Book Review: Binde, P., (2024), ESG Sprint, 10-10-10 Publishing

This book, written by Petter Binde, a Switzerland-based management expert, discusses a seven-step approach for implementing ESG (Environmental, Social and Governance). The approach that Mr. Binde is taking has been tried out in a number of firms, which have gone through a one-week program to implement ESG, given by his Geneva-based consulting firm, Binde Management Sarl. A number of practical steps are outlined, giving busy but interested business executives essentially a complete set of “tools” for implementing ESG. The five-day process discusses in the book draws on an approach originally developed at Google Ventures, aiming to solve complex problems though thinking about what essential steps might be taken, for then to do rapid prototyping, Excessive open-ended analytical steps and open-ended discussions, time-consuming, expensive, even paralyzing, might thus be avoided.

This reviewer finds this practical, tried-out approach to be highly valuable. There tend to be too few credible write-ups regarding “how to do it” in today’s business literature. Binde’s book is a welcome exception. So what sets ESG Sprint apart is its insistence of action. I can wholeheartedly recommend the book to any executive who might want to implement effective ESG. Before discussing the major key steps in the book, however, let me make two general observations:

First, it seems to me that the stepwise approach that Binde outlines might also apply to a variety of other processes, and not only when it comes to ESG. So, the book might probably have a much broader relevance than what the author claims.

Second, is ESG a part of a firm’s general business strategy or is it essentially the firm’s new strategy itself? Mr. Binde seems to lean towards the latter, although he does not seem to be totally clear regarding this. My own view is leaning more towards the former, i.e., that ESG might complement a strategy that might already be in place. There is a lot written about ESG these days, and many deep discussions. Most experts regarding ESG seem to lean towards a way of thinking about ESG quite similar to my own. But, in essence, what is what may not be all that relevant. What is more key is to develop solid, specific ESG thinking that applies to each particular firms. Binde’s book seems to do just that!

Let us now discuss what seem to be the key issues in the book. As already noted, the bulk of the steps that are outlines are consistent with agenda-items in one-week workshops, as follows:

Day One: Understand, so as to develop a clearer awareness of what ESG might entail in one’s own firm.

Day Two: Define, so as to come up with a set of clearly framed challenges when it comes to ESG

Day Three: Shape, so as to come up with clear metrics.

Day Four: Chart, i.e., develop a clear roadmap regarding the steps now to be taken.

Day Five: Validate, with a focus on gaining stakeholder commitments, and to communicate this broadly.

Mr. Binde also outlines two more steps, namely, to engage people, so as to be able to move fast, and to track and report progress. Where these steps might fit into the workshop process is not clear. To this reviewer they may seem to be more like after-thoughts.

Understand. Albert Einstein said: “If you cannot explain it simply, you do not understand it well enough”. A first issue to attempt to understand might be to what extent ESG might be an opportunity or a threat. Opportunity: strengthen one’s reputation, attract better people, more favorable financing, and so on. Threat: managerial distraction, new laws and regulations, increased costs, …

And there are several issues that one must understand in more detail: Environmental, such as impacts from climate changes, challenges of managing water resources, pollution prevention, businesses that lend themselves to circularity, and so on. Social, such as customers’ concerns, employees’ attitudes, community/societal norms, etc. Governmental, such as control (accounting rules, …), broader stakeholder concerns (such as discriminations regarding gender, age, or race). All of these factors might be seen through “shorter term lenses” as well as through “longer term ones”.

Binde then classifies the seventeen sustainable development factors that the United Nations have proposed into these three categories, or into two of these, or whether they would fall into all three:

Environmental: such as affordable, clean energy; life in water or life on land.

Social: such as no poverty; zero hunger; good health/wellbeing; education or less inequality.

Governance: such as partnerships for the goals.

Environmental and social: such as gender equality.

Environmental and governance: such as sustainable cities/communities.

Social and governance: such as gender equality; decent work/economic growth or peace/justice.

Environmental and social and governance: such as innovation or responsible production and consumption.

As already alluded to, ESG is being discussed a lot, by many entities, these days. Binde has identified 13 of the most important ESG standards (pp 30 – 35) and discusses two of these in much more detail, TCFD (Task Force on Climate-related Financial Disclosures) and the EU Taxonomy. A framework outlines in ISSB (International Sustainability Standards Board) thereby seems to become widely accepted standard.

Regrettably, there now and then appears to be so-called greenwashing. This is so when standards and regulations are not being intentionally followed, i.e., deliberate “cheating”!

Define, This phase of the process aims to define specific risks and opportunities facing one’s business. Stakeholders must be better understood as part of this. And are one’s own ambitions to lead or to follow?

The discussion of how ESG can lead to more value creation for one’s business is particularly useful. A strong focus on ESG is thus not necessarily a cost-driver, but can be seen to lead to significant value creation instead:

-              Top line growth

-              Cost reduction

-              Easing one’s regulatory burden

-              Enhanced employee productivity

-              Better investments.

And such added value creation takes place through various stakeholders, such as customers, employees, suppliers, competitors, governmental authorities, the press, and so on. Mr. Binde suggests that one might develop a stakeholder map with 4 cells for each of the most critical stakeholders, where one scale assesses the interest of stakeholders (from low to high), and the other assesses the power of the given stakeholder, also from low to high. In the case of high-high it seems key to try to manage this given stakeholder much more closely. In contrast, with a low-low assessment, the task might merely be one of monitoring. The two remaining cells call for an “in-between” focus so as to keep oneself informed regarding the development of a particular stakeholder, or to keep this given stakeholder satisfied.

Once more, there are particular risks as well as opportunities stemming from ESG, now identified by asking “how might we”. For instance, risk from climate change may be framed as “how might climate change impact our business”. And “how might renewable energy investments create an opportunity “for our business”.

So-called double materiality means that sustainability reporting and accounting refers to the fact that a company’s sustainability impacts and risks might be measured from both the perspective of a firm itself, as well as from a societal viewpoint.

The author discusses 10 different measurements. He suggests that benchmarking against similar competitors might be a particularly good way for highlighting what to be done. There are also several frameworks that rate ESG performance (Dun & Bradstreet, S&P, Fitch, Moody’s, …). These may be good for benchmarking, i.e., for identifying action that might be needed.

Shape. What will one’s successful business look like, now that efficient ESG for the firm has been established? Let us again refer to Albert Einstein: “If I cannot picture it, I cannot understand it”. Visualization is thus typically key. The author suggests 7 different ways of “drawing” the firm: Inspiration-based; process-driven; mindset; conceptual framework; relationship map; strong board or empathy map: do, say, think, feel.

Based on this more detailed shaping of one’s business it should now be even more doable to articulate the key ESG tasks rather precisely. A way of getting at this might be to address the following 6 questions (p. 102):

-              Who will your customers be?

-              How will your customers describe you?

-              Why will people want to work for you?

-              Who will you be partnering with?

-              Who and where will you source from?

-              How will you engage with your community?

Mr. Binde then discusses how to make use of “pre-mortem” analysis (in contrast to “post-mortem”) where one might identify an imaginary project which might have gone very wrong. One might thereby then be able to work backwards and identify the root causes of the failure. This, in turn, might lead to new insights regarding what one might wish to do differently in the future, including how now to start, stop and/or continue more or less as is. Technological and/or AI issues may turn out to be particularly relevant in many such situations.

Once more, we may now return to analysis of best practices. Hopefully the shaping stage might culminate with a so-called business model canvas, mapping out one’s successful sustainable future business, in terms of key partners, key activities, key resources, customer relations, segments and channels to market, all leading to a revenue stream and with a given cost structure. Hopefully this “new” value preposition might be a very profitable one!

Chart. According to Michael Porter, “the essence of strategy is choosing what not to do”, or, as I often say, perhaps even more succinctly: “strategy means choice”! A robust plan should now be charted out, with clear objectives, broken down into manageable, achievable key results. A gap analysis, based on what it shall take to make the business canvas even stronger, should now be undertaken, again with key focus on what to do. A way to be more specific might be to undertake so-called OKR analysis (Objectives/Key/Results), for each gap. As a result, an overall roadmap for actions that need to be taken might now be delineated. Resources should then be allocated, to achieve quick wins. It should be particularly key to focus on such quick wins, and also to try to stay clear of exceptionally difficult projects, which might require particularly high efforts but with relatively low impact.

Validate. This fifth phase focuses on trying to validate the soundness of the ESG approach that has now been worked out. Communication with key stakeholders is again particularly important here, so as to get new feedback and ideas. If at all possible, to get a second opinion from an independent party would also be key.

We now move onto phases 6 and 7 for coming up with more effective ESG. As already alluded to. These two phases seem to be discussed in a much less in-depth way that phases 1-5. Neither do these two steps seem to be part of the one-week workshop approach that seems to have led to the creation of exceptionally clear “how to do it” insights.

Engage. Michael Jordan said: “Talents win games, but teamwork and intelligence wins championships”. Quite similar quotes might be attributed to Alex Fergusson, Manchester United’s legendary football coach: “The focus should be on TEAM, not each of the solo players!” And Dean Bill Pounds said the same to me when I joined the Sloan School, MIT as a faculty member in 1973: “We have a lot of stars, such as [Fischer] Black, [Paul] Samuelson, [Franco] Modighiani, [Jay] Forrester, and so on. But it is our faculty as a whole that counts.” So, this brief chapter discusses how to get the team of people on board. To create a sense of urgency is particularly key, i.e., to mobilize sets of “fast” task forces from diverse sources in one’s organization. Avoiding silos, is equally key. Realism must be strived for here. In the end, this means a lot regarding leadership from the top, based on commitments and accountability agreed to throughout the organization.

Track and report. This final chapter discusses how to track various KPIs (Key Performance Indicators) that have been articulated to implement a stronger ESG. Once more benchmarking may be critical here too.

Epilogue

Mr. Binde shares 5 final insights with the reader at the end of the book, presumably based on general experiences that he may have gotten during the various one-week workshops. One of these insights, Make ESG an Integral Part of Company Strategy is particularly interesting. As indicated at the outset of this review, the present reviewer does not have clarity regarding whether ESG is part of a firm’s general strategy or a freestanding strategy on its own. My sense is that Binde is leaning towards the latter, although the brief paragraph on this (pp 188 - 189) does not add full clarity regarding this matter.

Conclusion

As already indicated, I find this book to be highly relevant. The first parts of the book are particularly strong. Chapters 6 and 7, on the other hand, might have benefitted from some more work. And, I would have liked to see some references too, particularly to the approaches developed by McKinsey. I do realize however, that this is a book primarily for practitioners, i.e., with few or no references!

My general recommendation: An excellent book; a “must read”!