Your refrigerator is running
Are you checking the food, or your energy bill?
Carbon!
Wow - did I get your attention? Let me try again:
Carbon! Carbon! Carbon!
To paraphrase Homer Simpson, “The cause of, and solution to, all of life’s problems.”
Yes, whether you want to save the planet or work in sustainability, it’s about carbon. If you have a carbon reduction goal, it’s even better.
Unfortunately, many of us are obsessing over the wrong thing. Misplaced focus on carbon can lead to poor business decisions and harm innovation. What’s even more unfortunate is that, across companies (including those in the value chain), there isn’t just one thing we should universally focus on, and that’s the point.
Take this hypothetical fiction:
Today, I left my refrigerator doors open for twelve hours.
Yes, this is a significant waste of energy and money, but if you missed the more pressing concern about food waste, which is a material issue for humans, well, thank you for playing. You can pick up your consolation prize at the main desk.
For some, the cost involved may be a significant concern, but the issue of food waste is probably more pressing.
This is how materiality works. It varies from company to company. And it shows just how awkward a position we’ve put businesses and their value chains in.
This is also how we’ve distracted ourselves from the progress we each can make.
We’ve built a cottage industry around carbon with RFPs to match. Even now, with tools in place, the focus remains on more precise measurements, rather than material or meaningful action.
So, when you hear that companies are pulling back on their goals, if it wasn’t material in the first place, did it actually matter? For fossil fuel, construction, and agriculture, removing carbon goals is a significant concern because these are the industries that need to transition. For semiconductor manufacturing, food and beverage production, and hospitality, water is a more substantial concern.
And it isn’t just that we’re focused on the wrong things in the wrong industries, but that it could be hindering the business and innovation.
Imagine you work at a large company in your industry, and you’re trying to capitalize on innovation or business improvement through a partnership. You find a startup that could transform one area of your business. However, when you reach Procurement, you encounter a roadblock. It isn’t that the solution isn’t valuable, but every supplier must report emissions or have a reduction goal to be considered, regardless of whether those emissions are material or not.
When carbon requirements are applied uniformly without room for nuance or engagement, even well-meaning policies can slow innovation and make Procurement’s job harder, not easier. After all, why is the line on carbon emissions? Why not nature, stakeholder management, solvency, reliability, cybersecurity, responsible use of AI, board experience, or any number of potentially more material concerns?
I wrote about something similar a few weeks ago. AI is receiving a lot of attention for its carbon emissions, but if you halt business improvements due to carbon concerns without balancing them against material business improvements, are you running a well-managed business that even has the chance to be sustainable?
Again, if you wake up in the morning and find your refrigerator door open, is your first concern about the energy use, or are you worried about the food?
Initially, I was excited that AI was receiving the “is it sustainable” treatment, as I thought it showed a shift in the mindset of businesses. It did, but not in the way I had hoped.
The shift in attention here will happen with any new technology or innovation, and it has more to do with understanding how goals will be impacted, rather than the potential benefits.
In other words, every business decision in the future will have a “will this create a problem for us” bow wrapped around it.
If carbon is material to your business, great! Carbon accounting matters, and you should transition accordingly, operationally and within your value chain. If measuring carbon aligns with your purpose, super! Do it and reap whatever reputational benefits you can.
However, here’s the rub: what’s material for you may not be material for a value chain supplier, and without the ability to scale engagement with those suppliers, that policy risks slowing you down or distracting from what matters, especially if your policies don’t leave room for direct engagement or nuance.
As the tide of disclosure regulations recedes, Procurement teams are on the beach, asking suppliers to align with their goals, making sustainability everyone’s concern, regardless of materiality or their ability to drive impact.
Over-focusing on carbon in this way is akin to buying a new energy-efficient refrigerator in response to a minor issue, such as leaving the door open. If you ignore the spoiled food, you may end up solving the wrong problem entirely. When policy treats carbon as the problem by default, instead of asking what’s materially broken, it can distort your strategy and your value chain’s response to it.
I’m starting to become convinced that if sustainability were where it is today, twenty+ years ago, no one would be using emails or video conferencing. We’re so focused on measuring carbon that we risk rejecting progress simply because of emissions, regardless of whether the outcome is materially positive.
Material ESG issues, not carbon, should drive your strategy.
…and those issues might not even be environmentally related! 😱
Ask yourself which is more critical?
Professional services firms (consulting, law, etc.)
🔹 Material: Governance and ethics
🔸 Low priority: Emissions from business travelSemiconductors
🔹 Material: Labor rights and local community impact
🔸 Low priority: Production emissions (when not a primary source)Agriculture
🔹 Material: Climate adaptation and risk
🔸 Low priority: Emission reporting (without context)
Oooh, that last one is tough, isn’t it? Still, if you're asking a farmer to report their emissions to you and you’re not concerned about their ability to adapt to the changing environment, will they be able to deliver anything to you year after year?
Low-priority pursuits don’t drive strategy, and they won’t scratch that ‘do well by doing good’ itch either.
Ultimately, ESG was never about filling out spreadsheets or goals, and please don’t make cute LinkedIn posts that “ESG was reporting, sustainability matters.” Yes, all companies should strive for more sustainable operations, but no, that doesn’t mean adopting universal environmental goals.
Collect and analyze data that matters. Adopt goals that you can influence.
Every company will have unique and material issues across environmental, social, and governance areas. If you are only paying attention to one (Carbon!) at the expense of materiality, it is to the detriment of the business, and you have missed the point.
Do you want a sustainability goal or a strategy that drives progress?
Not every company can save the world. But every company can focus on what’s most material, and in doing so, show the world how to lead change as only they can.
If your refrigerator door is open, yes, carbon and energy matter. But don’t forget to check the food. In ESG, the biggest risks are often the ones quietly spoiling your progress.