lens with which to view what action looks like, and it’s up to the changemakers, the leaders in companies big and small to grab this opportunity with both hands.
- We are at a point in the climate crisis where we need to be putting out tangible and actionable solutions, but, we’re seeing a lack of progress here.
- Most companies do not publicly share where the majority of their emissions come from and if they do, it’s usually in a large document where it goes unnoticed by the majority of individuals.
- It’s easier to get people motivated and to push for progress when information is presented in an understandable way.
- Disclosure helps progress and highlight clever systems for approaching climate problems.
- Disclosure can help provide economic incentive for companies to build out clean-tech solutions.
What does the future look like?
- Small businesses leading with influence as disclosure becomes a trend that leads to goal-setting.
- Companies begin closer scrutiny on their supply chains, implementing regulatory practices.
- Consumers demand clearer, more understandable and consistent metrics for making conscious ethical buying decisions.
- Statistics don’t tell the whole picture, synthesis with holistic analysis will identify and create new partnerships for growth.