A Dave and Dharm DeMystify Special Series - From Vision to Impact with Shargiil Bashir

FROM VISION TO IMPACT EP 2 : ASSESS CURRENT STATE

• Dave Wallace • Season 1 • Episode 2

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This episode emphasises that assessing a company's current environmental, social, and economic impact serves as the foundational step towards embracing sustainability. 

Without understanding the starting point, organisations risk navigating sustainability efforts completely blind, making it impossible to plan effectively for the future.
Comprehensive data collection approaches across three key areas. Environmental impact assessment utilises frameworks such as the GRI (Global Reporting Initiative) Standards and GHG (Greenhouse Gas) Protocol to measure energy consumption, carbon emissions across all three scopes, and resource usage. Social impact evaluation examines employee well-being, community engagement, and supplier relationships. Governance assessment analyses board composition, ethical practices, and shareholder rights.

A crucial component involves conducting a market analysis from an ESG perspective, including an evaluation of the competitive landscape, identification of sustainability trends, assessment of the regulatory environment, and a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. Shargiil advocates for materiality assessment, a process of stakeholder engagement that identifies and prioritises the most relevant ESG issues based on their impact and importance to both the organisation and its stakeholders.
Companies like Toyota, Apple, Nike, and Liberty Mutual exemplify successful current state assessments, demonstrating how comprehensive analysis enables informed decision-making, strategic goal setting, and enhanced transparency. 

This assessment process transforms uncertainties into opportunities whilst establishing accountability baselines for continuous improvement. This isn’t just about identifying problems; it's about recognising strengths, setting benchmarks, and building a roadmap for improvement.

SPEAKER_02:

when you're building a strategy for your company, you always need to understand where is our starting point and which direction are we taking. And this is not different when you're building your sustainability strategy or your ESG strategy, you need to understand your starting point.

SPEAKER_00:

In episode two, Shargill and Dave chat about how companies can assess the current state and why that is important for setting goals, as well as ensuring that sustainability objectives align with business objectives and contribute to long-term sustainability and growth.

SPEAKER_01:

Welcome to this next episode on Shargill Bashir's book, From Vision to Impact. And this week, we're going to be talking about assessing the current state, which is chapter two of your book, Shargil. So do you want to just give us a brief introduction to the chapter and the sorts of things we're going to be talking about?

SPEAKER_02:

Absolutely, Dave. So, yes, as you mentioned, the second chapter of the book is around assessing the current state. And it's very important that, you know, it's just like when you're driving your car. If you don't know where you're starting, How would you figure out where's the place you need to go to, right? You need to understand your starting point. And this is basically what this chapter is about, that you need to understand your starting point when you're starting your sustainability journey. Because until then, you wouldn't know what is it that you need to cover. What are the steps you need to take? Which are the actions you need to take? And in order to assess your current state, there are different tools that you can use from that perspective. This is a lot about understanding your data of your organization today. It is very much about gathering this different kind of data. It's understanding what market you operate in, right? Because different industries operate in different climates, environments, and what's relevant for that specific industry, getting that understanding. It's very much about understanding where are you coming competitors as well. It's very much around a market analysis, right? I often tell people, just like when you're building a strategy for your company, you always need to understand where is our starting point and which direction are we taking. And this is not different when you're building your sustainability strategy or your ESG strategy. You need to understand your starting point. So that's basically what this chapter is about and how you can assess that starting point in the current state.

SPEAKER_01:

You talk about starting point because I guess there is some complexity around this. And I think people may be worried that they have to go and do research and find data. So what would you say is a really good starting point? And, you know, where can people look for data, essentially?

SPEAKER_02:

Data is a point that, you know, I think we probably associate a lot when we discuss ESG because we always have this understanding of this lack of data. And I fully recognize that, right? But on the other hand, the world never had more ESG data than it has today. We've never discussed sustainability and ESG as much as we do today. We've never had access to the sources of data as we have today. Would we like more? Absolutely, right? There's much more to be done on this, but that should not be an excuse not to get started, right? And I think that's a very important part of this as well. So, and again, it's a simple thing, right? All of us, we pay our electricity bill. But I think very few of us know how many kilowatt per hour electricity do we use per month or per day or anything, right? I at least don't. And I don't think a lot of people out there does. And it's the same way. When you're starting a sustainability journey as an organization, you need to understand, take those simple things, right? We're all paying electricity. So how much electricity are we using? What can we do with this, right? If you're having a fleet of cars in your organization, we all know how many millages they're running. What can we do from that perspective? Could we transition them to hybrid cars so they use less fuel? Could we move to electric vehicles so they don't use fuel at all? So it's very much about understanding that data that you already have in your organization. And I think one of the biggest challenges when we discuss around data is that we basically have so much data, but we just need to structure it, right? Because there are going to be so many different internal stakeholders who will be sitting on this data. Because when we discuss sustainability, some of it is related to climate and environment, but they're also related to social and governance aspects as well, right? So when we start discussing employee data that will typically sits with HR, While if you're discussing the data related to environment and climate, might sit with your operations team or your climates team or your facilities team, finance even. So there are multiple different stakeholders that will have this data. And I think often it's the challenge of structuring and getting access to all this data that can seem very overwhelming. That's why there are some international recognized frameworks like the GRI exists there, which is, you know, it takes you step by step, which is kind of the data you need to get and use from that perspective. So I think there are those frameworks already there to look into it. And then you basically just start from the top and say, okay, this data we have, this data is lacking. How can we get access to this data? So I think there's no reason not to get started because of data. Most likely, a lot of data already exists, but you need to spend some time on structuring that data internally in your organization, whether you're a large organization or a smaller organization, to just put it all together into the different structures.

SPEAKER_01:

But it's really interesting that actually a great starting point is that structuring. So I guess if we took environmental data as an example, you mentioned GRI, but I think there's also the greenhouse gas Gas emissions.

SPEAKER_02:

Correct. Yeah. So when we discuss greenhouse gas emission, it's basically about scope one, two, and three. And scope one is basically your internal emissions. Scope two is your indirect emission. And scope three can be all these external emissions that you're going to have, which are a little bit more complicated to work with from that perspective, which could be like business travels, right? Where you need to get access specifically that, you know, if you're flying from Dubai to London, what the kind of emission for that specific flight, that will typically go into your scope three. So again, we do have those frameworks. There's a lot of free calculators out there that can support you and calculating those emissions as well. So if you put in the information about this is your electricity bill, this is the fuel you use, and it can help you calculate those emissions specifically. So that exists. But even beyond that, when you're starting, it's also about what kind of organization are you, right? Because some of these things, as we discussed, becomes very technical. But it's also about understanding what kind of organization are you? And when you're looking to environment, social and governance, which topic are material to you, right? Because again, one kind of organization, let's say within construction section versus a company in, let's say, pharmaceuticals, will have different kind of topics that will be material for them. And that's why you start by doing typically a materiality assessment, which is basically about reaching out to your different stakeholders, which will be your employees, investors, your regulators, your clients, and so on, to get their input. That for my company or my industry specifically, which topic under E, S, and G will you believe are material from that perspective? Which will have highest impact for us as a company? And then you start figuring out, okay, for me, E is much more important than S might be, as an example. Even within E, there can be multiple different aspects, right? This could be everything from climate to nature to biodiversity. That could be a topic that comes up. It could also be products within climate, right? So how can you do from that perspective? From a social aspect, again, there can be multiple different topics that becomes relevant to address. Similarly, from a governance perspective, some institutions might be discussing D&I from that perspective and other institutions might be discussing more around regulatory compliance as a key topic. So again, the materiality part can help guide you that for us, our organization specifically within this specific industry, which topics are most material. for us to work with and how do we engage with that? And that's why it's so important that you get that wider outside in perspective from the different stakeholders, right? Because otherwise we all tend to have our own topics we believe is gonna be important and that's why getting those inside stakeholder inputs are so critical to understand your starting point and which are the topics you should be prioritizing.

SPEAKER_01:

I think that's such a really good perspective because, as you say, we all have the things that we're really interested in and there's a danger that, you know, if you don't take that broader view, you end up driving a strategy based on your own sort of thoughts and what you think is important. You talked about looking at competitors as well. And I think that's, is that part of this sort of market view that you'll be looking at in terms of, you know, what, your competitors are doing and how they're approaching this?

SPEAKER_02:

Yeah, I think competitor analysis is always super important to get an understanding of which direction is your industry moving. And also which direction is your competitors moving, right? Because this can be good for your own understanding. And honestly, I think most businesses have a good understanding what their competitors are doing. But it also might be that you try to find a gap in the market that can help you and support you from that perspective. Also from a sustainability perspective, right? Let's take an example of a toys company, right? Let's take Lego as an example, right? We know they build these plastic bricks, very popular, probably one of the most popular toys over decades. But how do you then make those Lego bricks even more sustainable? Because this is plastic. What can you do from a recycling perspective? What can you do from other perspective? And here you could look at competitors across different industries that are working with plastic recycling. How could you look at from that perspective? That could be within the toy industry. It could be outside the toys industry as well. And that's why it's important to get an understanding which opportunities are there to look in from that perspective, right? And you can start rating your competitors as well when you start looking into, okay, my competitors product? How sustainable are they? What is it that makes their product sustainable? Where am I compared to them? What are the gaps we need to close? And if I need to enhance this product, what are the steps I need to do, right? I often say that you should be looking at it from an industry perspective than specifically just from one competitor to another competitor, right? Because once you're trying to build in your strategy and we are very early on here, try to look at it overall from an industry perspective and then slowly you can take it down to the specific country you're trying to address or based in or your markets you're based in. And then you can start looking into the specific products or the specific service you would like to focus on. I think that's super important that you have a viewer from that perspective.

SPEAKER_01:

So in terms of, you know, one of the issues in the data gathering is there aren't a large number of standards in terms of the way that kind of data is collected. So we've talked about a couple of frameworks already, which I think do provide useful frameworks. But what's your advice to people if they're worrying about standardization in terms of measurement as well?

SPEAKER_02:

Dave, one of the things that I have found very useful and working well on the topic of sustainability is actually industry practices. Because when we start discussing sustainability can mean so much. So as an example, in the banking industry with my background, you have some standards that have been set up. A lot of them are on a voluntary basis. These are set by banks going together who are saying, you know, we want to become more sustainable. There are the principles for responsible banking under the UN's environment program. That is focusing that what does a responsible bank look like specifically? What are the steps you should be taking? What should you be doing on climate? What should you be doing on nature? What should you be doing from a social aspect. Similarly, you had that from shipping as an example as well. So shipping came out with some called Poseidon principles on basically around decarbonization of the shipping industry. You're seeing the aviation industry doing something similar. So again, I think there's so many industry-led initiatives now on the topic of sustainability that can be a very, very good starting point to say that within this industry, These are the kind of data, these are the kind of trends, these are the kind of steps that you can take in order to become more sustainable. And that could be your starting point to look to, to say, okay, when I take down these 10, 20, 50 points that are being recommended across the industries and so on, how am I performing as an organization on those? What are my biggest gaps here? Am I calculating my emissions? That could be the first one, right? And what kind of data can I use for calculating my emissions? The other part could be around climate change. Do we have any views on addressing climate change in our organization? Recycling could be another one. Are we recycling within our organization? Use of paper. How are we using paper within our organization? Then you move into the social aspects and then you start looking at them again, one by one. What are we doing for employee engagement specifically? What are we doing from diversity and inclusiveness within our organization? And you can just take them step by step and say, where do we stand today? And what are the gaps we need to close to be in line with the market or the ambition you decide to set as well, right? Because there will be companies who will say that this is a topic that is very important to us. Again, coming back to the materiality assessment, because your stakeholder believe these are super important, right? Because for some companies and some stakeholders will say, for us, climate is very important. While in other industries, it might be that diversity and inclusion might be more important. And that can also guide the leadership of the organization to say, where should we be prioritizing to focus on and moving from the current state to the state we want to be in the future.

SPEAKER_01:

That's really interesting. I mean, so one of the things you talk about in your book is also doing a kind of SWOT analysis. So it sounds like that data could feed into looking at where you are actually doing okay, where weaknesses are and the opportunities and threats. That seems like a really good, simple step to take.

SPEAKER_02:

Absolutely. I think once you've gathered the data, and you understood where you stand, and you understood your materiality, I think you can then start looking into what is our strength, what is our weakness, and where are the opportunities and threats we face from an ESG perspective. And you can do this in two ways, right? I often say, let's start by figuring out what are our strengths and weaknesses as an organization without just looking into ESG at all. And then you start looking at it from an ESG perspective and say, what could be our strength, right? Because once you have gathered that data and you figure out the materiality aspect, you could say, oh, by the way, our stakeholders believe that diversity inclusiveness is very important for us as an organization. By the way, we're doing quite well on this, right? That becomes your strength. And then you start looking into step-by-step, one-by-one and say, what is important? What's the data tells us? And is that a strength? Is that a weakness? Is this an opportunity for us? Is this a threat for us? And how do we work from that perspective? And I think that's a very easy and simple way to do because I think close to 100% of companies will probably have a good understanding of the strengths and weaknesses and the opportunities and threats. And once you have them and you just put the ESG lens on them, makes such a big difference, right? And I think the discussion we're having right now, a lot of companies have it just from a strategy angle, right?

SPEAKER_01:

Yes.

SPEAKER_02:

They will be discussing this either in a formal way or an informal way. Even the coffee shop around the corner will be discussing Christmas is around the corner. What are we going to do from that perspective? Some companies will call it strategy. Some people will just call it some practical steps that how do we prepare for this, right? So all companies had these kind of discussions in a formal, informal way. Now what you need to do is put a sustainability lens on that. So as an example, when you are preparing for the Christmas in your coffee shop, what's going to be the sustainability angle you can take on this? Is there something you could do from that? And again, as I think we discussed in the last episode as well, it's basically just about adding that sustainability ESG lens into the small things we can do And they actually start creating a culture and they start helping you step by step and say, okay, we did this. That went well. Now let's do a little bit more, right? All the time.

SPEAKER_01:

It's really interesting because I was actually speaking to someone from Rabobank yesterday who had come to London on the Eurostar and it had taken him six hours. It sounded like an awful journey. And I was like, why did you take the Eurostar? Because you get London City Airport and yeah, it's the worst company policy. So they have decided that things like travel, it's a really good opportunity for them to kind of take out carbon from their business. They've gone beyond the theory and it's now in practice. When I was talking to him, you then go, actually, here's a company which is sort of living by the standards they're setting themselves. And I just thought it was a really nice example where somehow that if you follow that train of thought all the way back, they would have done a SWOT analysis and all the things you're describing and then said, and here's some actions that we kind of take out of it.

SPEAKER_02:

Absolutely. And I think, and again, that's where the culture part comes in, right? I'm sure when Rabobank and a lot of the other Dutch banks are leading on the topic of sustainability, because Netherlands as a country has also focused on the topic of sustainability a lot. I'm sure that if you do a materiality assessment across employees of some of the companies in Netherlands, you will see that the topic of sustainability is quite important, right? And what they can do, and that helps create create a culture, right? That people will say that, okay, you know, taking a Eurostar six hour, probably not the easiest, but if you're doing that as that becomes a company policy, you're being forced to do that. And then you can take the next step. Some of those people who are forced to do it will probably also consider doing it personally in the future as well, right? And again, I think that's also something that's helped creating that culture as well, that when you do have that opportunity, why not utilize it and why not do that as well? We have also seen examples of companies who are starting to incentivize their employees to take more sustainable options and by providing that to them as well. So we start seeing that and we are starting to see, especially the younger consumers, wanting more and more sustainable products, right? And I think we discussed briefly in the last episode and mentioned in the other chapters of the book that there is actually recent research showing that sustainable products are more sought after, right? Which also means that that's now starting to create a business case, which again will be part of that SWOT analysis you're going to do for your entity as well when you're developing your strategy.

SPEAKER_01:

You talk about materiality, and I guess that's just making sure that you understand what the focus should be. I think it's then like, I just wanted to come back to gathering data. So if we took the Rabobank example, they would have mapped out their scope one, two, and three, and they would have identified areas where they could actually reduce through the whole process that you're talking about. I mean, that's kind of fundamental, isn't it?

SPEAKER_02:

Correct. Absolutely. I think once you have defined your data and you start understanding your starting point, then you move on to what are the steps we need to take to close these gaps, right? So once you have understood that, okay, my electricity bill is this, right? And then you can start comparing to the others in the market as well. So as an example, if I was an entity and I've now got all my data and I've put it down and calculated, This is my emissions, scope one, scope two, scope three. We can also simply say, this is the fuel use I have. This is the electricity bill I'm having and cost and so on. Then you start comparing, what's my competitors doing? Am I doing better or worse than them, right? Again, using the coffee shop example, I'm sure the coffee shop on the corner knows whether his coffee is better in quality or cheaper or more expensive than the next door coffee shop. And there's nothing different here. You will again try to understand what is my emissions compared to others' peers in this industry. And that you can start comparing and say, okay, let's start comparing it per employee. What is the electricity use per employee in my company versus my peers? Why am I using twice as much electricity compared to them? There seems to be something wrong here. Let's start looking into what can we do.

SPEAKER_01:

Right.

SPEAKER_02:

What are the steps we can do? And again, it's just about breaking it down as a very simple thing that, okay, this is what we are using. How is that comparing to other? And what are the steps we can take to close this down? And I think that's where things become extremely interesting because you figure out there's so much you can do with a lot of quick wins and low hanging fruits, right? There's always so many steps to do. And not all of them will be cheap. I do understand some will require investments and so on. But to begin with, there are so many steps that are basically free, just takes a little bit of sensibility and action to move on and can make a huge difference in your emissions profile.

SPEAKER_01:

I really like that notion that, you know, there are low hanging fruit that you can kind of take, because I think if What people may be feeling is sort of overwhelmed by the amount of data that they need to collect and where to start. So it sounds like, you know, you can actually start with some very kind of high level basic things. And that then takes you on the kind of journey to kind of collect this data as well.

SPEAKER_02:

Absolutely. I think the topic of sustainability in ESG, if you look at it from an overarching perspective, it can seem like a very big mountain to climb. but just break it down step by step, right? We look at the environment part as we discussed. Let's look at scope one as a first and say, where do we stand today? Based on all the data we got in, where do we stand? How are we doing compared to our peers? What are the easy steps we can take from there? Then let's move on to scope two. Let's move on to scope three. Just like taking it a step at a time, just breaking it down It's so much important to start your journey than, you know, holding back because everything seems so big and complex. And those steps are so important, right? And you can do so much yourself, right? And I think David discussed this previously as well. There's so much we can do as individuals. There's so much we can do as companies. And those small steps matter a lot on this journey that can help you. And again, as we mentioned, data is important. A lot of data exists. Much more data will be great, but there's so much you can do, right? So again, Getting your data, doing your materiality assessment, and then doing your SWOT analysis to understand where do I stand in the market right now. That is so important to understand, right? And saying, what are the biggest gaps we have? And then we can start focusing on those.

SPEAKER_01:

I think that's great. If I was looking to start today... One of the things I would probably do, you talked about kind of looking at industry standards as well. But one of the things I might start doing is go to a chat GPT or a Google and sort of say, what industry bodies are there? That sort of feels like a really good, simple starting

SPEAKER_02:

point. Absolutely. It's a very simple thing. And today we have so many companies. resources available, right? Again, as you say, Chad TBT is there, but also if you just go on Google and look for your specific industry and say, let's look at food and beverage. I love my coffee shop example. So if we use the food beverage, right? And say in food and beverage, what's happening within sustainability? you will find so many good examples of there, which are, you know, what are the industries doing there specifically, bringing together that, what are the steps you can take, right? Reusable coffee cups could be one thing, right? There could be also about getting, using more sustainable products. It could also be the coffee machines you're having. How can you use someone that are using lower energy as well? So there can be multiple... Coffee grounds into compost and things like that. Absolutely. So we have access to so many resources. And that's the stats. So... And again, there's so many networks, opportunities. You have them. The UN has a race to zero about companies, even smaller companies, SMEs, that have committed, want to become net zero, where they have a whole resource platform available where you can go and understand, I want to start this journey. What are the steps I can take from here? So we have so many resources available. Probably too many that it might even confuse people at times, but there is so much information out there that can help you get started on this information. I mean

SPEAKER_01:

having read the chapter in the book you provide a very good detailed sort of step-by-step walkthrough as well and I think you know actually that's a for me I would say is a great starting point because you sort of really go through into a lot more detail about the sort of steps people can take.

SPEAKER_02:

Yeah, in the book, what I try to do is bring all these different topics we discussed, data gathering, materiality assessment, SWOT analysis, take them step by step. And not all companies will need to use, I have broken them down one by one and try to share examples of companies who've done this well as a resource to check from that perspective. But these tools can help you, these frameworks can help you start your journey specifically and say that this will help me assess my starting point. And once you have your starting point, you can move on to the next part to say that what are the kind of the goals we can set and so on.

SPEAKER_01:

Fantastic. Well, listen, I think that's been a really good conversation around the topic. So I'm very grateful for your time around it and your insights. Thank

SPEAKER_00:

you so much, Dave.