FROM VISION TO IMPACT EP 7 : MEASUREMENT & REPORTING AND CONTINUOUS IMPROVEMENT

In this episode, Shargiil discusses Chapters 7 and 8 of his book, focusing on measurement, reporting, and continuous improvement in sustainability. He begins by stressing the fundamental importance of measurement in assessing whether an organisation is succeeding or failing in its sustainability journey.

Setting clear KPIs (Key Performance Indicators) is essential. They must be embedded within business objectives and broken down across departments to ensure collective progress.

Bashir argues that internal reporting must happen regularly, not just annually, as many firms currently do. This is to ensure that they are always on the right track, and to illustrate weaknesses, strengths and how to improve upon them.

The episode also highlights the importance of third-party assurance in validating ESG data, thereby enhancing credibility and reducing the risk of greenwashing. Shargiil  differentiates between intentional greenwashing and honest mistakes resulting from immature data practices, advocating for a learning mindset over punitive responses.

With evolving global challenges, changing stakeholder expectations, and regulatory shifts, companies must be agile and adjust quickly and effectively. This emphasises the need for frequent performance checks within a business.

Shargiil emphasises that sustainability should not be viewed as a temporary project or trend, but rather as a core business discipline, integrated into annual planning cycles and aligned with broader business objectives. While new priorities, such as AI or geopolitical concerns, may dominate headlines, sustainability remains a long-term necessity.

Transcript

SPEAKER_02: 0:00

There's probably never been as many companies in the world focusing on ESD and sustainability today than there has ever been. But now it's even more important that we get everybody on board, that everybody starts their journey from their own starting point, from their own perspective, linking to their own industry and the market they operate in.

SPEAKER_00: 0:20

In episode seven, Shahgill talks about measurement and reporting and the importance of KPIs before going on to discuss continuous improvement.

SPEAKER_01: 0:28

So welcome to today's episode. Hi, Shahgill. How are you today? I'm very good, Dean. How are you? very well very well i'm looking forward to this conversation so today we're going to cover chapter seven and eight from the book and you'll see why because they're very related chapter seven is about measurement and reporting and chapter eight is about continuous improvement so welcome shargil again should we just get straight into it in terms of the importance i guess of measurement and reporting so why are they such a critical phase to the sustainability or critical thing to the sustainability journey?

SPEAKER_02: 1:10

Yeah, I guess if you have to put it very simply, Dave, right, it's about you need to measure whether you're being a success or you're being a failure. As simple as that, right? Because if I have to double click on that, what that means is that you have to be working on your strategy and understanding the direction you want to move into. It's very, very important. And some of the discussions we had previously, you need to set some targets, right? You can set some short-term, medium-term, long-term targets. But you also need to measure them. And more importantly, you also need to report them to your relevant stakeholders, right? These stakeholders can be your internal stakeholders. It can be your external stakeholders. Some entities also have some regulatory requirements to do disclosures as well. So that's where that information can be used for. But it also is critical to understand how quickly or slowly are you moving towards your targets and ambitions. And that's why it's very, very important to measure and report. And some of the key things, and we already know them, in the corporate world, we are all familiar with the KPIs, key performance indicators. to understand that, you know, what does success look like? What are the ambitions we set out? And these matrix KPIs can be linked into your energy usage. It could be linked to your water consumption. It could be linked to your waste reduction. It could be linked into how are you diversifying your workforce in your organization. It could be linked into some KPIs linked to your governance. So I think, you know, we use these KPIs and targets to measure. Are we moving in the right direction? How successful are we being in the implementation of our strategy? But at the same time, you also use them to figuring out where do we need to put additional effort. And for me, I think that's the most important part, right? Because if you put your KPIs in the right way, it can also help you further accelerate your work on this as well.

SPEAKER_01: 3:21

It's fascinating. It's fascinating. Again, one of the topics we've talked about is how, you know, aligning sustainability is kind of critical to the sort of broad or the criticality of aligning your sustainability objectives to the broader business objectives as well. And I sort of wondered, in terms of sort of setting KPIs, you do that within the sort of broader kind of business objectives as well, don't you?

SPEAKER_02: 3:50

Absolutely. I think every organization today sets some KPIs, right? And I think those KPIs, that's getting trickled down. So you might be setting an overarching KPI, which could be, as an example, we want to reduce our energy usage by, let's say, 10%. But then how are you going to do that, right? Because energy can be consumed at so many different levels as an organization. Then you could have a further KPI to say, We're going to reduce energy usage from our data centers by 5%. We're going to reduce our energy usage in our product production by 20%. We're going to reduce energy usage from our fleet by 10%. And I think those KPIs then get aggregated on top or the other way you can set a KPI on the top. And then you ask the different stakeholders internally to break it down specifically for your area, how are you going to achieve that, right? I think a good way that a lot of people will associate this within their organization is typically a organization will set a yearly target or a KPI from a financial perspective, right? Our return on equity needs to be a certain level or our revenue needs to be a certain level or our net profit needs to be a certain level. And that's fine. That's the overarching organization KPI. And then you start breaking it down, right? How is the individual, division, part of the organization gonna contribute to that? And I think sustainability and ESG is exactly in the same way. You need to understand what is our overarching ambition? What's the target we have set? And in order to get to that target, how do we break it down? How will the different areas of an organization gonna contribute to that part, right? And a simple thing, a HR department can contribute to some level of KPIs. but an HR department will typically not be the biggest one contributing to your energy usage, as an example. If you have a production facility, that area will be a significant user of energy, hence that KPI might have a much bigger weight compared to other part of the organization. So it's a little bit about setting those overarching ambitions, breaking them down, and understanding how are we exactly gonna contribute to this overarching ambition. And then you start utilizing the different sources of data you have in your organization to understand, analyze how are this working to us. You might even benchmark yourself because once you are setting some KPIs, it's also important to understand how are we benchmarking ourselves internally, but maybe also externally. So again, using our example of energy usage across the organization, the different departments might want to understand, okay, How much is this department using of energy compared to this department? Why is this department who are totally comparable using 20% more than the other one, right? What are they doing differently? What's the reason for this, right? And then you start exploring this and you start creating internal reporting. So you're always ahead in figuring out how that is being done. Because one of the biggest challenges we've discussed when it comes to museum sustainability, Dave, and you've probably heard it a lot of times, is around data. And we discussed this previously as well, right? We lack a lot of data when it comes to ESG and sustainability. And I fully agree on that. And I don't think there can be different opinions on that. However, if I had to provoke, I would say we've never had as much data on ESG as we have today, right? And I always provoke with this because two years ago, we had much less data than we have today. So we will always be seeking more and more data, but it's also a question of how to use that data that exists today. And how do you use that to set your targets, your ambitions to figure out that, you know, sometimes you might need to use some proxies to get to that point, which is very important. And then it comes to reporting. I see a lot of organizations who does their sustainability reporting once a year, which a lot of companies do. However, they don't establish more frequent internal reportings. And for me, that is critical. And I think that's a challenge that a lot of companies face, and it is very important to address. Because if you're only reporting once a year, how are you making sure that during the year you're making the right decisions that are helping you to move into the right direction? That's why you need to have those KPIs. You need to follow them. You need to establish internal reporting that you either on a monthly basis or in quarterly basis can follow how are we progressing because you might need to steer on different lanes, right? And I think that's very

SPEAKER_03: 8:46

important.

SPEAKER_02: 8:47

A good example of that is when you look into financial reporting, right? I don't believe there are many companies out there that are only doing financial reporting internally once a year, right? They do the reporting once a year and then they wait 12 months to do it again. They will be following every single month. How much did we sell? What was our revenue? What cost? What was the bottom line? And I think this is exactly the same from a YouTube perspective.

SPEAKER_01: 9:13

Yeah, I mean, you're totally right. If a business was financially reporting and sort of looking at the data on a yearly basis, you'd be out of business, wouldn't you? Absolutely. It would

SPEAKER_02: 9:24

just not be acceptable, right? And that's also why we have regulation around these things. And I think we're coming to a point on sustainability and ESG that if you really want to make an impact, if you really want to understand how is our organization moving, you need to track it, ideally on a monthly, but as a minimum on a quarterly basis. So you can make some decision based on that information to say, okay, are we moving in the right direction? Do we need to do something additional that can help us move faster or accelerate some actions? So that's why the reporting aspect is so, so important.

SPEAKER_01: 9:59

So, I mean, if you took the financial reporting as a kind of, as a proxy example, like if you're a large corporation across multi-geographies, you know, you will have one number which sort of sits at the top, but in the individual countries, they'll be reporting upwards. And often those, the way that finance is recognised or dealt with is different based on jurisdiction. So somebody at some point has to kind of make sense of it. But I wonder from an ESG point of view, if there were sort of similar things in place, because, you know, regulations will be different in different restrictions. And, you know, how do you sort of overcome that? Yeah,

SPEAKER_02: 10:41

I think it's something that we have developed over years, right? In order to understand a financial statement, I think most people, they have had some kind of training either on the courses, on the university, the different level where you understood the basic level of understanding a financial statement. You look at the P&L statement, you understand to look at a balance

SPEAKER_03: 11:02

sheet.

SPEAKER_02: 11:03

And most, every part of the world, you're going to have a P&L statement or you're going to have a balance sheet that will be more or less similar. And everybody understands how do we look at the assets, how do we assess the revenue, and et cetera. However, similarly that way, from a sustainability perspective, especially if you look at B, we have some very core metrics we could look into. We can look into, which we discussed previously, scope one, scope two, scope three, to say how is that progressing. We could start looking into some metrics around diversity. as an example, from some social metrics. We started looking into some governance metrics. And I agree with you that some of these metrics on the ESG side needs to enhance further and get developed and come to a point that we have this uniform understanding. However, I would say that from an EEB perspective, I think scope one, two, and three has become quite universal. Everybody, subject matter experts, majority of the people having some kind of link to ESG understand those and understand what that means. However, the part that we are still debating a little bit, or the challenge is to say, not everybody understands scope one, two, and three. So there's an raising awareness around that is going to be important, right? I would love if all kids in the eighth, ninth grade was taught to understand a ESG report, right? Let's make sure that we understand what scope one, two, and three means specifically. Then we also have the challenge that a lot of companies does not know yet how to measure some of these things. Similarly, if you go 80, 90, 100 years back, a lot of companies did not know how to report financial reporting. That is something that has built over time. How do we look into the revenue? And I think we're in a similar place because a lot of companies still are just establishing themselves because it is now becoming a regulation across the world to understand how do we collect our scope one information. How do we report it? What do we include in scope one? What do we include in scope two? How do we report it? So I think we are very nascent in that journey. And I think that we are seeing regulation and I know that there has been some political landscape changing over the US and the part of Europe and so on as well. But I do think that over the coming three, four, five years, We are going to see more and more disclosures coming across, a better alignment on disclosures, which we are starting to see by ISSB, where there's a discussion about creating a global aligned disclosure on sustainability. So I think we're going to get there eventually. And once we get there from a reporting perspective, it's also going to be easier to cascade those KPIs within your organization as well.

SPEAKER_01: 13:55

So, I mean, I think it's really interesting, but I guess what you're saying is like, at least you know starting with the scope one two and three isn't a bad place like there may i guess there still needs to be some work so that everybody's comparing apples with apples but it's not a bad place to start because i think the problem a lot of people will have is like what are the most important kpis how do we and i know there's a few frameworks out there which can be used as well can you just talk about some of those frameworks maybe and then if i was trying to decide what KPIs to report? What framework might be suitable for me? I

SPEAKER_02: 14:37

think we discussed this previously as well. So we have GRI as an example, which is the Global Reporting Initiative, which is basically looking into specifically for some of the sustainability-related matrices, how you report them, what are the key ones, and so on. So I think that's an important one. Then if you're focusing on climate or the E aspect of ESG, there has been what was used as TCFD, Task Force for Climate-Related Disclosures, which is now being merged into the ISSB framework, which is the International Sustainability Standards that is being pushed into. We're also now starting to see coming disclosure around nature. So there's a framework on that, which is the Task Force for Nature-Related Disclosures from that perspective. So we are starting to see these frameworks from a standalone perspective. But if you move a little bit beyond, I think if you're starting, I think GRI is going to be my first place to start from and work your way through that. But I think if I had to look from a KPI perspective, I think just like many businesses across different industries will have different KPIs. So as an example, KPIs in a bank will be significantly different than KPIs within a manufacturing company or within a logistics company or within a transportation company, right? Similarly, I think that, you know, from an industry perspective, you should be setting KPIs that are relevant to your industry or your specific

SPEAKER_03: 16:05

field.

SPEAKER_02: 16:06

And again, as a simple thing, if we are working on ESG, let's start from an E perspective. You know, let's look into my energy usage. It's a classic. I think all of us can do that, right? We could even individually, you and I could go and check what is our electric usage. And how is that performing? Some people who are really keen on this, I guess a couple of years ago when we saw the energy crisis in Europe, I think a lot of people started to measure and started to look much more into how many kilowatts is my household using of energy. It suddenly became much more apparent to people because a lot of people have typically just paid whatever their electricity bill was. But now we suddenly got interested in, oh, how many kilowatts am I using? And I think it's as simple thing as that. You know, you could put a KPI. This is our energy uses end of 2024. Let's have an ambition that we want to reduce this by X percentage in 2025. Let's put a KPI on that. The next one could be on our water usage, right? So how much is the water usage specifically end of 2024? What should it be in 2025? It could be something as specific as if you look at some of the social criterias. A lot of companies measure their employee engagement. That could be another. Employee satisfaction could be something. It could be your customer satisfaction you look into. It could also be if you're some of the really advanced companies and you're truly focused on your core asset, which is your employees, you could look into the mental health of your employees. And we do see companies who are really advancing and focusing on those metrics as well. So there are multiple of those things. And the ones I've mentioned right now, I will say these are uniform, right? These can work for every industry, for every level of company. And then you could start becoming more specific depending on which industry you are working within, right? And then you could start looking into, okay, for my industry specifically, what kind of KPIs will be relevant for ESG perspective?

SPEAKER_01: 18:08

Fantastic. And I mean, I guess one of the things that you do all this reporting and then you sort of publish results and then companies will then occasionally be accused of greenwashing because, you know, what they reported on and what they've done, you know, doesn't align with what people think they should be doing. And I guess that's... important to kind of talk about that but one thing that I was kind of interested in is like third party assurance around measurement as well so like if we go back to the financials you know having an audit is kind of a critical part of making sure that what you reported is is true and you know that has a big impact on kind of people's view on you from a credibility point of view so i guess there's sort of two things in there one is about greenwashing and the other is about assurance from third parties

SPEAKER_02: 18:58

yeah now let's start with the assurance part first right i think we can use the example of what we already know from a financial perspective there are today regulations in in majority of the countries and jurisdictions that requires and third party assurance on your financial statements, right? Of course, depending on size of the companies and so on. And what is the reason for that? The reason for that is that you want to ensure to your

SPEAKER_03: 19:22

stakeholders

SPEAKER_02: 19:23

that the financial statements, the financial information coming from a company has been verified by somebody independently who has reviewed this,

SPEAKER_03: 19:31

right?

SPEAKER_02: 19:32

And the similar should apply from a sustainability perspective. As sustainability and ESG is becoming more and more important, there's more and more jurisdiction and countries that are focusing on the topic of sustainability and how we reduce emissions. It becomes more and more important that you get that third party verification. And to be honest, it works quite similar to it works from a financial statement perspective. You hire a third party assurer. They typically have a framework that they will go to, they will look into that, you know, How have you made these calculations? They will do sample checks on the underlying data. That is, the data that you're highlighting in this report is this correct data. How was this data obtained? Do you have the right framework on the policies around this? And this is what gives you as a company assurance that you are putting the right information out there, but it also gives your stakeholders, which can be your customers, your employees, your shareholders, your community, that you are reporting this in the right fashion. And also importantly, when we get our financial statements assured as a private sector, also given internal comfort that we haven't overlooked. Because if you're a large organization with a couple of thousand employees, and let's say you operate in multiple jurisdictions, you're gathering this financial information from multiple places. And then you bring it all together, you do your financial report, but you still want to make sure, oh, is everybody doing the right thing? And that's the comfort you get by having that both internal controls, but also the third party assurance. On a similar fashion, energy usage in one part of the world versus a different part of the world can have many different ways. If you look at the energy usage, if you look at the level of energy providers across the world, I'm sure that the energy providers in the UK, they report in one way versus the energy providers, let's say, in Egypt versus China versus India. All this information comes in different levels, different forms, and so on. So aggregating that information gives you an internal comfort that you had a third party who understand these frameworks globally and can confirm to you that this is being done in a right way and fashion. I think that assurance is super important for managing all your stakeholders. However, also recognizing that not every organization will have the resources to get that third-party verification at this point. But again, getting this started, putting in place the right framework, putting in place the right policies can actually bring you a long, long way to ensure that you are verifying the information you're publishing. Coming to the second point around greenwashing, which is, again, very, very important. important. For me, greenwashing comes in two different forms. There is the, which I will call borderline fraud, which happens where people are on purpose overstating, overselling something or claiming something that is not true. For me, that is bottom line fraud. Then there's the other aspect of greenwashing, which is basically because we don't know better, because it's a topic that is still emerging. It is still developing that you can be in all the right mindset. You want to do it in a good state that you go and inform some data. And now suddenly the underlying data has changed or you get some new information or you simply didn't understand the complexity of this matter well enough. You might not have done it to get any kind of benefit. but you just didn't know better at that time. So I think it's important to differentiate between this, right? And for the first one, the fraud, I think that's totally unacceptable, right? We can't have people going and lying and fraud, and that's unacceptable in any shape and form. But the second one, let me give you an example. Let's assume you're doing your sustainability report from the first time ever, right? As I said, the scope one, two pre-calculations, it's not the simplest of the world. There are some frameworks out there you can follow and so on. Let's assume that you're now trying to gather information from all your different locations across the world. Let's assume that you're accompanied in multiple locations. And you receive all these locations. You're doing it for the first time. All your colleagues around the world have never gathered this information to a centralized to go to an ESG location. Now you publish this information. Suddenly, you get a call from one of your colleagues somewhere in the world saying, oh, the way we did this was totally wrong. We've never done this before. It was a mistake, right? And humans make mistakes, right? This can happen, which means that the number you published, and let's assume you didn't get a third-party verification, you might have understated this number, or you might have overstated a number, right? So next time you correct that number, is that greenwashing? I don't think so, right? You might have overstated the number, or you might have understated the number, but the reason for that was because you're going through a process, right? The baseline needs to be restated. It could also just be a simple thing as, you know, in your fleet, in the first time you publish this data, they were part of the fleet you couldn't include for some reason, right? And now, as you are maturing, you're getting, you know, enhancing your capabilities, you're able to get more data in there, which means that you're restating your baselines. So I think, again, greenwashing is a big, big concern because companies do this. And luckily, we have regulators who are looking into this in detail. But it's also important to remember that since it's such a new topic, it's such a nascent topic that a lot of companies are starting on. We also need to be mindful that if you start accusing everybody for greenwashing, the impact of that is going to be you're going to get green hushing, as we discussed last time. People are just going to not speak about what they're doing for sustainability perspective in order to be a good example for others.

SPEAKER_01: 25:44

No, but I think, you know, on both examples, like measurement, there's a criticality to measurement, isn't there? Absolutely. You know, I mean, again, it just shows the importance of kind of getting those KPIs in place.

SPEAKER_02: 25:58

Absolutely. And it shows the importance of starting on the journey and expanding those capabilities. I think it's very important. You set those KPIs, you try to build those capabilities, and you ensure, because the majority of the companies we're discussing here, Dave, that is going to focus on their sustainability and ESG journey, have gone through the journey of doing financial disclosures. For me, in at least 90 out of 100 cases, you could try to copy a lot of the controls a lot of the processes you have for your financial disclosures and reporting to copy as much as possible to your ESG reporting, right? So you could say, okay, these are the controls we have in place for when we are doing our financial reporting. Let's try to do the same for our ESG reporting. We are setting our KPIs for financial perspective. We have some internal governance we go through. We have some internal discussions. We follow up on them on a monthly basis, quarterly basis. Let's do the same from ESG perspective, right? So let's try to mirror as much as possible. And I will say that probably around 90% of those processes or that governance can definitely be reused when you look at it on it from a ESG and sustainability perspective.

SPEAKER_01: 27:18

Fantastic. Well, we're going to switch gear now and talk about continuous improvement. And again, there's themes that have kind of cropped up before. So I was kind of keen to focus on a few things around this. So obviously, sustainability is a very iterative process. I mean, and we've just talked about kind of measurement. Measurement, you know, getting the right measurement isn't, you know, you're not necessarily going to get it right first time. You kind of iterate around and totally understandable. But in terms of sort of the broader kind of sustainability program, what are some of the biggest barriers that you've sort of seen in terms of a program is put in place, there's initial wins, you know, but then things slow down. I was kind of interested to kind of get your views on that.

SPEAKER_03: 28:08

Yeah,

SPEAKER_02: 28:09

I think when we speak about continuous improvement, I think like everything else, you need to continue having a focus,

SPEAKER_03: 28:16

right?

SPEAKER_02: 28:17

Because some of, and I think we have all been guilty of starting a project and suddenly lose focus and that project never finalizes. Or at least some of us can recognize that happening to us, right? And I think sustainability is exactly the same way, right? That you need to make sure that you're coming back to those things. You're asking the questions, you're challenging yourself that why is this not moving? Or why is it moving? Or why is it not moving fast enough, right? How do we enhance that? Again, let's use the example of energy usage, right? So if we have set ourselves a TPI that we want to reduce the energy we are using by improving our products or being much smarter about the way we use energy and the numbers are still not moving, what's the reason for that? Have we had the right discussion internally? Are we speaking with the right people internally? Have we everybody on board on this mission, right? I think you need to ask those questions, but it also about how do you keep enhancing your understanding on this topic right it's similar once you develop a product you just don't end there right like we didn't end with iphone one right we're on iphone 16 17 or what number we are on because you continuously keep improving on that product that how do we keep enhancing and it's exactly the same way on sustainability and esg as a very simple if everybody listening to this podcast ensure that in their company there was at least one target from sustainability, let's just say, for instance, it was on energy usage, right? Let's focus on this. Now we build our capabilities. Next year, we do it on water usage, right? The year after we focus on waste or we say three additional KPIs or focus areas are put there and we keep enhancing, right? So, okay, we managed to reduce our energy, but now let's be more ambitious next year, right? Because now we understood that we had a success with one product by reducing the energy consumption of that product. Let's be even more ambitious next year, right? Similarly from the vehicles, a lot of the car manufacturers who have come into electrification after Tesla, right? They also started looking to... A lot of car makers didn't go directly from a fossil fuel car directly to electric vehicles. They started with hybrids, right? And then they say, okay, you know, we take a step-by-step approach. They moved into hybrid vehicles. And from there on, they were moving to electric vehicles, right? And some made the direct jump, right? And I think that's why it's important that we continuously challenge ourselves that how is it that we can improve on... are embedding ESG and sustainability in our organization because it continues to be a journey. There's no organization today globally, anywhere, I would love to see them if there are, who can claim that they're done with sustainability,

SPEAKER_03: 31:16

right?

SPEAKER_02: 31:17

because it's a continuous journey. Just like there's no company who continues to be the world's best companies for decades, right? There might be companies that are very good in a few years and then somebody else comes and takes over and they need to start over again, right? So we need to continue just like a strong leadership continues to to renew themselves. Companies continue to renew themselves. The reason Coca-Cola still exists today is because they continue to renew themselves in different ways. And similarly, we need to understand that from a sustainability perspective, you need to continuously improve yourself. You need to improve your credentials. You get smarter, you get better. Some of the leading companies on ESG, if you ask my peers in those companies, they will say, we're just in the very beginning. There's so much more we can do. And that's why you need to continue improving. And honestly, all of us needs to continue improving until we have ensured that, you know, we have done the best thing for the planet and the planet is in a much better place. I think that's why that continuous improvement is so important to continue challenging yourself.

SPEAKER_01: 32:26

I mean, I really like that. So, you know, from a maturity point of view, it sounds like Maturity in ESG is about being very open-minded and knowing that the job is never going to be finished, but you kind of relentlessly look at sort of optimising things and changing what you've done to make it better. But you do need to start with a big picture in terms of this is what we're trying to achieve. So if you're a Unilever or Ikea, you've got the vision, basically. And we've talked about how important it is to have that vision aligned with the overall business vision. They've got to kind of be part of the same thing, haven't they? Absolutely.

SPEAKER_02: 33:07

And the leaders, like you mentioned, the Unilevers, the Ikeas of the world, the Microsoft of the world, they have a yearly assessment and they have a monthly and quarterly touch points, right? So they set a KPI, they will then come back next year and say, okay, did we meet that KPI? How could we enhance that KPI to the next year? But in between, on a monthly basis, if not even more frequent, they will be assessing how are we moving within each of those KPIs, how are we moving on each of these targets that we have set. You keep enhancing and assessing yourself that how can we improve all the time. And sometimes the improvement happens because we enhance ourselves internally, right? Our capabilities got better, we got a better understanding, there was increased focused, but it might also be because of external factors, right? It might be that suddenly a lot of more people starting to buy our products that are more sustainable. It might be there might be some regulatory changes. There might be that some of our stakeholders are pushing us for more of this. It might be that some of our customers are having a much higher demand for more sustainable products. And that's why you need to continue improving yourself and all the time assessing that what can we do, how can we do it, and what kind of impact does that create? And I think it's important that you link it to the action plans you set within organizations. Because every year, I think majority of the companies companies have set some kind of a plan for a year, right? So in 2025, we're going to do this. And at some point later this year, you're going to planning for the 2026. And similar way from an ESG perspective, you set up those plans. How does this link to our action plan? How do we continuing improving us for where we were last year to continue doing something that is better? The only challenge and the difference there will be here, David, I think was important to highlight Sometime you might get pushed to be more ambitious than you had planned to be because suddenly some external factors around you change. It might be that one of your biggest competitors suddenly decided to become much more ambitious than you. And what does that mean? Will that suddenly make a change in your decision making? How is that going to impact you? So that's why you always need to be on your toes. You need to be on top of things to say that, you know, how do we continue improving ourselves? And sometimes external factors can make you accelerate that journey.

SPEAKER_01: 35:37

No, it's very interesting. And then, you know, within all of that, with continuous improvement, you've got to keep an eye on regulation and what's going on. Like we've talked about, there's a changing landscape as well. How are companies or individuals with companies, how do you kind of respond to all of this? So how do you keep on top of what's going on, do

SPEAKER_02: 35:59

you think? I think, listen, it's just like everything else that things move at different speeds, right? If you look, I love to use the example of the digitalization because I always compared digitalization with sustainability. Not every country, not every industry moved equally fast on the digitalization journey. There were industries that were much faster. There were jurisdictions that were much faster to adopt this. We have countries today where you can sit home and electronically vote for a parliament. But majority of countries still don't have that. because of multiple different reasons, because of regulation, governance, data security, and so on. The same way of sustainability. There are countries who are very advanced, who believe that this is what is going to put them apart. Some countries are being much more affected by ESG, and they need to focus from that perspective. But I think what is always important when you're working within this field, like everything else, is always to be prepared a couple of steps ahead, right? You will always have different scenarios you play out. You say, okay, suddenly the world changes its direction. This happens. How do we address this from that perspective? It might be suddenly that a couple of years ago when we suddenly had that whole energy discussion, about energy security not having enough energy available in Europe. How do we address that? Suddenly we saw everybody wanted to have a focus on becoming independent from an energy source perspective. That discussion had a lot of focus. And now suddenly, because of the geopolitical landscape changing, that priority has suddenly changed because another priority has become much more important. And on the topic of defense, or it might be something else, AI is another topic that has become super important, makers, all the government world leaders who say we need to focus on AI now. So again, that does not mean that ESG is not important anymore. It just that means that there's going to be a trade-off, right? So now something else is a little bit more important. And it's always gonna be a trade-off, right? At the same time, when we two, three years ago, where I say, you know, where ESG discussion was at its highest, it did not mean that companies didn't focus on anything else, right? We still focus on governance. We still focus on data security and so on, but it was just some trade-offs, right? And then we just wanted to make sure that, you know, now we need to get started on our ESG journey. It's very, very important. There's regulations coming. There's a demand from our consumers. There's a demand from our stakeholders. Investors believe it's important. And a lot of investors still believe it's important. It's not probably just as important as it was two years ago, but it's still very important. So I think it's a little bit about how you look at it. Things are probably not as critical as they were a couple of years ago. But I also think it's fair to say that majority of the companies today have started their sustainability journey. They might be in a very early and nascent state, but many more companies are now focusing on the topic of sustainability in ESG than there was two years ago, right? I could probably make the provoking statement again. that there's probably never been as many companies in the world focusing on ESD and sustainability today than there has ever been, right? But now it's even more important that we get everybody on board, that everybody starts their journey from their own starting point, from their own perspective, linking to their own industry and the market they operate in.

SPEAKER_01: 39:24

No, it's really interesting. And, you know, you're so right, though, that, you know, just because one thing's changed, it doesn't mean that other things have changed. So, you know, like investors are still interested because they're probably all sitting there looking at their climate risk models going, well, there's risk in all of this, you know, and consumers care as well. Just because some politicians have decided they don't care, it doesn't You know, it doesn't impact those other things,

SPEAKER_02: 39:51

does it? Yeah. And if I have to, for once, probably defend some of the politicians, not all of them, but for some of them, it also because some more parties become more apparent, right? I think we need to be realistic that, you know, there are some geopolitical situations around us that changes. There might be some external factors around those changes. There might be some catastrophe that comes across, which means the world leader changed their priorities. but that does not mean that they don't prioritize something else, right? Like the topic of healthcare, I'm sure that healthcare is a topic and welfare is a topic top of mind on majority of the politicians and leaders, but that does not mean they go around and speak about it day in and day out. It's probably one of the topics you hear them speak least because it always have to be a top priority. And maybe in my good thinking is that hopefully that's where ESG is gonna get at one point that ESG has just become this hygiene factor. We always need to focus on and always keep a key priority, it needs to be there. We can discuss AI, we can discuss so many other things, but it's still gonna be there. It is key to success, it's key for the planet, And it's something we feel every day. The climate change, everyone in the world is starting to feel it, right? It's getting hotter. We can always discuss for the reason for that. We are seeing flooding around the world. We are seeing wildfires around the world. And this is something we are seeing ourselves, right? And people can believe the science. They can decide not to believe the science, but we are seeing it in front of us, right? And when we see in front of us, it means that it gets people to act. I hope that we get more and more people to

SPEAKER_01: 41:33

act these things. Fantastic. Fantastic. Well, thank you so much. That was a really, really good view on both the continuous improvement, but also on the measurement side of things. Thank you so much, Dave. I appreciate it.

SPEAKER_00: 41:49

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