The debate over the future of ESG, purpose and sustainability in corporations continues

December 21, 2023

In case you missed it, new Unilever CEO Hein Schumacher is overhauling the company’s sustainability goals to be less aspirational and more tangible. Some saw this as backtracking the decade-long work of Paul Polman, the previous CEO, but others saw it as a step in the right direction to reduce greenwashing and practically setting achievable sustainability goals. Unilever has traditionally been praised for putting ESG issues front and center, but has also been questioned on how it balances this with the financial performance of the company. 

Schumacher is leading Unilever’s sustainability strategy forward by focusing on four strategic areas: climate, nature and biodiversity, plastic waste and livelihoods of suppliers, and customers and communities. Schumacher criticized corporate sustainability plans that sounded great in press releases when he said, "In recent years, debate around brands’ sustainability and purpose has arguably generated more heat than light.” He commented that Unilever’s strategy would be different. 

“The era when companies could make bold, audacious commitments without specifying how or when they’ll achieve them is ending.” – Unilever CEO Hein Schumacher

Materiality, particularly the issue of double materiality, is on our minds.

There has been significant back and forth on the scope and role of materiality in sustainability reporting. The ongoing debate is whether to disclose only those factors that influence the financial performance of a company or to include financial materiality plus the impact of a firm’s operations on nature or society. The latter is what is called double materiality. Social Value International has released the Materiality Files, a series of blogs and a webinar to address the issue of materiality where they advocate for something akin to double materiality called “wellbeing materiality”. 

The debate on double materiality between the CSRD and ISSB continues. It appears that the entire sustainability field and corporations realize that this is a critical issue in taking the next step towards integrating financial and sustainability reporting, but where it will land is still to be determined. 

What does this mean for the future of the impact marketplace?

All of this is very relevant to how CGM is addressing the problem of broad sustainability goals without quantitative, outcome-based plans to achieve them. At CGM, we believe that materiality encompasses much more than financial materiality and that converting material impacts into financial impacts is a critical step towards integrating financial and social reporting (and thus increases its value for corporations that report it along with their stakeholders). 

CGM supports corporate sustainability (CSR, ESG, CSI) strategies and performance in several ways. First, by analyzing how their past programs performed through data gap analysis, and sourcing critical anchor studies related to their program and building SROI (social return on investment) models. 

Second, by designing new programs that take the lessons learned from our analysis that ensure the right data is collected and that participating organizations (social enterprises or non profits) are able to deliver verified outcomes through our impact framework. 

Lastly, the ability to achieve quantitative, economically valued, verifiable SDG targets that are material to their business by hosting that program in our marketplace and purchasing Verified Impact AssetsTM (VIAs) from participating organizations. We’ll be sharing more early next year from this work and will continue to break down how materiality impacts the future of the impact marketplace as a whole. Stay tuned for more.