This workshop will introduce attendees to the practice of context-based sustainability (CBS), a cutting-edge approach to measurement, management and reporting that interprets performance relative to social and ecological thresholds. Speakers will examine the stakeholder-centric orientation of CBS, its focus on multiple capitals, its grounding in science- and norm-based standards, as well as its practical implications for materiality, goal setting, and reporting. Notable case studies in CBS and its growing influence in international standards (GRI, IIRC, GISR, etc.) will also be discussed.

2. Mark McElroy Center for Sustainable Organizations
@mwmce
Andrew Winston Winston Eco-Strategies
@AndrewWinston
Jeff Gowdy Vanderbilt University
Taking Sustainability
Literally: An Introduction to
Context-Based
Sustainability
#SB14sd

3. An Introduction to Context-Based Sustainability
Mark W. McElroy, Ph.D.
Center for Sustainable Organizations
SB’14
June 2, 2014
Taking Sustainability Literally

4. • Quick tutorial
• What kind of thing is CBS?
– New management doctrine for corporate
sustainability management (CSM)
– ~10 years old
Context-Based Sustainability (CBS)
4Copyright © 2014 Mark W. McElroy, Ph.D.

5. • What are they?
– Competing or alternative schools of thought or
practice that managers rely on
– Reflective of different worldviews or paradigms
• About how best to interpret sustainability
performance management, in this case
Management Doctrines
5Copyright © 2014 Mark W. McElroy, Ph.D.

6. • CSR
• Eco-efficiency
• Citizenship
• TBL
• Other?
Mainstream Doctrines in CSM
6Copyright © 2014 Mark W. McElroy, Ph.D.

7. • Literalist in its orientation
• Others are incrementalist
• CBS is also explicitly capital-based
– Grounded in Multicapitalism
CBS as an Alternative Doctrine
7Copyright © 2014 Mark W. McElroy, Ph.D.

8. Multicapitalism
8
Available flows of
valuable goods
and services
(carrying capacity)
Appropriations of
goods and services by
people who need them
Resulting levels
of human
well-being
Source: McElroy, 2008
Stocks of natural capital
Stocks of human capital
Stocks of social capital
Stocks of constructed capital
Copyright © 2014 Mark W. McElroy, Ph.D.

9. Vital Capitals and theTriple Bottom Line
9Copyright © 2014 Mark W. McElroy, Ph.D.

10. • Incrementalist
– Absolute
– Relative (Intensity)
• Literalist
– Context-based
– A 3rd way
– Quotient-based
Metrics Vary by Doctrine
10Copyright © 2014 Mark W. McElroy, Ph.D.

11. Context-Based Metrics
11
A General Specification for Context-Based Metrics
S =
A
N
(Actual impacts on a vital capital)
(Normative impacts on a vital capital)
For impacts on natural capital, all scores of < 1.0 are sustainable; > 1.0 unsustainable
For impacts on other capitals, all scores of > 1.0 or sustainable; < 1.0 unsustainable
Copyright © 2014 Mark W. McElroy, Ph.D.

12. • Materiality criteria also differ by doctrine
• Incrementalist
– Narrow investor-based interpretation carried
over from financial to non-financial domain
– e.g., SASB
• Literalist (CBS)
– Broader, stakeholder-based interpretation
• All impacts on vital capitals important to stakeholder
well-being are material
• All duties and obligations to all stakeholders to have
such impacts are material
Materiality Implications
12Copyright © 2014 Mark W. McElroy, Ph.D.

13. Quick Illustrations
13
CSO’s Context-Based Carbon Metric
World’s 1st
Context-Based
Carbon Metric!
Science-BasedTargets
Copyright © 2014 Mark W. McElroy, Ph.D.

14. Quick Illustrations (cont.)
14Copyright © 2014 Mark W. McElroy, Ph.D.

15. Quick Illustrations (cont.)
15
2019 – Company ABC
B
ottom
Lin
e
A
reas
ofIm
pact/(Capitals)
P
rogression
Score
W
eigh
t
W
eigh
ted
Score
Fully
Su
stain
able
S
core
G
ap
to
Fu
lly
Sustainable
A
rea
of
Im
p
act
B
ottom
Line
Triple
B
ottom
Lin
e
NotesA B C D
A x B B x 3 D - C C / D
Living Wage (H) 3 1 3 3 0 100%
Workplace Safety
(H,S,C)
3 5 15 15 0 100%
Innovative Capacity
(H,S,C)
1 2 2 6 4 33%
Equity (E:IF) 3 5 15 15 0 100%
Borrowings (E:IF) 2 1 2 3 1 67%
Competitive Practices
(E:EF & ENF)
2 1 2 3 1 67%
Water Supplies (N) 3 3 9 9 0 100%
Solid Wastes (N) 2 2 4 6 2 67%
The Climate System (N) 2 5 10 15 5 67%
62 75 13 83%
Economic 90%
Environmental 77%
Overall
Performance
Social 83%
Notes
The
MultiCapital
Scorecard™
World’s first integrated
context-based measurement
and reporting system!
Copyright © 2014 Mark W. McElroy, Ph.D.

16. Uptake by Standards
16
“Sustainability Context”
Copyright © 2014 Mark W. McElroy, Ph.D.

17. • One reason only:
– You care about whether or not your
organization is sustainable
• No other way to assess the sustainability
performance of an organization
• Not just about non-financial performance,
either
– Integrated form of CBS includes treatment of
financial performance in these terms, too
– Maintenance and/or production of vital capitals
Why Embrace CBS?
17Copyright © 2014 Mark W. McElroy, Ph.D.

18. Implementation Template (AoIs)
18
Start Here
Vital
Capitals
TBL
Sustainability
Norms
(Thresholds)
Data Types
and SourcesAreas of Impact
(AoIs)
Stakeholders
Climate / GHGs Humanity Natural En Mitigation Targets Own Emissions
Livable Wage Employees Economic Ec Regional Norms Own Payroll
Copyright © 2014 Mark W. McElroy, Ph.D.

19. Thank you!
19
Mark W. McElroy, Ph.D.
mmcelroy@vermontel.net
www.sustainableorganizations.org
Copyright © 2014 Mark W. McElroy, Ph.D.

20. REIMAGINE
REDESIGN
REGENERATE
#SB14sd