Research & Test Labs
An Incubator and Accelerator for Piloting and Cross-Pollinating Transformative Practices and Models
r3.0 fulfills an R&D function for the reporting field as a lever for broader systems change. It catalyzes extensive collaborative research and innovation into the next generation of reporting and transformation. We focus on the triggers transforming economic and business ecosystems as an answer to the need for consolidation, convergence, innovation and acceleration in fragmented markets. Hence, r3.0 serves as a neutral, pre-competitive, and market-making platform that delivers research, recommendations and tools for the global common good. Building on our existing and new Blueprints, Transformation Journey Program (TJP), and Global Thresholds & Allocation Council (GTAC), Test Labs fulfill an incubation and cross-fertilization function. Test Labs will pick up emerging ideas and trends to vet and, if promising, nurture into new transformative practices and models. Outcomes of Test Labs will be integrated into the Transformation Journey Program, Global Thresholds & Allocations Council, and future (and updated older) Blueprints.
Areas for further development
r3.0 has identified a set of areas that warrant attention for development of Blueprint Recommendations to be integrated into the core strategies of its various constituencies:
- Digitization: Big Data, Artificial Intelligence / Machine Learning, Internet of Things, and Distributed Ledger Technology (Blockchain / Holochain) all carry significant implications for implementing (or obstructing) r3.0 Blueprint Recommendations.
- Leadership: Shifting the worldviews and mindsets of leaders sits atop Donella Meadows “Leverage Points”. What are the best methodologies for this as it is one of the biggest challenges for scalability and advocation as recommended by r3.0.
- Regeneration: While the regeneration “meme” is gaining traction, it risks the fate of the term “sustainability” in being diluted / co-opted, warranting development of a disciplined definition.
- The Promise of the Commons: The ‘tragedy of the commons’ is a long-known dilemma that economic theory has not solved, reducing current capitalism to a one-dimensional discipline. Further integration of the Commons is necessary in the journey towards Multi-capitalism.
- Risk Management: At the micro and meso scales, the scopes of Enterprise Risk and Portfolio Risk are being expanded to encompass ESG, but gaps remain to encompass Systemic Risk and Existential Risk on the macro scale, and Career Risk on the nano scale.
- Governance: Corporate Governance Codes mostly react to upcoming topics of sustainability. This has lead to an ESG Push, whereas in the view of r3.0 a ‘GSE Pull’ is necessary. This would better explore the full potential of governance.
- Education: In addition to shortcomings in managing economic and ecological systems, r3.0 identifies similar shortcomings in educational systems (dubbed the ‘Triple-E Failure’). Education focused on delivering System Value needs new life breathed into it.
- Fiduciary Duty: Profit maximization, short-termism, and shareholder primacy have hijacked most interpretations of fiduciary duty, requiring a fundamental reorientation of the term toward long-term, sustainable system value creation.
- Communication: r3.0’s theory of change, the language the Blueprints and the narrative for the transformation touches mental stereotypes and mindsets. There is a need to experiment how to best ‘tell the story’.
r3.0 is collaborating with the United Nations Research Institute for Social Development (UNRISD) on its four-year Sustainable Development Performance Indicators Project (2018-2022). Specifically, r3.0 is conducting research and writing reports proposing a Three Tiered Typology of Sustainable Development Performance Indicators. The UNRISD report builds on the foundation of the r3.0 Data Blueprint, which integrates seminal work by Dana Meadows as well as core concepts from r3.0 Advocation Partner Mark McElroy. One such key concept is the Sustainability Quotient, where Sustainability = Actual Impacts / Normative Impacts (S = A / N).
This formula forms the basis of the Three Tiered Typology:
Tier One: Incrementalist Numeration
Numerator indicators focus on actual impacts, including absolute indicators, as well as relative or intensity indicators that are non-normative, and therefore incrementalist by definition.
Tier Two: Contextualized Denomination
Denominator indicators contextualize actual impacts against normative impacts. Also known as “Context-Based” indicators, denominator indicators take into account sustainability thresholds in ecological, social, and economic systems, as well as allocations of those thresholds to organizations and other entities.
Tier Three: Activating Transformation
Transformative indicators add the element of implementation and policy to normative denominator indicators to instantiate change within complex adaptive systems.
UNRISD Sustainable Development Performance Indicators Project can you find here.
UNRISD convened a Conference in June 2019 in Geneva gathering diverse experts to explore the question encapsulated in the Conference Title: Measuring and Reporting Sustainability Performance: Are Corporations and SSE Organizations Meeting the SDG Challenge? The Program included a keynote by Global Reporting Initiative Co-Founder (and r3.0 Ambassador) Allen White that referenced the concepts covered in the r3.0 report (see the Conference Twitter feed at #Reporting4Sustainability for a detailed narrative of the Conference as it unfolded). r3.0 Senior Director Bill Baue presented on the Three-Tiered Typology — his deck included a long appendix that includes many of the issues covered in the first report, which is due out in Fall 2019. He is now writing a second report proposing specific Tier Two Indicators based on the Tier One Indicators introduced in a recent UNCTAD report.
Conference Twitter Feed: #Reporting4Sustainability
r3.0 is collaborating with the International Integrated Reporting Council (IIRC) on a White Paper on the shift from Monocapitalism to Multicapitalism: the existing economic regime focuses exclusively on financial capital, with emergent trends toward economies that integrate the multiple capitals — natural, social, human, manufactured, intellectual, and financial. Building on this concept of Multicapitalism first proposed by r3.0 Advocation Partner Mark McElroy (and fellow MultiCapital Scorecard author Martin Thomas) in 2014, r3.0 is spearheading the drafting of the White Paper that will integrate and further flesh out approaches for applying the “carrying capacities of the capitals” — or thresholds delineating the ongoing viability of ecological and social systems. The White Paper, which is due out by the end of 2019, will be vetted by project Advisors, including Eva Zabey (WBCSD); Fiona Reynolds (PRI); Veronica Poole (Deloitte); Jeremy Nichols (Social Value International); Mark Gough (Capitals Coalition); Sean Esbjorn-Hargens (MetaIntegral); and John Fullerton (Capital Institute).
The Equity Culture / Civic Fiduciary Test Lab
r3.0 is pleased to support the launch of the Equity Culture / Civic Fiduciary Test Lab as a platform for r3.0 Senior Research Fellow Marcy Murninghan to continue her ongoing action-research in this arena. To energize the formative stage of this project, this Test Lab is producing a feasibility study to secure funding to plant a prototype in Massachusetts and Michigan. With funding support from pioneering corporate governance / shareholder activism theorist and practitioner Robert A.G. Monks, Dr. Murninghan will write a white paper on the Equity Culture / Civic Fiduciary concept and strategic approach while continuing to carry out field building to pave the way for planting the Action Labs.
This balance of action and theory-building will yield not just important supportive alliances to launch the pilot labs and a white paper, but important insights that can be incorporated into r3.0’s Sustainable Finance Blueprint. Indeed, the vision, concept, and strategies embodied in the Equity Culture / Civic Fiduciary Action Lab encompass both theory and practice, and are highly compatible with the aspirations and ongoing work of r3.0.
- The Civic Fiduciary concept extends principles contained in moral and political philosophy, along with still-evolving public fiduciary theory and legal norms, to the real-world investment policies, practices, and impacts of affluent state-chartered nonprofit institutions located in two select U.S. locations: Lansing, Michigan, and Boston, Massachusetts. It challenges directly the narrow view of economic motivation, economics as a discipline, finance, and transnational capitalism that has emerged in the past six decades, compared to more expansive and humane definitions lasting through the millennia (Aristotle; Cicero; Veblen, 1923, 1997; Simon, Powers, and Gunnemann, 1972; Longstreth and Rosenbloom, 1973; Dahl, 1985; Sen, 1987; Vernon and Spar, 1989; Wuthnow, 1996; Sandel, 1998; Nye and Donahue, 2001; Sklair, 2001; Stiglitz, 2002; Skocpol, 2003; Pooley and Solovey, 2010; Shiller, 2012; Kay, 2015; Collier, 2018; and Norman, 2018). This narrow view exists alongside the explosive growth in nonprofit institutional investor assets under management, thus contradicting core values and mission.
- The Equity Culture concept extends principles contained in complex adaptive systems theory of human and ecologic well being (Meadows, 1999 and 2008; Olson, 1971; Ostrom, 1990; Shklar, 1991) that integrates multicapitals, while applying a context-based approach to identify and assess impact. It seeks to cultivate “civic financial literacy” — e.g., mapping, motivating, meaning-making, and monitoring multicapital “return on investment” — through inclusive citizen taxpayer and trustee participation.
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