Global Thresholds and Allocations Council
= part of the proposed Reporting 3.0 Platform framework
Bill Baue et al.:
"The Reporting 3.0 Platform proposes the formation of a multi-stakeholder Global Thresholds & Allocations Council (GTAC), to establish an authoritative approach to reporting economic, environmental and social performance in relation to generally accepted boundaries and limits. GTAC will operate as a partnership between leading organizations and individuals from science, business, investment, government, and civil society focused on assessing and validating methodologies for allocating fair shares of responsibility to organizations for their impacts on the stocks and flows of capitals – natural, human, social and other resources – within their carrying capacities. Building on extant efforts to establish science-based targets, GTAC will accelerate progress toward contextualizing company disclosures commensurate with the ecological, social and economic urgencies facing societies and companies alike in the coming decades." (https://drive.google.com/file/d/0B-9lY-KOycJ9M2NESU9rdzNqdU0/view)
● Identify thresholds & norms for sustaining the carrying capacities of systems-level capital resources in the commons that are vital to stakeholder wellbeing, based on a comprehensive review of research in physical and social sciences and practice in the field.
● Design and validate allocation methodologies that apportion fair share responsibility for jointly preserving and enriching capital resources vital to stakeholder wellbeing.
● Disseminate consensus-based thresholds/norms/allocations with “off-the-shelf” ease-of-use in mind to facilitate global mainstreaming of such practices."
"A 2015 UNEP report highlights two concepts as instrumental for applying Sustainability Context:
● Thresholds that demarcate the carrying capacities of vital capital resources (natural, social, human, constructed, financial) and therefore divide sustainable from unsustainable performance;
● Allocations that apportion to companies fair shares of responsibility and accountability for their positive and negative impacts on common capital resources that are vital to stakeholder wellbeing.
The report contains two key recommendations pertaining to Sustainability Context:
● All companies should apply a context-based approach to sustainability reporting, allocating their fair share impacts on common capital resources within the thresholds of their carrying capacities;
● Multilateral organizations should collaborate to create a global governance body of scientists, academics, business practitioners, NGOs and other stakeholders to provide guidance on methodologies for determining ecological (and social) thresholds, as well as guidance on approaches to allocations, all of which are broadly applicable to the business level."
"A number of initiatives have spawned in the past decade to help operationalize thresholds and allocations:
- Employ Context-Based Metrics, such as Science Based Targets for greenhouse gas emissions reductions and Context-Based Water Stewardship Targets;
- Implement the UN Guiding Principles on Business & Human Rights;
- Utilize the Vital Capital Index in agriculture and assess synergies between sustainability impacts;
- Consult the Embedding Project’s Road to Context for guidance;
- Set “break even” and “positive pursuit” goals using the Future Fit Business Benchmark;
- Apply systems-level considerations and measure influence in investment decisions, as advocated by The Investment Integration Project;
- Conduct scenario analysis (with guidance at the TCFD Knowledge Hub) and produce transition plans to <2°C business models (as advocated by Preventable Surprises);
- Use the MultiCapital Scorecard.
In additions to these actions, Reporting 3.0 provides a comprehensive approach to applying thresholds & allocations through a number of fit-to-purpose tools:
- Mapping: The Reporting 3.0 Strategy Continuum (covered in Part 5 of this series) enables plotting of practices, impacts, business models, etc. on the spectrum from incremental improvement through sustainability (defined by thresholds and allocations) to regeneration and thriving;
- Implementation: The Reporting 3.0 Integral Materiality Process (covered in Part 6 of this series) applies thresholds and allocations in its context-based approach to materiality;
- Governance: The UNEP Raising the Bar report also recommends: Multilateral organizations should collaborate to create a global governance body of scientists, governments, businesses, NGOs and other stakeholders to provide guidance on methodologies for determining ecological (and social) thresholds, as well as guidance on approaches to allocations, all of which are broadly applicable to the business level."
"The Great Acceleration datasets of socio-economic and earth system trends unequivocally demonstrate that the “parts” and the “whole” of the Earth system are unwell.
The inextricable link between the Earth’s health and activities of business within its sphere lies at the heart of the link established in 2002 in Global Reporting Initiative’s second generation Sustainability Reporting Guidelines that introduced the Sustainability Context Principle:
- [P]lacing performance information in the broader biophysical, social, and economic context lies at the heart of sustainability reporting... This will involve discussing the performance of the organisation in the context of the limits and demands placed on economic, environmental, or social resources at a macro-level.
However, despite the centrality of Context in sustainability reporting, the Principle remains conspicuously absent from almost all sustainability reports produced since then. A comprehensive 2017 Danish study examined 40,000+ sustainability reports released since 2000, and found only 0.3% of companies (31 of 9,000) disclosing their environmental impacts in the context of ecological limits — including strategies for meeting these limits. And only 5% of reports in the study period cited ecological limits at all." (https://drive.google.com/file/d/0B-9lY-KOycJ9M2NESU9rdzNqdU0/view)
"The idea of thresholds & allocations isn’t new. In fact, the concepts grew out of the notion of “capitals” as stocks of resources that generate productive flows, which are vital to support well-being (see below for a visual overview of the history of novel contributions to this thinking).
The key to achieving sustainability is to respect the carrying capacities of the capitals, as Reporting 3.0 Advocation Partner Mark McElroy established in his 2008 Doctoral Dissertation (applying the carrying capacities concept from the field of ecology). And McElroy also proposed a Sustainability Quotient for expressing thresholds, whereby sustainability (S) equals actual impacts (A) over normative impacts (N) — think carbon footprint over carbon budget.
And Reporting 3.0 notes that most practice in the so-called sustainability space (think CSR, ESG, etc…) amounts to numerator-only work, focused on incremental improvement that falls short of sustainability thresholds. As Reporting 3.0 Steering Board Member Brendan LeBlanc of EY notes, “the only thing more dangerous than no progress is the illusion of progress.” We at Reporting 3.0 also like to point out that thresholds and allocations are always being employed (resources always have upper or lower limits of viability, and use of a shared resource alwaysrequires parsing it out); the main question is how consciously resources are used and shared.
The key “marriage” of thresholds & allocations started with the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines in its second generation (G2) released in 2002, which introduced the Sustainability Context Principle that tied micro-level organizational impacts on the multiple capitals to macro-level economic, social, and ecological systems viability. Ideally, this would have inspired companies to make this vital micro/macro link in their management, performance, and reporting in order to operationalize sustainability.
Unfortunately, a 2017 study of 40,000 sustainability reports issued since then found that only 5% make any mention of ecological limits, and only 31 of 9,000 reporting companies (0.3%) integrate such limits into their strategy and product development. Reporting 3.0 calls this the Sustainability Context Gap.
In its 2015 Raising the Bar report, UNEP succinctly summarizes what companies can do:
- 'All companies should apply a context-based approach to sustainability reporting, allocating their fair share impacts on common capital resources within the thresholds of their carrying capacities'. " (https://medium.com/@ralphthurm/what-are-thresholds-allocations-and-why-are-they-necessary-for-sustainable-system-value-fe127483c407)