Perspectives · ESG

Balancing Value: From Friedman's Metrics to Purpose-Driven Impact

I am often asked about the most significant challenge GPM faces when explaining the value of sustainable project management. This question frequently comes from CFOs who have yet to embrace the benefits of sustainable practices beyond mere compliance with regulatory or stakeholder demands. In this post, I aim at a favorite antagonist from a bygone era, Milton Friedman.

Who was Milton Friedman?

Milton Friedman (1912-2006) was an economist and Nobel laureate who was a leading proponent of free-market capitalism. He strongly advocated for minimal government intervention in the economy, positing that a corporation's primary responsibility is to its shareholders, a principle famously outlined in his doctrine of shareholder primacy. This perspective, which prioritized profit maximization and efficiency, significantly influenced global economic policies and business practices for decades. Side Note: These issues are some of the root causes of why the SDGs were developed and also why they are struggling to be achieved as corporations need to shift their thinking. At present, we are on track to achieve only 15% of the SDGs by 2030.  

Milton Friedman's Mindset: Quantifiable Value through Shareholder Returns

Friedman's doctrine, based on classical economics, argues that a business's primary responsibility is to maximize shareholder value. This viewpoint emphasizes efficiency, profitability, and market dominance. For example, a company like Phillip Morris, which for decades focused on maximizing profits and shareholder returns, prioritized tobacco sales without any regard for the social impact. Success here is measured by tangible metrics such as stock prices, quarterly earnings, and return on investment. While this approach has driven significant economic growth, it often overlooks broader social and environmental consequences.

For-Purpose Mindset: A Broader Spectrum of Value

In contrast, 'for purpose' organizations adopt a more holistic view of value. While valuing financial health, these entities prioritize their social and environmental impact. Patagonia, an outdoor clothing company, exemplifies this by using sustainable materials and donating some of its profits to environmental causes. Their success is not just measured in dollars and cents but in the positive changes they effect, such as improving social welfare, reducing environmental footprints, and engaging communities. This approach recognizes that long-term sustainability and profitability are intertwined with the well-being of the community and the planet.

The Intersection and the Dichotomy

The critical question arises: Can these two mindsets coexist, or are they fundamentally at odds? Some argue that Friedman's profit-focused approach, as seen in many traditional manufacturing industries, inevitably leads to short-termism and neglect of broader societal needs. Conversely, 'for purpose' organizations might risk financial viability for altruistic goals, potentially leading to inefficiency and eventual failure.

How do we explain quantifiable value from a sustainability context?

Quantifiable value in a sustainability context refers to the measurable benefits that sustainable practices bring to an organization, society, and the environment. Using the GPM P5 Standard for Sustainability in Project Management, quantifiable value can be derived from integrating sustainability into project management.

Here are six examples from the P5 Standard:

1. Economic Value (Prosperity)

The P5 Standard emphasizes the importance of economic prosperity, which includes direct financial benefits that can be quantified. For instance, sustainability initiatives often lead to cost savings through increased efficiency and reduced resource consumption. Metrics such as Return on Investment (ROI), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR) can be used to quantify these financial benefits.

2. Environmental Value (Planet)

Environmental value is quantified by measuring the positive impacts of sustainability on the planet. This includes reductions in greenhouse gas emissions, waste, and water usage. Metrics such as carbon footprint, waste diversion rates, and water efficiency can be used to quantify these environmental benefits. The P5 Standard encourages projects to consider their environmental impacts and align with the UN Sustainable Development Goals (SDGs), which provide a framework for measuring progress towards environmental sustainability.

3. Social Value (People)

Social value refers to the benefits that sustainable practices bring to people, both within the organization and in the broader community. This can include improved labor practices, community engagement, and contributions to public health and safety. Quantifiable metrics here might include the number of jobs created, training hours provided, and improvements in employee satisfaction and safety. The P5 Standard includes elements such as labor practices and decent work, society and customers, and human rights, which guide project managers in creating social value.

4. Product Value

Sustainable products often provide quantifiable value through their entire lifecycle, from design to disposal. The P5 Standard encourages the consideration of product lifespan and servicing, which can lead to quantifiable benefits such as longer product life, reduced maintenance costs, and higher resale value.

5. Process Value

Sustainable processes are those that are efficient, effective, and fair. Quantifiable value from processes can be measured in terms of increased productivity, improved quality, and fair trade practices. Metrics might include time savings, error rate reductions, and compliance with fair labor standards.

6. Reporting and Disclosure

The P5 Standard also discusses the use of sustainability reporting as a means to communicate quantifiable value to stakeholders. By conducting a P5 Impact Analysis and including the outcomes in a Sustainability Management Plan, organizations can disclose their sustainability performance, which can lead to enhanced reputation, customer loyalty, and potentially, investment.

Striking a Balance for Future Sustainability

The future of business and societal value might lie in finding a balance between these two perspectives. Integrating the efficiency and market acumen of Friedman's approach, as demonstrated by tech giants like Apple, with the ethical and long-term focus of 'for purpose' organizations, such as Ben & Jerry's commitment to social and environmental responsibility, could lead to a more sustainable and inclusive economic model. This balance could be the key to addressing our time's complex challenges, aligning economic prosperity with societal well-being. Get the P5 Standard for free here!

Perspectives · Perspectives

New Year, New Aspirations: Embracing Bold Changes for a Sustainable Future

With the new year here, it's time for businesses to step out of their comfort zones and embrace bold, even audacious, goals. The future demands leaders who are willing to reimagine not only what they do, but also how they do it.

Setting Massive Goals

The first step is setting goals that may seem beyond reach at the present moment. This isn't about playing it safe; it's about envisioning a future that challenges current capabilities and then striving to meet it. Instead of asking, "What's next?", companies should ask themselves, "What if?". Ambitious goal-setting can be exemplified by SpaceX's mission to colonize Mars, which once seemed like a far-fetched dream but is now a significant goal driving technological advancements. Similarly, Tesla's aim to accelerate the world's transition to sustainable energy challenges the automotive industry. Businesses can draw inspiration from such examples to set their massive goals. For instance, a retail giant could aim to become entirely plastic-free in five years, necessitating innovation in packaging and supply chain management.

Aligning Business with Sustainability

Business models need a fundamental shift towards sustainability. This means embracing a circular economy, where waste is minimized, and products are designed for extended lifecycles. Companies must look beyond profit and consider their impact on the planet and society. IKEA’s transformation towards sustainability is an apt example. They aim to become a circular business by 2030, focusing on renewable materials and extending the life of their products. Another example is Patagonia, which not only uses sustainable materials but also encourages customers to repair and reuse their products. Companies can follow these models by rethinking product design for longevity and investing in materials that reduce environmental impact.

Decarbonization: A Core Strategy

Decarbonization should no longer be treated as a side project but rather as a central element of business strategy and operations. This involves reducing carbon footprints, investing in renewable energy, and innovating for lower carbon emissions in every aspect of the business. In the energy sector, an inspiring example is Ørsted, a Danish energy company that transformed from being one of the most coal-intensive energy companies in Europe to a global leader in offshore wind power. This shift highlights a profound change in strategy, directly impacting the reduction of carbon emissions. Companies can emulate this by transitioning from traditional energy sources to renewable ones, like wind or solar power, and by investing in innovative energy storage solutions to address intermittency issues. Another groundbreaking development is the advancement in fusion energy research, led by companies like Commonwealth Fusion Systems. Though still in the experimental stage, fusion energy promises a nearly limitless and clean energy source. This forward-thinking approach can inspire businesses to invest in cutting-edge research and development, pursuing long-term solutions that could revolutionize energy production and consumption globally, significantly contributing to decarbonization efforts.

Moving Beyond Mere 'Action'

It's no longer enough for companies to simply 'act'. This term can be interpreted in minimal terms. The focus should shift to realigning products, services, supply chains, and operating models to address the urgent issues of climate change, biodiversity loss, and social equity. An innovative example in this context is the urban farming industry, like AeroFarms, which uses vertical farming and aeroponics, significantly reducing water usage and allowing for local, sustainable produce in urban areas. This approach challenges traditional agricultural practices and contributes to solving issues like land use and water scarcity. Companies can seek inspiration from such models by investing in technologies that radically change their environmental footprint, such as adopting sustainable manufacturing practices or creating products that encourage eco-friendly consumer behavior. Another example is the emergence of car-sharing platforms like Zipcar, which not only reduce the number of vehicles on the road but also promote a shift in consumer behavior towards shared resources, directly impacting urban congestion and emissions.

Leadership Companies as Role Models

In the business world, there are already leaders who are setting an example by integrating these principles into their operations. These companies aren't just talking about change; they are living it, showing that it's possible to be both successful and sustainable. Microsoft serves as a role model with its initiative to be carbon negative by 2030 and to remove all the carbon it has ever emitted by 2050. This bold move sets a high standard for other tech companies. Another example is Adidas, which has committed to increasing the use of recycled materials in its products. These companies show that integrating sustainability into business practices is not only possible but also beneficial for long-term success. Businesses can look to these leaders for inspiration, understanding that sustainable practices can coexist with profitability and growth.

Important!!

As we enter the new year, let's encourage and support businesses that are willing to take these bold steps. It's not just about the survival of individual companies; it's about the well-being of our planet and future generations. Let's make this new year a turning point towards a more sustainable and equitable world. If you need a boost, GPM is here to support! Our Competence Standard for Sustainability Leaders is a great (free) resource to help get you started!

Perspectives · Guest Post

Overcoming Obstacles in Renewable Energy Projects: A Project Manager's Perspective with Agrivoltaic

Guest post by Tom Capillon, MEng, Guilhem Perez, MEng, Valérie M. Saintot, PhD In the 21st century, we face interconnected global challenges such as population growth, urbanization, resource depletion, and climate change, urgently calling for sustainable energy solutions. Innovation is key in navigating these complexities, yet opinions vary on the right approach. Among the areas requiring reinvention, the energy sector plays a central role. Traditional energy methods pose significant environmental threats, jeopardizing future generations’ quality of life. Searching and even better building innovative solutions is imperative. The content of this blog answers the following questions from a project manager standpoint:

• What is agrivoltaics?
• How do stakeholder needs align with Maslow’s hierarchy?
• How to argue with each type of stakeholder to promote agrivoltaics?

The elements of answer to the above questions come from the thesis the first two authors wrote in view of obtaining a Master in Program and Project Management from SKEMA Business School.

What is agrivoltaics?

Agrivoltaics is an approach which combines agriculture and solar energy production. The literature acknowledges that it is a promising solution. It enables the simultaneous use of agricultural land to produce clean energy. It reduces surface requirements for solar panels while ensuring agricultural production and offers protection against climatic hazards with the shade generated by the panels. However, agrivoltaics isn't without challenges, including land management, societal acceptance, and installation costs. Being open about benefits and disadvantages is important for project managers. Project managers should not blindly promote their project losing sight on the possible less positive effects of their projects. Figure 1 below summarizes our key findings, offering insights from our interviews: Project managers in photovoltaic projects, including solar shading structures, face the challenge of navigating a field rich in diverse configurations worldwide. Given the novelty of this field, there's a scarcity of management literature, prompting project managers to proactively seek knowledge through peer exchanges. It takes project managers to actively seek and exchange with relevant counterparts to build their acumen. Project viability hinges on factors like prioritizing agricultural aspects, selecting declining agricultural areas, engaging entrepreneurial farmers, land access, and managing 10 to 15 hectares. Additionally, project managers must raise awareness among key stakeholders, including politicians and farmers. Our research underscores the importance of a detailed analysis of stakeholder needs for effective project management.

How do the needs of stakeholders align with Maslow’s pyramid of needs?

As part of our Master's in Project Management at SKEMA Business School, Paris, we undertook a qualitative study in agrivoltaics. We interviewed 50 key stakeholders. This blog post gives the gist of our findings with the intention to possibly inspire others to use some of the contributions we proposed in our thesis. In essence, we complemented project management tools with general management theory around stakeholders’ needs. We used the taxonomy of needs mapped in the Maslow pyramid. Using Maslow's hierarchy, we structured a detailed analysis of the resistance to agrivoltaics, aiming to humanize the technological conversation and emphasize the impact on people. The idea was to also bring the topic closer to people and not only promote the technology but also the positive impact of the technology on people fundamental needs. In this logic, agrivoltaics can meet physiological needs at the base of the pyramid by ensuring a reliable energy supply. It also helps to secure the resilience of food systems. People involved in these projects can promote their direct contribution to sustainability and grow a sense of personal fulfillment and self-actualization as people contribute to the energy transition. This novel approach, scarcely seen in existing literature, could facilitate more productive discussions, making complex energy transition topics more relatable. The below Figure 2 summarizes the way we aligned Maslow pyramid and the way stakeholders in the agrivoltaic contribute to meet these needs.   After aligning stakeholder needs with Maslow's hierarchy, we examined the challenges and opportunities in developing agrivoltaic projects. Our extensive vision encompassed the needs of both industrial and agricultural sectors, ensuring compatibility across all stakeholder interests.

How to argue with each type of stakeholder to promote agrivoltaics?

Our multidisciplinary method integrated technical, economic, environmental, social, and regulatory aspects to craft recommendations for sustainable, innovative projects. It includes equally what hinders and what motivates the players involved.

• For farmers: it offers yield optimization and income diversification, but concerns remain about product quality and animal welfare.
• For energy providers and industrialists, agrivoltaics diversifies energy sources, contributing to the energy transition. Long-term economic viability needs to be demonstrated, and collaboration with farmers and regulators is essential.
• For politicians, government commitments to renewables open new opportunities.
• From society's point of view, agrivoltaics represents a step towards a sustainable and resilient future, requiring awareness of environmental benefits and resolution of aesthetic and cultural issues. Harmony between agrivoltaic farms and traditional agricultural land is essential for social acceptance.

Figure 3 summarizes each stakeholder group's perspective, outlining strategies for increasing acceptance across these populations.   Agrivoltaics is an innovative solution for meeting energy needs while preserving agriculture and the environment. Convincing stakeholders requires a holistic approach, focusing on communication, education, planning, and regulation. Its widespread adoption could contribute to the transition to a sustainable energy future, preserving agricultural resources and the environment. Project managers need to expand the understanding of their mission beyond the strict scope of their role. Without becoming an expert, project managers increase the chances of success of their project if they engage more deeply. In this research, what was key was to include the psychology of the stakeholders so many usual project management aspects could be secured and run effectively and efficiently.

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About the authors

Guilhem Perez, MEng, MS, is consultant at Sia Partners (Paris). Guilhem recently graduated from ESIEE engineering school, specializing in industrial engineering, and went on to complete a Masters in project and program management at SKEMA Business School, working on a training course in the energy and innovation sector. He is passionate about industry, retail, and energy. Tom Capillon, MEng, MS is manager in the photovoltaic and storage BU at Bouygues Énergies et Services. Tom recently graduated from ESIGELEC engineering school (Paris), specialising in Energy and Sustainable Development. He did a Masters in Project and Programme Management at SKEMA Business School. He is passionate about all aspects of renewable energy. Valérie M. Saintot, LL.M., PhD is adjunct professor at SKEMA Business School (Paris & Lille), doctorate supervisor at the university of Gloucestershire, certified coach, and keynote speaker. Valérie teaches leadership and organizational performance in project management. She is passionate about AI and sustainability. She is an educational ambassador for Green Project Management.

Perspectives · Perspectives

A Response to the Barrage of Frustration Aimed at COP28

I just read an interesting article by the Guardian's author George Monbiot titled: "Cop28 is a farce rigged to fail, but there are other ways we can try to save the planet."

In his piece, George Monbiot critiques the 28th UN Climate Change Conference (COP28), suggesting that the structure of such summits is inherently flawed.  To this point, I agree.  I stopped attending the COP when it became a global forum for virtue signaling. Last week I was at a conference in Paris and more than one person asked me "aren't you going to COP?"  My response was that there are enough trade shows; we need to get down to business. That isn't what this post is about, though.  I covered that last year.

Back to my point... Monbiot points to the continued reliance on fossil fuels and the consequent endangerment of millions of vulnerable individuals as evidence of this failure. He criticizes the COP28 president for their stance on fossil fuels, which he labels as a shocking lie. However, Monbiot does suggest that there are alternative routes we can take to save our planet.   To be clear, I am not writing this so single George out.  There is a lot of frustration out there, and he isn't the only one writing pieces like this.  I have read several this past week and thought it to be a good idea to respond.

I want to draw on Monbiot's recent commentary on the perceived shortcomings of COP28; it is clear that there is a need for a fresh approach to tackling climate change. While international forums like COP28 serve a purpose in shining a spotlight on the urgency of the climate crisis, the real key may lie in the implementation of initiatives to combat it. Projects.

Now, to be clear, when I refer to 'projects,' I'm talking about initiatives both big and small - from grassroots efforts to large-scale infrastructural developments. These projects, unlike discussions at summits, have the potential to deliver concrete results and measurable outcomes. In bypassing the political maneuvering and bureaucratic tangles often associated with international meetings, they offer a more direct route to action.

Consider, for example, the renewable energy projects Monbiot mentions in his article. These initiatives have the power to directly reduce our dependence on fossil fuels. Similarly, regeneration projects (he says reforestation projects so I corrected it), are another area highlighted by Monbiot, can contribute significantly towards absorbing more CO2 from our atmosphere. Furthermore, community-centered projects focused on education and engagement can foster a culture of sustainability, equipping people to make greener choices in their day-to-day lives.

The beauty of focusing on projects lies in their cumulative impact. Each initiative, no matter how small it may seem, contributes to the larger goal of mitigating climate change. When executed across various sectors and regions, these projects can lead to significant global change. The importance of projects becomes even more apparent when you consider that they account for more than 35% of global GDP. With such a significant investment being made annually, if these projects are managed sustainably, they could transform global challenges, including climate change.

Projects also offer a platform for innovation. They allow us to try out new ideas, learn from our failures, refine our successes, and in doing so, find more effective solutions to the complex challenges posed by climate change.

So, while international summits like COP28 are important in setting agendas and encouraging cooperation, we must recognize the power of projects in driving meaningful action against climate change. It is through these tangible initiatives that we can translate our words into actions, our plans into projects, and our hopes into realities. The fight against climate change will not be won solely in conference halls, but in the fields, factories, cities, and homes where these projects take shape. Let's embrace this approach and truly make a difference.

Want some free tools to get you started?  How about our free P5 Standard for Sustainability in Project Management and the micro course that goes with it?