The anxiety among young people and those concerned about our current path is evident. Every year leading up to the COP meeting at the end of November, there is a constant flow of panic-inducing news reports, followed by speeches from UN officials and heads of government who try to compel us into taking action.
While some businesses in the Caribbean are starting to think and talk about sustainability, an increasing number are also taking action. However, these efforts are insufficient, and urgent scaling up is required. To accelerate progress, we must identify genuine sustainable initiatives and distinguish them from superficial attempts that continue harmful practices.
UNSUSTAINABILITY IS A GOVERNANCE FAILURE
My colleague, Dr Victoria Hurth, with whom I had the pleasure of leading the development of ISO 37000 Governance of Organizations – Guidance, which was adopted as a national standard in Trinidad & Tobago, Saint Lucia, and Jamaica in 2022, presents a clear and compelling equation:
Economy = wellbeing = sustainability
Economies are the systems through which we convert various forms of capital into the wellbeing of people. This is the ultimate value we aim to create.
Governing involves three decision practices: directing towards goals within constraints, overseeing to ensure goal achievement within constraints, and accountability to others if goals are met or explaining corrective actions if they are not.
Over the past few decades, the assumption has prevailed that financial success, measured by GDP at the economy level and profit at the firm level, is a sufficient indicator of wellbeing.
As a result, resource consumption, social and human impacts, and the actual achievement of wellbeing have been left entirely to the invisible hand of the market, un – and as a result, unsustainably governed.
A major study on biodiversity published in February 2021, “The Economics of Biodiversity: the Dasgupta Review,” revealed that our current approach to value generation is highly inefficient and unsustainable.
Maintaining our current living standards would require 1.6 Earths, and the stock of natural capital per person has declined by nearly 40% between 1992 and 2014.
This is not solely due to market failures but also institutional failures.
Our governments often exacerbate the problem by financially incentivizing the exploitation of nature and prioritizing unsustainable economic activities over conservation.
In the Caribbean, a review of progress towards the Sustainable Development Goals in 2023 showed that after seven years, only 23% of the Goals are on track, leaving 77% to be achieved in the next seven years.
SUSTAINABILITY IS EMERGING EVERYWHERE
In this context, sustainability is seeking to emerge at all levels worldwide.
Wales, for example, is redirecting its economy to establish a wellbeing economy.
However, the main focus of this column is on companies, how they can grow sustainable value generation, and how they can contribute to sustainable development. In this respect, the Caribbean has been at the forefront, co-leading the development of the global consensus on organizational governance for sustainable development alongside the United Kingdom. The ISO 37000 suite of standards has been instrumental in this regard.
The Trinidad & Tobago Bureau of Standards, in addition to providing the Vice-Chair of the ISO/TC309 Organizational Governance committee, played a crucial role in developing ISO 37000 in 2021. Two new standards related to indicators of and for organizational governance are currently being developed. The Bureau also hosted the ISO TC309 plenary meeting in Port of Spain this year, where the purpose of TC309 – to establish the global consensus on organizational governance for sustainable development – was adopted.
Saint Lucia and Jamaica National Standardization bodies have vibrant national Mirror committees and their vibrant experts actively participate in standard development.
In the United Kingdom, Dr. Victoria Hurth led the development of the first national standard on purpose-driven organizations, PAS 808, on behalf of the British Standards Institution (BSI). This publicly available specification outlines the principles and practices that all types of firms should adhere to, prioritizing sustainable value generation and wellbeing over mere profit-making.
FINANCIAL SUSTAINABILITY IS NOT ALWAYS SUSTAINABLE
The UN called for financial markets to consider Environmental, Social, and Governance (ESG) concerns to mobilise financial capital supporting the sustainability agenda.
Over the past 18 years, this movement gained momentum, leading to the publication this year of two influential ESG disclosure standards frameworks: the ISSB (International Sustainability Standards Board) standards and the ESRS (European Sustainability Reporting Standards).
Companies will begin reporting using these standards in 2025 for 2024 data. However, it is crucial to recognize that the financial sustainability of a firm, as defined by the ISSB, does not equate to the sustainability of our ecosystems, society, or people.
Without addressing the broader dimensions of sustainability, these frameworks may result in extensive reporting efforts with little tangible progress. For example, many dimensions measured by these frameworks lack a normative sustainable threshold, making it difficult to determine whether a particular reduction in water consumption, for instance, is sustainable without examining the specific watershed’s carrying capacity.
Moreover, the focus on preventing further damage alone does not lead to sustainable value generation; it is necessary but insufficient.
This is where directing companies to fulfil their meaningful purpose, generate wellbeing, and focus on sustainable value creation comes into play. ISO 37000 clarifies that good governance cannot exist without these principles.
TOWARDS SUSTAINABLE VALUE
While the ISSB standards and the ripple effects of the ESRS supply chain due diligence have not yet fully reached the Caribbean, now is the time to focus on the most material sustainability dimensions and strategic initiatives. We will explore this further in this column.
It is time for all of us to come together and establish an international consensus on how we can direct, oversee, and hold purpose-driven companies accountable. I encourage you to contact your national standards body and get involved. Together, we can develop the clarity, commitment, and courage needed to generate the sustainable value we all seek and depend on.
Dr Axel Kravatzky is managing partner of Trinidad & Tobago based Syntegra-360 Ltd, vice-chair of ISO/TC309 Governance of organizations and the president of EUROCHAMTT. He enables companies to flourish through integrated governance, certified management systems, and transformational leadership. Empowered teams, effective strategies, and authentic impact.
Disclaimer: the views presented are those of the author and do not necessarily represent those of any of the organizations he is associated with. Comments and feedback are welcome at [email protected]