Sustainability Rating Platforms. Oriane Wiser, Global Sustainable Enterprise System (GSES)

What frustrates me, and that's— I'm confronted to those behaviors and those comments almost on a weekly basis with when introducing or pitching the ESG rating platform, is how is that tool going to help me sell more products or going to help me make profit?

Okay, interesting.

And there won't be any products to sell if in 50 years there is no planet.

Hello and welcome to Rethink What Matters, the podcast dedicated to aligning the economy with the ecology and everyone for improved business performance, stronger families, and a greener, cooler planet. And today I'm joined by Orianne Weiser, Program Manager at the Global Sustainable Enterprise System in Rotterdam, the Netherlands. And we're going to be discussing sustainability rating platforms. So the GCESS system is a sustainability rating platform. So on this podcast, we're going to be learning about sustainability rating platforms. I'm really looking forward to this because it's something which I think is helping us to join up all the dots, which is very much what a waterloo is all about. So perhaps we could start off, Oriane, with you telling us a little bit about your role there and a bit more about Global Sustainable Enterprise System, GCESS.

Yes, of course. So I'll start by introducing GSES. So GSES was founded by Kelly Reichholt in 2019. It is still a startup, but scaling up. We are young and a driven team. And GSES is a software as a service. So we are basically the digital bridge between companies, suppliers, and product manufacturers with third-party auditors to verify their sustainability performance. In short, we often call GSES the one-stop sustainability management platform because you can manage all of your company's or organization's sustainability performance through the platform, including its supply chain and its products. And by including the supply chain, we ensure third-party verification on Scope 3 emissions. Amongst many other things. My role as program manager, I joined the company in 2020, so still when it was, uh, it was very young. Um, we are now almost 3 years down the line for me, and we have launched many of our now core modules such as the supply chain dashboard and the product assessment, which I can talk a bit more later. But my role as program manager is mostly to strategize our global expansion. We are a tool that is sector agnostic and also territory agnostic. Our wide network of third-party auditors cover more than 110 countries, which is also what you need when you want to ensure supply chain assessment. Because supply chains almost, almost always include many other constituencies, many countries, many different companies and organizations. So that's also why we don't only serve as private organizations, but also public governmental organizations.

Perhaps you could tell us a little bit more then about sustainability rating platforms, you know, what exactly they are, how they work. A little bit more of the detail if you can, please, Oriane.

Yes, of course. So a sustainability management platform will get you— most of our clients come because they need to be regulations ready. So in Europe, for example, we have the CSRD coming up, which is the Corporate Sustainability Reporting Directive launched by the European Commission that is forcing companies to actually comply with sustainability reporting and making sure that their sustainability performance are not greenwashing but are legitimate. So in that sense, our clientele comes to us and they first start with a zero-point measurement. A zero-point measurement is to understand what is your current state of your sustainability sustainability performance. To do a zero-point measurement, all you would need to do is insert your certification. So companies have often a lot of certifications such as ISO standards, GRI, which are legitimizing and certifying that their organization is environmentally friendly or that their IT services is secured. So there's certifications in all realms, but we of course focus on sustainability certifications, and we are able to give you a legitimate ESG score. Now, an ESG score— environmental, social, and governance score— is to give you a number to kind of rate you on your sustainability performance. It's the most common used grading system in the universal school of sustainability, so to speak, and we facilitate for our companies, the communication across all their stakeholders on their own sustainability performance. So typically, an ESG rating or sustainability rating platform will get the data from its clients so that our clients insert the data that will then be third-party verified by the auditors. And then GSCS generates Based on the audit reports we get back, we generate an ESG score.

Okay, okay. And that ESG score is recognized, it's a globally recognized score, is it?

Exactly, it's globally recognized. It's the most common used rate to measure sustainability at not necessarily only at the corporate level, but at any organizational level. Right. And also it's good to note that there are internationally recognized frameworks to align with sustainability guidelines that the UN or EU, big, big international organizations such as them, like to push for. So ISO is one of them, but the EU directives, of course, GRI, and the SDGs, the Sustainable Development Goals. And these are all aligned on GSES. So you can make sure that you are your sustainability performance reflects one that is aligned with the internationally recognized standards.

So I think I came to you originally through the global, um, through the Sustainable Development Goals, and I was interested that here is a system that's helping a company to implement the 17 SDGs, or to measure them at least. Yes, you can then— so you can then import data associated with each of the 17 SDGs. And would that be correct?

That's very correct, Paul. I'll tell a little more about this. So, um, so I've talked about GICS, and now we have the link with an SDG assessment measurement dashboard based on project level, and that's under the branch called Data for Good that is also linked through our platform. And this incentivizes our users to actually report on their impact and how they're helping SDGs or how they're helping achieving certain targets of the 2030 Agenda set by the UN. And how we do it is we actually measure on project level. So very different than the organization supply chain assessments, a project-based approach. So we will ask our clients to give us their KPIs and insert their targets. So let's say if they want to run a project that's going to support SDG 7, that's clean energy and reducing CO2 emissions, they can plot their own project and explain how they are achieving a certain target of SDG 7, or not necessarily achieving it, but rather rather contributing to its achievement. And then just like on the GSES platform, we will have that project mapping and results based on their progress and their deadlines once their project is achieved, verified by third-party auditors. And that way they can communicate with verified information on their contribution to the SDGs on their sustainability reporting, for example.

Okay, so are the UN involved in assessing the level to which a company is achieving the SDGs?

The UN's involvement towards the SDGs is only to read reports that come in from all the state members of the UN. So basically the way we work, especially in the Netherlands, because we are Dutch founded and Data for Good, which takes care of the project assessment, for SDGs is a recent, is a recent project for us. And we work with, with the SDG Netherlands Foundation, which is an organization dedicated to report on the Netherlands' achievement on the SDGs and progress towards the 2030 Agenda. So we facilitate the measurement of their claims through Data for Good, which then enables the Dutch government to report with verified information to the UN.

Right. Okay. How small clients do you work with? Because, you know, we want, we want private companies to be doing this as much as big public corporations and big corporations. So how small a client can, can get involved with you?

On Data for Good, there's an individual membership that's free. So even just a single human being could do it. On GSES, we have assessments made for big corporates, like you mentioned, and for corporates in general. But we also have SMEs, small and medium enterprises assessment. And that allows even a startup to enroll and do its zero point measurement and have a sustainability assessment done. Because eventually, especially specifically in Europe, CSRD will concern everyone at some point. So we need to get also the smaller companies ready.

For sure. That's very much, I think, a focus of Waterloo, to be honest. You mentioned zero point, is that same as a carbon footprint?

Zero point measurement is just to see where your status quo is at. So it's an assessment of the status quo in terms of your sustainability measurement. We will analyze the CO2 footprint. We have 6 pillars basically for an organizational assessment because we strongly believe in the holistic approach of sustainability, right? And this is very important for any— anyone out there thinking of sustainability. Sustainability is not only your carbon footprint. Climate change is driven largely by GHG emissions, sure, But it's not only by CO2 emissions, for starters, and it's not only driven by GHG emissions. It's also driven by biodiversity loss, and biodiversity is an assessment in our standards, actually. But also, to have a sustainable world that can last in the long run and a sustainable society, so to speak, you need to have health and well-being included. You need to have CSR, corporate social responsibility, employability, making sure that the workforce is well treated, and making sure that no one is left behind, but also making sure that your supply chain is sustainable. So one of the assessments is sustainable procurement. You also have circular economy because— and that's driven by the cradle to cradle on the product level, but also the approach of the doughnut economy. So actually thinking of an economy that stays within the planetary boundaries without jeopardizing future generations' resources and needs. So we are not exclusively a carbon accounting platform. We do have a carbon dashboard that allows you to verify, third-party verify again, your carbon footprints. And then we are partners with compensation programs, so carbon compensation programs that will help compensate for your emissions. And we are working on a project with a partner called ABB, the large corporation, to actually launch a verified scheme to legitimize the carbon credit and carbon accounting fields.

The secret to all of this must be transparency, I think. So to what extent, if you like, is transparency supported, you know, by the GCESS system?

Very good question and very good assumption. Transparency is key in the realm of sustainability to fight greenwashing, notably, and to make real claims. Our transparency layer comes from our third-party auditors network most, most predominantly. But we also use transparent methodologies that is shared with everyone— our clients, members, partners, and even the audiences that follow us on social media will know, will have access to our methodologies. We're very transparent with the way we work, and you need to be transparent. We, we often, outside of outside of our work as GSEs members, we, we preach transparency, because if we are not transparent, then we don't have a real sustainability performance assessment. And then we don't know what is the state of the world.

Right.

And then that means we don't know in what state we're leaving it for future generations.

Okay. I think the danger with a system like this potentially is it puts the focus on measurement. An analysis rather than action. So to what extent do you drive action with this?

That's a very good question. I'm happy you're asking that. It's true that we often have the motto, measuring is knowing. Once you measure, you know how you can go further, what you can achieve, you know where you stand. But it might not, like you insinuated, it might not push you to actually do more. It might not push you for action. And this is why Data for Good was founded. Because Data for Good is a project-based approach assessment. So you don't start by measuring, actually. You start by lining out your project and the actions you are going to take to contribute to the Sustainable Development Goals. And then at the end, if you want to get your project verified to legitimate— to legitimate it towards your stakeholders or even shareholders, then you can get it verified and measured by third-party assessments. But it's just to drive action and to motivate people to all join together. We also have Alliance Dashboards where you can collaborate on projects. So you're not just on your own, just not your own organization or your own self as an individual. You can join collaboration because Working together, you'll go further, you'll achieve more, more impact.

Okay, okay. You know, oftentimes companies are already very busy. Sometimes it's about survival, and this just becomes one, just another thing for them to do. So I can imagine it might be difficult to get traction with it. How do you get people involved with this and keep it going, keep them motivated?

It's, it's a very good question, and it's It's a hard thing to tackle, whether it's for GSES or for Data for Good. Taking action is something that we will collaborate with other companies who are such as NGOs whose, or campaign companies whose core work is to drive impact and to motivate people to make impact. But we work a lot with governmental institutions that themselves, especially in the Netherlands, you have a lot of public-private partnership. So for example, you have municipalities that own shares in private companies. And so through the municipalities and through ministries, we actually motivate private companies to engage because then they can showcase to their shareholders who are often governmental bodies that they are helping them to contribute to the SDG progress of the Netherlands or of any country. So in that sense, we motivate them. Then I'm going to be honest with you, Paul, one of the big motivations is regulations. So the more companies are aware of, of all the financial consequences that they can bear if they don't take action, This is the biggest motivation right now.

Okay. Okay. That's good. That's interesting. That's a very interesting insight. So that's where we are today. It's more, it's more push than pull.

It's definitely more push than pull. But we're entering a new era with the regulations coming into play. And I think what's going to follow up is companies or any organizations that take action on their own. Hands and, and take the initiatives in their own hands, so to speak, because the younger generations were raised with the conscience of sustainability and protecting the natural resources so that future generations have access to them. So we are going towards progress and we are going towards more action and more creating impact.

Are there any case studies or stories you can share with us of people using the GCESS system?

Yes, so I'll talk about the Johan Cruyff Arena. The Johan Cruyff Arena is the biggest stadium in the Netherlands. It's in Amsterdam, and it's— if there are soccer, soccer lovers amongst your audience, it's the home of Ajax team. And they have a strong purpose to drive innovation, and they set a 2030 target to be, to be neutral, carbon neutral, and even net positive. If, if they, they achieve carbon neutrality, then they want to be net positive. So by 2030, their target is net positivity for the arena. They've been using the GSES system to set— to not only to see their zero-point measurement where they're at, how they can contribute better, what they can put in place to achieve a better sustainable performance, but they wanted to take it further. Their Chief Innovation Officer, Henk van Raan, is driven by purpose for this, and that's how he was interested in using data for good and using the SDG dashboard to showcase the contribution of the Arena to the 2030 Agenda. And so in that sense, the Arena is one of our first front runners using both GSES and Data for Good. And on Data for Good, they are actually proving and measuring through projects by installing food transformers that creates biomass energy from food waste, but also projects on green energy. So they've installed more than 4,000 solar panels on the roof of the stadium, and they can create a lot of energy, and therefore they can contribute to the municipality of Amsterdam's own targets. Because the municipality of Amsterdam owns 49% of the shares of the arena, um, and therefore they have high, uh, stakes in, make, in the arena sustainability. And they, uh, and they can help each other achieving their sustainability targets. And for example, so you have the Arena who has their own targets, but you have the municipality of Amsterdam who wants to be 50% to reduce its CO2 emissions of the city by 2030 of 50%.

Right.

To align with the Paris agreements of coming back to the emissions set in 1990. And through through the project mapping and verifying their achievements on their actions through Data for Good, the arena is legitimizing its purpose and its effort to contribute to the targets of the municipality.

Okay, thank you. With ESG, we've got environmental, social, and governance. And it seems to me that sometimes we approach that the wrong way around, you know, we go environmental environmental first, then social, then governance. Yes, it should really be governance first. And what's your view on that?

It's a very good question. That's why we focus on the holistic approach of sustainability. So there is no strong, stronger emphasis on environmental or social or governance. Environmental is the front runner in ESG for many people and for many organizations. Why? Because it's easier to measure, it's easier to assess, right? But we are seeing amongst our, our clients and amongst our, our just our network and in the Netherlands and all across Europe, a strong emphasis on good governance, because good governance is seen as the, the driver for change. With bad governance, you will not achieve much, you will not achieve your actions, and you will not achieve impact. You need good governance before you implement environmental strategies. And in that sense, I do— your question is a very good one and very important for people to really not disregard the S and the G.

What are the frustrations you find there are around sustainability rating platforms? Have you got any stories about where it's just not worked or it's not working?

Yeah, very good question. One of my main frustrations And I think it comes from a personal trait as well, a personal background. I have a master in climate change and international development. So I am not only preaching because I work for a sustainability management platform. What frustrates me, and that's— I'm confronted to those behaviors and those comments almost on a weekly basis. With when introducing or pitching the ESG rating platform is, how is that tool going to help me sell more products or going to help me make profit?

Okay, interesting.

And it's a legitimate question when you're head of a portfolio or head of a product or head of sales. It's a legitimate question. It's your job to make profit, and I understand that. And and respect that, there won't be any products to sell if in 50 years there is no planet.

Right.

So it's the, the biggest struggle is to actually switch the minds versus short-term, but towards long-term.

And Warderoo is very much focused on regeneration as opposed to sustainability.

Yeah, I also prefer regenerative to sustainable. Although sustainability is most commonly known than regenerative, so that's why in the semantic we do use sustainability more than regeneration. Although from an academic perspective and an expert perspective, regenerative has it all in the name. You need to focus on it not being a one-time use or not being a short-term product or service. You need to think about regenerating it and making sure that its lifespan is as long as it can. So the approach of reusing versus recycling is something that is very leveraged in the regeneration approach. In GICS, on our product assessment, we do actually follow the methodology of regenerative approach. So in that sense, we, we are including the regenerative approach because it actually— the sustainability falls under the regenerative approach. What I like about regenerative is that it's the umbrella above that includes the SDGs, the planetary boundaries, and sustainability ESG assessment. You can't— if you want to truly be sustainable, then you need to think regeneration-wise.

I think so, because sustainable almost by definition equals failure, because we have something at the moment we don't want to sustain. You know, it's all— it's broken. We don't want to sustain something that's broken. We need to improve what we have and rebuild what we've broken and build capacity for the future, because there's still going to be growth because there's going to be 8 billion people or 10 billion, whatever it is, who are all going to want to get wealthier. So I think I read that the global economy, the output of the economy, could double in 30 or 40 years. You know, what it took to do, take 240 years, we're going to do in the next 30 or 40. So yeah, this is an exponentially compounding problem which if we don't regenerate We just won't, we just won't make it, frankly.

Can I just comment on, on sustainability? Yeah, again, because I did a master's in climate change. But the problem with the word sustainability is that the word in itself actually resonates with what you just said. It makes you think of what you just said. But the definition of sustainability in academia and in that's used for the methodologies and that's the legitimate sustainability definition is to actually make sure that the needs of current generations are— and the uses of natural resources of current generations are not jeopardizing future generations. And that we are actually including in our current usage, including for the future generations. So in that sense, sustainability and regeneration are very close. But of course, greenwashing and, and just, I mean, mostly driven by fossil fuel companies and by big profit, for-profit companies have twisted the word sustainability around, the concept of it. And that's, that's the struggle also of being in the sustainability world as a company. It's always to educate and to make sure that we are not getting the wrong point across.

So if it's driven mainly by compliance, does that mean that— I think compliance only really applies in the UK at least for companies that are employing 250 people or more. So companies employing less than 250 people, they don't have this compliance issue?

No, not now. Not for now. It's going to be— CSRD is starting in waves. So it's going to be a wave process. So the first batch will be the big fish in the EU and the big fish in the EU market.

Right.

So definitely companies that have more than 250 employees, but As the waves, as the years goes on, CSRD wants to include everyone.

And if you're a small company employing, say, 200 people, but your customer has got a few thousand, you probably yourself need to be able to show your carbon footprints or your sustainability credentials and ratings to that larger organization because, because they're going to demand it for their own, for their own certification.

Exactly. And that's why we work a lot with companies who want to assess all their suppliers, to assess all their supply chain. And when you work with a big corporation, the way we do it is actually facilitate sustainability assessment for their smaller suppliers or for their smaller— for the smaller suppliers. We obviously give lower fees for rating because when you manage, I mean, for example, for some of our clients, we are going to assess or we're assessing more than thousands of suppliers. And some are even very small companies, some are less than 10 people. So for them, they have a different requirement and a different price. Price. And that's driven by the corporate ambitions to show their sustainability performance at the supply chain level. So you could, you can also see that sustainability-focused people often find solutions to include, to be as inclusive as possible because they know that they can't do it alone.

Right.

So they're going to have to help those that can't afford it.

And just give us your impression then of how much you think this is changing behaviors.

Actually, there are many reasons why they're changing behaviors. It's a confrontation. It's like looking at yourself in a mirror. It's, it's very confrontational when you realize how bad your KPIs are based on verified data that's been third-party verified and you have legitimate sustainability performance that shows you that you are— your governance is actually not good, that your social KPIs and targets are not good, that your score, your verified score, is below 10%, that drives change, especially for competitive minds and for the management level. They're realizing the impact of that sustainability focus needs to be really sound. It needs to englobe everything, and you can't just grade well in CO2 emissions. You also need to make sure that your, your staff and your workforce is well treated because of compliance coming in and of those regulations. So it's changing behavior in that sense, but also it's changing behavior on the board level. Because now in, in their quarterly, the quarterly meetings with the investors or their quarterly meetings with the admin board, they share their ESG rating, they share their sustainability performance, and they show why they need to put budget on this to achieve better rating, to then be the product that people will use, because it's the product that's going to last the most because it is encompassing the sustainability approach and it's encompassing the survival of humanity. And those often— I mean, sustainability just challenges intergenerational debates as well because we have generations that were actually told to consume as much as they could to help the economy. Economy.

No, that's very true.

And it's very hard to then tell them, well, now— well, no, you buy secondhand everything, uh, you don't help the economy. And it's in their heads and in their minds. And if you look at just an economical— an economic standing point, you're like, this is never going to work. We're not going to generate money. Sure, we might save the planet, but we're not going to be able to feed ourselves because we won't have money for it. So that's also, it's also part of the challenge. But having teams that have different age groups in them challenges dialogues and help a common understanding of the importance of this and how it can work.

Thank you very much for your time on this podcast and helping us to understand how sustainability rating platforms work. And the value that they bring and how your G-SES system works as well. Thanks very much for your time on this podcast.

Thank you very much, Paul.