In Tai Pan, James Clavell’s towering novel of colonial Asia, Dirk Struan sets a lookout with a telescope atop a high promontory overlooking the vast Hong Kong harbor. From this aerie, the scouts could see the mail ships heave over the horizon long before those on shore. A system of coded flags alerted spotters on the wharf who dispatched a fast cutter to intercept, and Dirk – who now had the latest news – was wheeling and trading while his competition was still asleep.
“Before the mail packet was at rest in harbor,” it reads, “their three hours of dealing had made them potentially forty thousand guineas richer.”
The value of advance notice, to handle risks and find rewards, hasn’t changed. The trick is to gain that advantage, but how? The answer, we believe, is Stakeholder Science™. It was designed by sustainability and materiality experts for exactly this purpose and is comprised of:
- 4D Materiality™
- E3 Evolution (E3E)
- 30 in ’30™ Research
- VIEWS™ – the Valutus Issues Early Warning System
Combined, they are sustainability’s equivalent of posting watchers on the peak to get the earliest and broadest possible view of what’s happening now, and what – for good or ill – is on the way.
Photo by Roland Steinmann
Stakeholder Science uses this proprietary set of interlocking predictive and strategic tools to provide a clear, running picture of extant and emerging perils and opportunities all along the risk horizon.
The first and best known of these is materiality. As we’ve written elsewhere, up to now materiality hasn’t fulfilled its promise. But Valutus has souped up, revamped, and expanded it, and our 4D Materiality™ now serves as the anchor of Stakeholder Science.
4D Materiality is significantly faster and more comprehensive than traditional materiality, as it:
- Draws assessments from a far broader swath of both internal and external stakeholders
- Uses a proprietary method for drilling into the data, including the ability to segment results by stakeholder tier, type, function, geography, expertise, and more
- Focuses on ratings of how stakeholders assess the business is doing against the full gamut of issues
- Renders dynamic, interactive outputs allowing clients to group, separate, evaluate, and focus the data any way desired
The 4D Materiality process gives enormously greater context to sustainability strategic planning and does so in as little as 8 weeks – not the standard 4-6- month odyssey.
But the real beauty of the Stakeholder Science approach is the other components that continually refresh the insights between full materiality assessments. Business must constantly adjust to match the speed of stakeholders, and the usual approach means companies are perpetually 12-24 months out of date. Driving by looking in the rear-view mirror just doesn’t work. Remembering how much has changed in the two years between the end of 2019 and 2021, it’s clear that using a two-year-old assessment is simply not workable.
Stakeholder Science marries timely updates each quarter with regular materiality refreshes. This allows organizations to:
- Keep abreast of shifting stakeholder expectations
- See what is coming before it arrives
- Know which gaps will likely be most visible, and most prone to being liabilities in the future
To do this we’ve created several additional sources of always-current information to add context and fill the gaps.
Photo by Brett Jordan
E3 Evolution: Exceptional => Established => Expected
E3 Evolution is our research into the increasing speed with which stakeholder expectations evolve and shift. Businesses that hit the scene as cutting-edge and are seen as exceptional. Over time, they become established, and in the past, remained established in perpetuity. Today, attitudes and expectations change at the speed of viral posts on Tik Tok, and established companies are being called out left and right for lagging behind what is now Expected. What was once “wow, hey, that’s cool” has become, “hey, if you guys don’t do it, you’re lagging behind… get with the program!” We suggest that too, and the ‘program’ is E3 Evolution.
So 4D Materiality has given deep periodic context for sustainability strategy, tapping into the expertise of hundreds of diverse stakeholders. E3 Evolution keeps track of stakeholder expectations, ensuring companies don’t get caught with their priorities around their ankles.
But there’s yet another critical piece of the puzzle: insight into the most significant forces, the megatrends, driving the world.
30 in ’30 Research: It’s Trending
Our 30 in ’30 Research monitors some of the largest and most influential organizations on Earth – producers, consulting practices, massive investment firms, even government and military agencies – to keep abreast of (and pass along to you) the top 30 trends they see flowing to 2030.
Our most recent survey found sustainability issues all over this list, with climate change as the top trend, urbanization, resources scarcity, mass migration in large measure to sea level rise and desertification close behind. As we noted at the time, “the very opportunities afforded by these trends when properly planned for, present a nearly identical set of risks when they are not.”
VIEWS™: Valutus Issues Early Warning System
VIEWS identifies topics that might not be on your radar now… but should be. For instance, just a few years ago plastic waste was rarely included in materiality analyses or ESG strategies. There was awareness of the issue – Valutus was helping a client toward a plastic neutral goal even then – but most considered it unimportant.
As an example, one firm noted a decline in online stories about plastic waste at the end of the summer of 2018 and asked, was interest in reducing plastic waste “just a silly season?” Now, of course, surveys often find plastic waste to be the #2 consumer concern after climate change.
The goal of VIEWS is to improve the ability to anticipate upcoming issues by enough lead time to dramatically slash the time, cost, and disruption of needed adjustments. Indeed, clients can save big by having just six months advance notice of major change. One Valutus client found that anticipating a new regulatory requirement by six additional months, as mentioned in the previous article, cut the cost of adapting their supply chain by 80%. Eighty percent! With results such as this, upcoming issues demand our early warning system.
ROI: Submerged Yet Substantial
Which brings us to ROI. We have – loudly and often – encouraged businesses to embrace the concept of Submerged Value, and Stakeholder Science is positively rife with value that is unseen at first blush, but which usually renders ROI far in excess of the cost of any project or initiative.
This is especially true for sustainability projects, which many executives and analysts continue to see as having no discernible ROI. The lookout ceaselessly scanning the horizon was a cost without apparent value – until the mail ship arrived. There is ROI aplenty from foreknowledge of risks; of opportunities; of the prevailing trends; and with the rich context 4D Materiality can offer.
Valutus has long championed the idea that any analysis – indeed any sustainability initiative – must be firmly underpinned by a return-on-investment framework and Stakeholder Science can unlock it.
Global corporations, whose inputs draw from everywhere and whose outputs impact everyone, have literally billions of stakeholders. Stakeholder science is designed to keep their fingers on their movements, and the forces pulling them in different directions – and to pick out the key patterns that matter most.
Photo by Monodon
Meanwhile, stakeholder risk is pervasive: more than 1,500 far-reaching climate-related lawsuits are sitting on dockets around the world, and yet another massive pension fund jettisoned their half-trillion-dollar fossil fuel holdings last month. And, if the last two years have taught us anything, it is that the pace of change and disruption is accelerating.
In such an environment, how do you know what really matters, and to which stakeholders? The true importance of an issue and how well you are performing against it? The impact your company can make in the world by tackling it?
Photo by Saffu
Being caught flat footed on these questions may prove existential. But with such complexity and the speed of modern entropy, how can you keep up?
Stakeholder Science has been designed to ensure you can.