2018: From ‘The Necessary is Impossible’ to ‘The Impossible is Necessary’

Year-end thoughts from Ralph Thurm and Bill Baue of Reporting 3.0

We draw our headline from Thomas Friedman’s latest book, Thank you for being late — an optimist’s guide for thriving in an age of acceleration, which succinctly captures our civilization’s current paradoxical relationship between impossibility and necessity. Perhaps more compellingly, 15-year-old Swedish climate activist Greta Thunberg applied her Asperberger’s clarity in addressing world leaders at the Katowice Climate Change Conference with essentially the same stance:

Until you focus on what needs to be done, instead of what’s politically possible, there’s no hope. We cannot solve a crisis without treating it as a crisis… And if solutions within the system are so impossible to find, then maybe we should change the system itself.

Both of these formulations resonate with Reporting 3.0’s Theory of Change, as well as our definition of Positive Mavericks, which helps explain why we at Reporting 3.0 have started calling ourselves “Necessary-ists” (with a head-nod to Friedman, Thunberg, and many others).

Reporting 3.0’s Theory of Change defines Positive Maverickship and Necessary-ism

Following up on our in-depth 5-year review on Medium this fall, we now add a 2018 year-end review that also points to the future of Reporting 3.0 in our next phase of development, from content development into Implementing Thriveable Transformation:

  • Transformative Ambition: The IPCC 1.5C Report put a stake in the ground by unequivacably stating that “limiting global warming to 1.5° Celsius would require rapid, far-reaching and unprecedented changes in all aspects of society” and that “a ‘whole systems’ approachwould be needed for the type of transformations that could limit warming to 1.5°C. This means that all relevant companies, industries and stakeholders would need to be involved…” (emphasis added). We believe this makes the ambition set by governments at the Rio + 20 Summit of transforming to a ‘Green, Inclusive and Open Economy’ even more clear and urgent to achieve. However, the more we postpone stepping up to this ambition level, the harder it gets to achieve — creating the effect that Alex Steffen calls “steepening curves.”
Difference of percentage of CO2 reduction in a 2 degree and a 1.5 degree scenario
  • Language: We at Reporting 3.0 believe in the maxim of “meeting people where they’re at,” which typically entails “speaking their language.” Unfortunately, existing linguistic formulations tend to solidify the broken status quo, when what’s needed is radical transformation of existing systems. We recognize that the new language that’s needed can be challenging, but we encourage you to assess what’s underneath your discomfort with new language. For example, the term “asset allocation” in investment circles is uncontroversial, but “threshold allocation,” when applied to meeting the carrying capacities of vital capital resources, is highly controversial — but absolutely necessary. As we like to say, resources are always being allocated, whether consciously or invisibly. And when it’s done invisibly (as it is now), the likelihood of power imbalances influencing this distribution is high — as is the likelihood of crossing thresholds of the carrying capacities of resource pools. So perhaps the solution is not to “speak their language,” but rather to redouble efforts to spread new language to seed new realities.
  • Three Questions: We are increasingly crystalizing our work on these three binary yes/no questions that cut across our full spectrum of coverage:

a. Is your performance sustainable? 
Answering this question requires application of the Sustainability Quotient. Companies and investors have spent the last two decades on numeration (which doesn’t answer the question); going forward, we must focus on denominationin order to answer the question, and ultimately achieve sustainability. To support this shift, Reporting 3.0 is incubating the Global Thresholds & Allocations Council, which we believe is “necessary” to enable companies and investors to answer the question.

The Sustainability Quotient

b. Can you account for your ‘Total Contribution’? The Crown Estate introduced the Total Contribution methodology for calculating its net contribution across all the capitals (natural, social, human, etc). The next logical step is to extend this approach to assess these contributions within the context of the carrying capacities of the capitals (in other words: are there sufficient capital stocks to feed ongoing capital flows?). The Reporting 3.0 / International Integrated Reporting Council (IIRC) ‘From Monocapitalism to Multicapitalism’ Program will fill this gap, enabling organizations to answer this question.

c. Are you scaling up your impact to create necessary system change? There’s no sustainable business in an unsustainable economy or world, we like to say. In other words, achieving sustainable performance at the company level is moot if the overall society is unsustainable. So micro-level sustainability efforts must be accompanied by efforts amongst industries, portfolios, and habitats at the meso level, which scale up to macro-level system change

  • Blueprints — Round Two: After setting a solid foundation of our work ecosystem with the four pillars of the Reporting, Accounting, Data, and New Business Models Blueprints, we are now starting a second round of Blueprint development. Our next three Blueprints focus on Sustainable Finance, Value Cycles, and Governments, Multilaterals & Foundations. In each of these realms, the existing level of ambition falls short of what’s necessary, so Reporting 3.0 will apply its Working Group approach to reviewing existing literature and practice to identify gaps and vet recommendations for filling those gaps to achieve necessary system change.
  • Transformation Journey Programs: After releasing the Transformation Journey Blueprint at the 5thInternational Reporting 3.0 Conference earlier this year, we immediately set about to translate it into a Transformation Journey Program focused on “implementing thriveable transformation.” We launched this program with 2-day Workshops focused on Sustainable Finance in Amsterdam (hosted by ING) and Boston (hosted by John Hancock) in November (and continuing with three more 2-day Workshops through Spring 2019). We are also launching the broadly focused Erasmus Transformation Academy in January 2019. The most energized conversation at the Workshops centered on how career risk (at the nano level) handcuffs professionals from challenging the dysfunctional status quo, creating a causal chain creating systemic risk on the macro level and beyond, to existential risk on the universal level.
From individual career risk to universal existential risk

In sum, Reporting 3.0 is focused on shifting from the predominant practice of forecasting (from today’s realities to tomorrow’s potentials), to backcasting (from what’s necessary in the future to today’s realities). We need a total change of mindset if humanity is to survive, given the range of options. The year 2018 has witnessed steps forward in the right direction, but they come nowhere near the level of change necessary.

Friction creates energy — the beauty lies in moving this to positive energy for change. That’s possible, within the magnetic field we’re in at Reporting 3.0. We look forward to doing our part in our collective journey of climbing ‘Mount Thriveability’. Thank you to all partners that started, continued or intensified their efforts to arrive at our North Star together.

Ralph and Bill
December 19, 2018