Why transparency needs an intervention

Much has changed in the world of transparency since Interface published one of the first corporate sustainability reports in 1997. (We fondly recall the yellow banana paper cover.) Today, this kind of company-level reporting is so mainstream that most large companies produce CSR reports, with the option to have those reports audited by an accounting firm against a global standard, such as the Global Reporting Initiative.

With the recent movement towards transparent reporting of product-level impacts (as discussed in our last column), it would appear that we’ve collectively made great progress. But a skeptic might be inclined to ask, “So what?”

Put another way: We seem to be getting better at keeping score, but does anyone know what game we’re actually playing?

If you agree with us that the game we are playing is about shifting our businesses toward a sustainable path, then it might be time to revisit systems thinker Donella Meadows’ acclaimed essay, Leverage Points – Places to Intervene in a System (PDF), to assess whether what we are measuring in our reporting has any impact on this game.

Meadows is clear in her essay: She is not suggesting some formulaic, paint-by-numbers approach to change a system; rather, she invites us to think more broadly about the many ways there might be to force systems to change.

She defined “leverage points” as places within a complex system (a corporation, an economy, a living body, a city, an ecosystem) where a small shift in one thing can produce big changes in everything. She then proposed a list of 12 places to intervene in a system beginning with least effective (#12 – Constants, Parameters, Numbers) to the most effective (#1 – The power to transcend paradigms).

While any sustainability expert could pick apart the hundreds (thousands?) of CSR reports companies now publish every year, we prefer to pick on something closer to home: Interface’s substantial investment in generating an Environmental Product Declaration for every product we sell globally by the end of 2012. Will this substantial commitment to product transparency actually “move the needle” towards a sustainable future?

Can EPDs become a leverage point?

EPDs are standardized life-cycle data disclosure tools often likened to the ingredient lists and nutrition facts labels found on food items, except you get data on such things as greenhouse gas emissions and water usage instead of calories and saturated fat. Any product can have an EPD, just like any kind of food can have a nutrition label. The problem is, judging from our current health epidemic, just putting the information out there is insufficient to cause significant reductions in obesity, diabetes and heart disease.

This is why my first instinct was to say that an EPD as a data disclosure tool might fall into Meadows’ 12th category of parameters and numbers. She suggested that probably 99 percent of our attention goes to parameters (such as how much energy was used or how much pollution was emitted), but they only become powerful leverage points when they change dramatically. Parameters and numbers are the points of least leverage, and parameters and numbers represent the bulk of what is reported in a CSR report or an EPD.

So, if this is the case, have we just wasted a lot of money on a seemingly “low” leverage point, or can disclosure tools like EPDs become more effective places to intervene in the system?

Working our way down the Leverage Points list, there are several intriguing possibilities. First, consider Point Six, “changing the structure of information flows.” This is not about the data, but how it is delivered: new feedback loops delivering information to a place it wasn’t going to before, therefore inspiring people to behave differently. Meadows reminded us that it’s important that missing feedback be restored to the right place and in a compelling form. A reason why so many feedback loops are missing in systems is the human tendency to avoid accountability for our own decisions.

So EPDs or CSR reports published regularly to track progress could be tools to drive greater accountability for our impacts, if that data arrived in the right place in our corporate decision-making process. This gives us defined metrics and a process for incremental improvement, but still doesn’t define the game for which we are keeping score.

That would require us to move up to Leverage Point Three: “Change the goals of the system.” For Interface, EPDs are a way to measure progress toward Mission Zero, our commitment to eliminate any negative impact the company might have on the environment by 2020 and beyond. This shift in our goals was made possible by an intervention that took place at Leverage Point Two, “change the paradigm out of which the system arises,” when our late founder Ray Anderson read The Ecology of Commerce and began to see the economy as “a wholly owned subsidiary of the environment.”

Defining the game

EPDs help us keep score in our internal Mission Zero game, and rigorous CSR reports could function the same way for the small, but growing number of companies with “North Star” or “Zero Impact” sustainability goals. But this falls short of defining a common game where businesses can actually compete – which is, after all, what we do best.

We see great promise in NGOs like Architecture 2030 creating systems interventions and defining compelling games that can give all of our scorekeeping meaning (and leverage). The recently launched Architecture 2030 Challenge for Products calls on the global architecture, planning, design and building community to specify, design and manufacture products that will meet a carbon footprint of 30 percent below the product average through 2014 – then incrementally improving this reduction to 50 percent by 2030.

To score this game consistently, building product manufacturers are encouraged to develop ISO-compliant EPDs or third-party-verified life-cycle assessments (LCAs) for their products. Funneling this new data to decision makers in the architecture community changes information flows (Leverage Point Six) and begins to change the goals of the system (Leverage Point Three) as manufacturers compete to hit the 2030 goals.

This is one small example of how those of us committed to shifting our economic system toward sustainability can begin to turn all the numbers being churned out for CSR Reports or EPDs into meaningful leverage points for change. In addition to generating more transparent and credible sustainability data, businesses need new games to take us where we want to go — a sustainable future for the coming generations.

And maybe as we bring more players into the game, we will shift a few paradigms, which is when transparency could get really exciting. Let the games begin!

Illustration by Eka Panova via Shutterstock