The Ideaspace

Interviews, essays, and research exploring the frontiers of what's valuable and in our self-interest

In Praise of Standardization

From BusinessWeek on how Asian companies are becoming leaders in addressing climate change:

After years of pressure from mostly European investors, Asian companies are pulling ahead of their North American counterparts when it comes to climate risk reporting.

In Asia, a key turning point was 2017, when the Taskforce on Climate-Related Financial Disclosures finalized its recommendations for reporting climate risk. The proposal offered companies a standardized framework that helped boost disclosures…

“Climate change went from a topic that might have been one item on an agenda somewhere in a meeting,” Simmonds said. Now, it’s “probably the first question asked by investors on every presentation.”

“If you are able to put a dollar number on that and people can understand and see it improving year on year, then it brings in much more comfort and clarity,” said Rishi Kalra, managing director and group chief financial officer at Olam Food Ingredients. “I think that really has been a big differentiator for us.”

Also this from BusinessWeek on new metrics to track companies’ full impact on its community and environment:

“It will help managers make stronger business cases,” said Susanne Stormer, chief sustainability adviser at Danish pharmaceutical company Novo Nordisk AS. “Instead of saying, ‘This is the right thing to do or we need to avoid that,’ they’ll have more robust data, better information, which is lacking right now.”

I experienced this first-hand as a CEO. When you face a tough decision you look for legibility in potential outcomes. Which path more clearly satisfies our goals? The black and whiteness of money is extremely useful. It simplifies the math.

The flipside is that this de-emphasizes concerns that aren’t legible. This default towards profit motive is the seemingly natural inertia that drives all companies unless their founders explicitly define other goals or ways of working to counterbalance them. This is not an easy thing to do, even for the best teams and the best people.

Using metrics to rationalize the values and considerations now considered irrational may change those conversations. Instead of a debate between what feels rational and what seems to be emotional, there could be a shared language through which teams could make decisions that balance these considerations.

What I think we’re likely to find — to the consternation of many — is that capitalism will successfully incorporate these new values into its operating system, the great hegemon that it is. But what is defined as capital will change. Money has been the monopolist of value and capital over the past few centuries. But the proliferation of measurement and increasing ability to distribute goods according to non-financial values will change this. Not through any political revolution, but through the flow of opportunity and necessity.

Most people will nod along to this, but many of those same people will also bristle at what comes next: we’re going to use math to define things we’ve never defined before. As we’ve talked about in past issues and will talk about in many future ones, if we want non-financial considerations to be legible and functional at the society-wide level, we’re going to have to translate them into numbers. When those values are expressed as numbers they’re far more likely to scale in their impact (as those articles above attest). This creates lots of good and bad (see: the past ten years of the internet).

Defining these new values is a key new frontier and a tricky one. My focus with the Bento Society in 2021 is to better understand the scope, feasibility, and upsides and downsides of this evolution in metrics and values. This will involve talking to experts in these fields and conducting our own research and projects (all of which are already underway), and reporting back to you on what we find.

Crucially, I’m approaching this work not as an advocate for any particular position, but as a curious person (and a former journalist in my pre-Kickstarter life) trying to understand what’s true and what’s not about this space. Seeking truth, not our desired outcomes, is a core value to our work at the Bento Society.

Peace and love my friends,

The Bento Society