We can all learn a lesson or two from David Coulthard, and not just about driving fast

I love using sport as an analogy for sustainability. So far, I’ve wangled football and Formula One into commentary on double materiality and context-based targets, respectively. If you don’t mind, I’m returning to Formula One this time.

 

I recently attended the Workiva Amplify EMEA conference, at which David Coulthard was keynote speaker. Many of his words chimed with me as a long-time believer that lessons learnt in sport are transposable to so many aspects of life and business. There was one line of discussion in particular I’d like to explore.

 

Coulthard pointed out the importance of any and every modification to an F1 car, even if it only shaves off mere milliseconds from a lap time. In F1, marginal gains can make all the difference. Engine output, downforce, drag, weight, suspension, the list goes on. They are all important. Tiny modifications to the car to manipulate these features can leave a driver soaked in champagne or tears.

 

Such has been the pace of technological advances in F1 teams engineering capabilities, the norm of four car upgrades per season in Coulthard’s time is now an every-race expectation. This means as little as four days to execute an upgrade between back-to-back race weeks. A team cannot possibly complete a full wish-list of modifications in a handful of days. But if all these modifications matter, where do you start?

 

This is how many sustainability teams feel. There is no debating the importance of every aspect of sustainability. We must take action to reduce carbon emissions, an inclusive workplace should be an expectation, life as we know it is under threat owing to unparalleled loss of biodiversity globally. But sustainability teams cannot tackle all these issues (and more) in one foul swoop. Just as F1 teams do with car upgrades, we need to prioritise.

 

In the world of sustainability, the tool for the job is not a spanner but materiality. Through materiality, we consider:

·       Outward impact: the impact a business has on the environment and society through its actions and decisions

·       Financial impact: the impact on a business’s financial position due to the environment and society, and a business’s dependencies on them

 

We short-list relevant topics and then assess both the outward and financial impacts associated with each. Once these impacts have been determined, a threshold is often implemented to determine “material” topics.

 

Such thresholds are helpful to highlight high-impact topics, where the most immediate action is required and where resources should be prioritised. But just like F1 car upgrades, all short-listed sustainability topics require attention to some degree. As CSRD makes thresholds the norm, we must be careful not to treat thresholds as a binary yes-no decision on the relevance of a topic. While in-depth reporting on topics below the threshold may not be necessary, we should not simply turn a blind eye to them.

 

As an example, let’s consider scope 2 emissions (emissions that a company causes indirectly and come from the energy it purchases) for a service-based business. Scope 2 emissions are unlikely to contribute major outward or financial impact owing to the relatively low volume of emissions generated. This isn’t to say said business needn’t consider shifting to a renewable energy tariff. Granted, it might not be a workstream that requires a taskforce. It is a lower effort change that results in marginal gain, but it is a change worth making. In a similar bucket may be topics where negative impacts and risks are already well managed, reducing the magnitude of impact. But ongoing efforts – that mitigate negative impacts to such a point that a topic falls below the threshold – cannot stop just because a topic is not deemed “material”.

 

Qualitative insights from the materiality assessment are key to identifying such occurrences. Stakeholder insights help explain why a topic lands above or below the materiality threshold and should be a crucial consideration when using materiality to develop a sustainability strategy.

 

It can be tempting to use materiality thresholds to draw a line between those topics which require attention and those which don’t. But let us learn from Formula One in this instance. Any topic which is short-listed is there for a reason. While materiality helps us to prioritise areas for action – as any F1 driver will tell you (if you do happen to get the chance to speak to one) – marginal gains are still gains.