Ending Two Wars


#greenwashing | CSR | decarbonization | esg | esg reporting | fossil fuels | renewables | sustainability | war

Keynote delivered by Attila Schillinger, ESG Core Founder at the Greenwave Conference organized by Kreativ Magazin. Budapest, Hungary, March 10, 2022

Dear Colleagues, My Friends!

After the last virus wave, finally the green wave is here. Welcome to the Greenwave Conference by Kreatív Magazine. Since March 2020, we’ve been guessing and researching what will be our “new normal,” instead, we’ve got the next abnormal. When I accepted this invitation, I had a plan for what I was going to tell you. But in the words of former heavyweight boxing world champion Mike Tyson, one has a plan until he gets punched in the face. News of the war knocked me out. Instead of writing my speech, I wrote to Alina.

We met as fellow professionals about fifteen years ago. I knew she lived in Kyiv. I was worried and wanted to help. Her response shocked me. Between two air sirens, she asked me to help put together a sustainability-themed communication plan for a startup. She then apologized for her “unusual request”, as she put it, but this could give her energy and hope for survival. She was having “Big Dreams” as the bombs fell on Kyiv.

She was interested in the extent to which the war was holding back the achievement of the UN Sustainable Development Goals. When I wrote back that I was wondering how she could think of the SDGs now, she responded: to live is to hope. Let’s draw strength from this, because we have a lot to do.

Of course, Alina didn’t just want to hope. She wanted to end two wars as soon as possible, one for her country, one for all of us. Because let us not be in doubt, the greatest war has been going on between us and our planet for centuries. The declaration of war read: our resources are unlimited, they just need to be exploited. We see where that led us.

Sustainability is when we lay down our arms. We make peace with our environment and learn to live in harmony with each other and the Planet. 96 year old Sir David Attenborough has already explained this to us with so much energy that it could make Paks 2, the planned Hungarian nuclear power plant, redundant. But what can we do when our world, as we know it, is falling to its atoms around us?

We should start with the nucleus. And that is ourselves. Our daily actions. There is a saying “what goes around comes around”. It does matter what we send around. Our micro-aggressions add up and in return we get a society that is not good to live in. In our neighborhood, there are piles of litter around the tobacco shop. We walk by with my children almost every day. Many people turn into our one-way street the wrong way, just because it is more comfortable for them. Our celebrity neighbor turns up his music so loud that the walls are shaking. He is a real influencer, since there is no way I can work from home. The fellow living on the opposite side of the street warms the engine of his diesel car for fifteen minutes before he gets going. Next to him, the sound of a flex tool greets us when we’d have our Sunday lunch on the patio.

We can fight climate change with climate change. We may start by paying attention to each other and realize that our individual freedom is only worth something if we do not exercise it to the detriment of others. If we understand that masks and vaccines protect others, perhaps weaker than us, and serve a common purpose. If we look up and see that “we” must get in front of “I” if we want to survive this century.

We Greenwave participants are in the fortunate position of being able to do more than that. We can change the course of things at the system level, as we have influence on the operation of companies and organizations. What should we do? First of all, we must not start with a ‘CSR culture’. We must not get fixated on producing a nice report, even if often that’s what the organization expects from us. We don’t just have to do a goodwill action well and then communicate spectacularly. We need to move from company cosmetics to genetics. This is a huge professional challenge, opportunity and responsibility. Especially, since no one has walked this path before us. No one has consciously incorporated the methods that can lead to sustainability into a company’s strategy, structure, culture, and technology. The three strands of DNA we need are Environmental, Social and Governance. ESG. Sustainability and ESG are non-interchangeable concepts. One is the goal, the other is the means to get there.

Let’s face it, ESG is far from perfect today. With $30 trillion behind it, ESG has put the money markets on its head, but there are still many question marks. What are our main dilemmas? ESG is a framework within which sustainability performance can be measured. However, today there are at least 600 types of measurement frameworks using different metrics. We compare apples to pears. Professional work on universal standards has finally begun under the IFRS, but this process could take years.  Serious debates have already arisen over the definition of materiality. Materiality is one of the cornerstones of ESG. It does matter whether a company focuses on dealing with environmental and social risks that affect its own long-term value or whether it also considers how the operations of the company affect its environment. What seems certain is that a double standard is being created through the markets and through the means of legislation: in addition to the financial performance of companies, non-financial performance will be just as important. In 2022-2023 that needs to be reported for the first time.

It is difficult to name priorities within the three pillars, but decarbonization is key. We urgently need to reduce emissions of greenhouse gases that are exacerbating climate change. Everyone needs a climate strategy. Oddly enough, those who have such strategies got hit first. According to the New Climate Institute, 25 leading companies of the world did not pass scrutiny. Although they have a net zero strategy, they are either not based on accurate enough calculations or do not take into account the output of the entire value chain. Although Net Zero 2050 is a consensus that is gaining more and more participants, critics say neither the ‘net’ nor ‘2050’ will be enough for humanity to survive. We must proceed to reduce emissions every year, based on science and along targets approved by SBTi. While offsetting emissions is still accepted today, it is under fire, as it does not reduce but seeks to compensate for GHG emissions. The trouble with planting many millions of trees is that the Amazon is on the edge of an ecological tipping point while the land on which we could plant gazillions of trees is rapidly running out. Same goes for the credibility of such programs.

Just a few weeks ago, it was almost taboo to talk about ending the use of fossil fuels. Today, the UN Secretary-General is talking about “addiction”. The war against Ukraine also shows that history will repeat itself as long as we keep relying on unsustainable energy. The company specialized in installing heat pumps has been unavailable for days. So many would be customers are looking for help. In our apartment building, the 4th item on the agenda of the next general meeting is the immediate replacement of gas heating with renewable energy. George Monbiot in The Guardian argues that the global energy transition is a matter of will and not funds. The price of electricity generated by solar power plants fell by 89% between 2010 and 2019 and is now cheaper than any other energy, including nuclear. The price of onshore wind energy fell by 70% over the same period. What are we waiting for? According to Monbiot, we need a Pearl Harbor moment. After that, the U.S. transformed its entire economy in a few months. It has increased its budget tenfold in five years. The goal was to end the war. Now we must transition to a green economy, not a war economy, one would hope. We must think big. Together with you, we can make it happen.

All this will not work with the old top-down policy making method. The experiment of stakeholder capitalism is about involving workers, suppliers, consumers and, through environmental organizations, our planet in our operations and decisions. If we ask how they want to be involved in this process and help them do so, we can build a real community instead of the annual stakeholder event and survey. If we were to draw the Maslow’s pyramid of stakeholder engagement, presence would be at the bottom, voice above it, and influence at the top, ending in real participation and influence. Inclusion is scalable.

It has also become clear by now that people are not a resource. And if we treat them as such that, we can copy the sign a restaurant put out the other day: “Unfortunately, due to labor issues, we can no longer open. We must close. Thank you for your understanding.” Rather, we should understand that the age of companies of the people, by the people, for the people has come.

All of these steps and realizations are essential for ESG to be credible. It is a circular process. It requires leadership commitment, a motivated team, transparent data collection, and focused performance improvement. This is the only way to communicate and report authentically at the end. That’s why it hurt so many when the aforementioned New Climate Institute questioned the integrity of those at the forefront. Let’s not take this too personally. We don’t have a ready-made recipe. We can be wrong if we honestly want to learn and improve. We also need to be prepared that what is sacred today, such as our net zero plans, may not be tomorrow.

Stakeholder capitalism is about how we can operate successfully for the benefit of all stakeholders. However, we still work within the paradigms of capitalism-consumption-growth, we, in Hungary, have experienced for the past three decades. Success is still measured in terms of GDP and profit. In his book Big Pivot, Andrew Winston wrote, “We must pivot — sometimes painfully, always purposefully — so that solving the world’s biggest challenges profitably becomes the core pursuit of business.”

Our responsibility extends to monitoring this horizon and predicting reputation-critical changes. Recently, 450 scientists signed an open letter asking the world’s leading PR agencies to get rid of their clients representing the fossil fuel industry. Clean Creatives wants to decarbonize the communications industry in the U.S. Congress in America has commissioned a hearing on the role of public relations firms in diminishing the threat of climate change and promoting the benefits of fossil fuels. “Clean coal”, “renewable natural gas”, “carbon footprint”. Sound familiar? These expressions were born out of this industry cooperation. There will be plenty of talk of greenwashing today. However, undermining the credibility of sustainability is taking place at an even higher level. The global ranking of the most sustainable countries is consistently led by countries that, while truly at the forefront of reducing emissions within their borders, are major exporters of hydrocarbons and the associated greenhouse gases. Norwaying?

If I continue with this reasoning, I might only get a job at Boston Consulting Group in the future. Their CEO said he wants to hire activists. After all, we are all activists, because despite the headwinds, doubts, negative news, and ‘oh, it’s too late anyway’ remarks, we must work with new energy every day to make the transformation “fast and fast enough”. Only then can we hope that the Big Dream will come true.

Thank you for your attention!