Assumptions Seeding Our Theory of Change

This last year we have re-connected deeply with the social impact environment.

In our journey, we discovered a term that has underpinned many of our activities without realising it.

The term is the Theory Of Change.

Anyone can use the theory of change, whether it’s Government, NFP, businesses, community or an individual aiming to bring about a positive change in their life or the world.

In a sentence, it explains why, what and how the change creates a greater impact.

It starts with the underlying issues that we are trying to address. The assumptions, activities, outputs, outcomes and impact result from the activity.

At Purpose With Profit, we have formulated our Theory of Change, and this article provides the background, Problems and Assumptions.

We need to first start with the context:

• Measure More Than Money
• Planetary Crises
• Global Population, Affluence & Inequality
• Sustainable Development Goals & Tracking
• Doughnut Economics
• Governments & Global Accounting Shifts
• Our Fiver Levers
• The Journey from 2017 - 2023

Let’s dive right in…

From the inception of the modern corporation around 400 years ago, monetary measure has primarily been the focus.

From the earliest of times, it was based on the pure exploitation of man (enslaved people), then colonialism to the exploitation of resources and the environment.

If we measured homes, businesses or countries on purely monetary terms, the prosperity would be temporary.

Let us demonstrate.

Imagine a home where both parents are dedicated to only making money through work or business and neglect their health, relationships, and children. This home will be dysfunctional in a few months.

Imagine a business that is only about maximising profits at the expense of workers, suppliers and the environment and treating customers with disdain. A business will only last a few years.  

Imagine a country that is only about maximising income and GDP, exploiting its ecosystem with growing inequality in the population. The forests are destroyed. The air and water become toxic, leading to poor public health. Social cohesion breaks down. The country's prosperity will barely last a generation.

Furthermore, pure monetary measures lead to overconsumption, environment, and human exploitation – largely from the low GDP countries, known as the Global South.

In the US, this has resulted in the public losing trust in many corporations (Shared Value - Porter & Kramer).

This video shows a relatable example for any individual.

While many corporations and governments focus on carbon reduction, this is just one of the nine planetary boundaries being overstretched, which we call the planetary crises (plural).

In the early 2000s, scientists at the Stockholm Resilience Centre (SRCs) identified nine planetary boundaries, three of which are natural—freshwater, biodiversity, and land systems change—while the remaining six are tied to human-generated waste, including greenhouse gases (GHGs), ocean acidification, ozone-depleting chemicals, novel entities like plastic and non-compostable materials, aerosol loading, and nutrient overload from fertilisers (nitrogen & Phosphorus).

Some have described this as a polycrisis, including public health, economic, geopolitical, environmental and technological issues.

Hold on!

We feel this can overwhelm the public and lead to confusion.
 

These issues are not new and surely some of them are preventable.
 

The following three questions can shift the paradigm here:

1) Would we have geopolitical issues if we had good government AND a more equitable planet - surely not!

2) Would we have health issues if the public had more reverence for food, like some regions in the world – surely not!

3) Would we fear technology if Governments (collectively) created a guard rail for its use - surely not!

We see systematic changes occurring when we change how we measure business success to include sustainability and societal and financial measures. And the public hold the governments to account.

The Global population surpassed 8 Billion people in November 2022.

With the rising population, we also have rising affluence in Asia: from India, China, and East and Southeast Asia.

The following image shows the significant rise in Asia countries adjusted for inflation.

With the rise in affluence, more people want to consume like the Global North (High GDP Countries).
 

This visual perspective from the Global Footprint calculator gives a better picture of why this is impossible ( see table below).
 

If the world moved towards consuming and living like Australians and Americans, we’d need five planet Earths!

The world is currently sitting at 1.75 earths.

While affluence is rising worldwide, we also know the global wealth disparity is worsening.

A tiny fraction (1%) of the population owns 46% of the world’s wealth. The following table is from Inequality, a US-based NFP tackling the issue.

One could argue that the Global South is not just low GDP countries but those impacted by globalisation in the Global North.

A theme we now see through social channels is that the ‘global elites fly their private jets to forums like COP 28 or World Economic Forum while wanting the average person to change their diet and lifestyle’.

Thanks to globalisation, products are being made worldwide with low manufacturing costs and environmental protection.
 

Capital shifts their cost of production to low GDP countries – hence the rise in affluence for the low GDP countries – the factory owners and management.

Then over the last two decades, we have also seen ‘white-collar’ jobs being outsourced to low GDP countries.

COVID-19 further accelerated this with a remote working culture.

But this comes at a cost.

Those working in these jobs in high-GDP countries have fewer options. It’s either the loss of their jobs or stagnant wages.

This is one of the explanations for the rise of Trump in 2016, by ‘Making America Great Again’ to bring manufacturing back into the US.

Also, COVID-19 further distorts the growing inequality. Oxfam published a report titled Inequality Kills about the significant rise in wealth for the affluent during the pandemic at the cost of low and middle income.

We saw this with many small business owners impacted by the pandemic with significant debt burdens while entrepreneurs in the health space profited well.

All the while, we still have close to 10% living in extreme poverty and many countries with poor literacy rates.

Philosophical & Pragmatic Question: How much will you care about the planetary crises if you have:

An empty stomach?

Or feel oppressed?

Or exploited?

Or disempowered in society?

Not much!

In 2015, the United Nations developed 17 Sustainable Development Goals (SDG) to share a “blueprint for peace and prosperity for people and the planet, now and into the future”, to be delivered by 2030. The SDGs and the 169 targets are quite detailed -

In Sep 2023, the UN reviewed the progress of the goals, and we are sad to share that the world is tracking appallingly towards the SDG targets.

While internet usage and child mortality are the only indicators on track, many others remain stagnant, if not going backwards.

The SDGs going backwards include: Life Below The Water, Zero Hunger, Health and Wellbeing, Sustainable Cities and Communities, Life on Land, Peace and Justice and Strong Institutions.

Kate Raworth, the economist, published Doughnut Economics, building on SRC’s work and creating a social foundation map to include specific actions.

The attributes of social harmony include energy, water, food, health, education, income and work, peace and justice, political voice, social equity, housing, gender equality, and networks.

They effectively create human and social cohesion and planetary boundaries for all levels of governments, NFPs and institutions to consider when designing policies.

In Australia and New Zealand, an ecosystem called Regen Place Network is forming, tackling pieces of the Regen puzzle. Volunteers for Regen Sydney created a beautiful 100-page Compass for Greater Sydney.

Like Kings and Queens, Governments are the guardians of their citizens. So, you may be curious about the roles they play here.

Bhutan is a country that has followed its own path in creating a National Happiness Index, living in harmony with the earth. They are one of just three carbon-negative countries in the world. They continued to retain large amounts of forests.
 

Bhutan's measures include Psychological Wellbeing, Health, Time, Education, Cultural Diversity and resilience, Good Governance, Community Vitality, Ecological Diversity and Living Standards. 

Interestingly, of the 33 indicators, only one is household/capita income. Housing is valued just the same. See the following image from Source: 2022 GNH, 2023.

After the global financial crisis, many realised the existing monetary-only model was broken, and we need to look at new ways to measure a country’s success.

In 2011, starting with Bhutan’s framework, a new reporting approach measuring the Gross National Happiness Index was launched.

Unlike GDP, which only measures economic output, the GNH monitors aspects like Social Support, GDP, Wellbeing, Freedom of Expression, Generosity, and Perception of Corruption.

Please note - it moved significantly away from Bhutan's GNH index.

Even though this paints a better picture of a country's success, many Western country leaders and media still focus on GDP and economic prosperity. Please see the 2023 World Happiness Report below.

In July 2023, Australia launched its Measuring What Matters 130-page report.

With the change in the Federal Government, Australia is launching bold steps to measure more than money through five themes and 50 data points.

The themes are Public Health, Security, Sustainability, Cohesiveness and Prosperity.

This is a first-of-its-kind moment in Australia, and many in the public are probably unaware.

Many of these targets map to the SDGs and Doughnut Economics.

The shift is starting to happen.

In June 2023, a historic shift occurred as International Financial Reporting Standards introduced the International Sustainability Standards (ISSB) to complement the accounting standards incorporating the TCFD. This is for carbon only.

Then, in September 2023, the Taskforce on Nature-Related Disclosures (TNFD) was also globally adopted. The TNFD enabled business and finance to move from nature-negative to nature-positive outcomes.

Accounting is changing for the first time in its history!

Why?

It’s because we are facing the planetary crises as described above.

This will eventually result in the majority of businesses measuring more than money.

While the UN SDGs and Doughnut Economics provide measurable outcomes, we identified five levers to create a sustainable planet. These levers amplify the leverage to achieve many of the targets. Also, it’s easier for the public and stakeholders to digest.

They are:

1. Changing how we eat to have more reverence for food and mainly plant-centric – due to planetary and public health crises. You’ll see we tackle the cause vs symptoms.
2. Changing how we consume – to be a more sustainable and circular economy.
3. Shifting business success to measure Purpose With Profit so we can identify which businesses are a force of ‘good’.
4. Shifting capital towards regenerative, impact and ESG as a minimum.
5. All layers of government support businesses and the public to live more sustainably.

We expand on these levers and hands in the following article Five True Levers of Sustainability.

We discuss the Levers and the 'Hands' which can pull on these levers.

Here is the dilemma for all stakeholders: there must be greater consistency and awareness about ‘good’ businesses for the other four levers to take action.

While there have been a small number of ‘good’ business models over the last few hundred years, the lack of consistency and poor marketing has meant the public is largely unaware of the differences.

Co-operatives and mutuals can be grouped under a broader social enterprise banner. However, while many cared for the community, they didn’t include the planetary boundaries.

In Australia, Social Enterprise Australia was formed in 2022 and has found over 200,000 livelihoods are being employed in the sector.

From the US, we have a certification process called Bcorp to help mainstream businesses move towards business being a force of good. In 15 years, there are approximately ~7500 businesses globally. While this is a great start, we must move much faster.

We have researched this space for over a decade since 2008 to measure more than money.

We are a purpose-led business genie. Then, which sector(s) should we work with?

Since 2017, we focussed on growing the alt protein and plant-based space due to the impact lens. We identified plant-based food supporting several Sustainable Development Goals and wanted to work with ambitious purpose-led brands to attract impact capital.

With the launch of Beyond Meat in the US, the landscape changed to attract venture capitalists, family offices, and high-net-worth individuals into the industry.

When the pandemic struck, we provided various services to help businesses connect, collaborate and survive. We are happy to share that many businesses in our network thrived following this. We hold space well for founders and leaders.

We found that SME businesses grow much faster in quality group settings.

We have invested over $75,000 in the latest business growth strategies and developed a lot of IP to help leaders and impact businesses grow.

Having seen some of our IP, one advisor said we could earn>$1M under the Though Leader practice model under the brand Bob.

That wasn’t enough for us.

We are more Greedy for Good ™

In late 2022, after attending the Social Enterprise World Forum, we realised our services are needed for other impact sectors. In 2023, we created workshops for social enterprises and impact consultants - with great feedback.

But again, the workshops are not enough.

These impact businesses need a quality network to support their growth.

Our observation and the many pivots along the way are about system change, where we balance people and the planet as well as profit.

Why do all of this?

You’ll find out even more in our Theory of Change!