In "Jumping Through Hoops", Andras Ferencz writes about Tony Henshaw's visit to the Pentland Centre on 23rd June 2017.
In Thinking, Fast and Slow, Daniel Kahneman, a Nobel Prize-winning psychologist, wrote about the innate human disposition to overlook objective statistics, and to consequently cave in to subjective biases. In a table labeled the “fourfold pattern,” he illustrates the odd phenomenon of how high probability scenarios that are coupled with potentially significant losses elicit risk seeking behavior in people. Faced with a 95% chance of losing $10,000, or a 100% chance of losing $9,000, most people would opt for the former. This should strike any person informed in statistics as absurd. Yet, for various reasons, in a “lesser evil” situation like this most human beings tend to choose the “greater evil.” It’s as if Kahneman was trying to describe the dilemma that businesses face at the dawn of exacerbating climate change, a scenario in which loss is inevitable. When the adoption of a sustainable business model is highly costly on the short run, and the stout adherence to the status quo seems only costly on the long run, then which side of the fork do you take in the road? Those who wish to outwit their innate biases put their money on the former.
Aditya Birla Group, an Indian multinational conglomerate operating in 40 countries with about 130,000 employees, is jumping through hoops to make sure it doesn’t fall for the above-described bias. Founded in 1857, the company now juggles around $42 billion in revenues, and has subsidiaries in a slew of sectors such as agribusiness, carbon black, cement, chemicals, e-commerce, financial services, mining, retail, telecommunications, textile and wind power. The company’s sustainability officer, Tony Henshaw, visited Lancaster University on the 23rd of June to speak about Aditya Birla’s sustainability model at the Building Sustainable Businesses event, hosted by the Pentland Centre for Sustainability in Business.
Mr. Henshaw described Aditya Birla as perhaps “the largest company you’ve never heard of,” and underscored his claim by adding that the company recycles 50 billion soda cans annually, produces 130 million tonnes of concrete per year, and has around 200 million subscribers at its Idea Cellular telecommunications subsidiary. Sustainable company titans offhandedly boasting such statistics bring to mind a sportscaster casually broaching the physical attributes of nimble NBA giant. The image we see and the numbers we hear somehow don't add up. How can a 6’6” player deliver such an ankle-breaking crossover, and how can such expansive corporations swiftly transform their business models into a sustainable one? We must bear in mind that a giant cannot achieve its improbable agility without a cutting-edge training regimen, and this means that if a large business wants to stay in the game, it has to create a strategy based on the most pertinent statistical indicators.
To demonstrate what indicators were considered when he took the role of sustainability officer in 2013, Mr. Henshaw brought up factors such as the ecological footprint per capita, the disproportionate distribution of the world’s population, the world population growth curve, and the famous Keeling curve, which plots the concentration of carbon dioxide in our planet’s atmosphere. He explained that while based on these indicators the case for better sustainable business models may seem like an open-and-shut case, these facts are often just water off a duck’s back for CEOs. To get around this problem, Mr. Henshaw and his team introduced a model that redefines what sustainability is by framing it as a narrative rather than a shoal of numbers and graphs.
The sustainability narrative, Mr. Henshaw explained, is rather straightforward: you simply have to define how much space a company has in which it is allowed to operate. To define an operational space, you need to take into account the current state of the planet, and define the standards that can gradually tighten that space. The precipice between current legal standards and what may be desirable for a sustainable planet is still gaping, but adopting international standards and developing best practices can put a company on a slimming diet. Further down the road, new legal standards also need to be introduced so we may approximate a sustainable world. Going into more detail, Mr. Henshaw relayed how the definition of these operational spaces rests on a three-tier model: Responsible Stewardship, Stakeholder Engagement and Future Proofing.
Image Credit: Aditya Birla
This framework can be illustrated by a funnel of circles with ever-decreasing girths. Accompanied by the simple phrase “if you go outside the line, you’re not sustainable,” this model resonates much better with business leaders, Mr. Henshaw explained. This put me in mind of what the Director of the Center for Climate Change Communication at George Mason University said in 2015: "numbers numb, stories sell.” By and large, it seems that jumping through these figurative hoops could be a company’s ticket to the future, and businesses that drag their feet in coming to terms with this truth will simply miss the boat. In other words, you need to accept, as Mr. Henshaw phrased it, that “sustainability is a market share gap." Pay the price for transformation now, or you’ll have to bring down the curtain. While both will cost you, the former option is clearly the lesser evil.
When at the end of his presentation an audience member inquired whether the momentum for a more sustainable global market will come from the rich few at the top or from the many billions at the bottom, Mr. Henshaw succinctly opined that “billionaires have to save the world, because they are the only ones who can.” Following the event I spoke to him and asked him, in light of Amazon’s recent Whole Foods acquisition, whether we’re living at a time when the bully stigma often attached to monopolies will have to be brushed off. I wondered whether change coming from the powerful few might mean that even if by grinning and bearing it we should further empower these giants so they may facilitate change.
There wasn’t an exact answer to this, and the conversation quickly turned into a general musing. How do you bring the oil industry to a soft landing without collapsing the entire marketplace? How much say does government have? How big of a role will big data play? If we allow the unrestrained treading of monopolies, how many of them should there be?
One thing was clear, however. Mr. Henshaw believes that if you can compel the few at the top, then it may set in motion a cascade of events wherein other businesses, and eventually the entire world, will follow in tow. As he put it, “leadership pulls, international standards clarify, laws codify.” Whether coming from the billionaires, or the billions, I hope that a hastened wide-scale transformation will happen soon, because it seems that humanity is really playing it down to the wire. As per the latest research, we seem to have only three years to safeguard our planet, and as much as it is against our nature to heed statistics, we should bury our biases for now, roll up our sleeves, and start jumping through those narrowing hoops.