With the increased focus now being placed on environmental, social, and governance (ESG) issues, we’re learning how to combine these priorities with a wider lens to analyze resource consequences in new ways and direct sustainable organizational outcomes.
Many times, dilemmas, paradoxes, trade-offs, and compromises can play an important role in this decision-making process. Although similar, each term has a slightly different meaning: A dilemma involves a tough choice because each decision option is firmly rooted in personal values. A paradox, on the other hand, seems contradictory, but a deeper investigation of the alternatives might reveal there’s some truth to all sides. Trade-offs are choices that necessitate the loss of something else, and compromises imply that neither side was chosen but a new and agreeable alternative was settled on instead.
I recently attended an IMA® chapter meeting where a sustainability officer from a well-known global fast-food chain shared examples regarding his company’s investment decisions. Some global studies suggest that chicken is the most sustainable meat option, but making the decision (as a company or as an individual) to switch to poultry becomes a painful one if it’s obvious that the better option is to simply eat less meat or if the data conflicts with other studies. Having an incomplete picture of the issue takes away our ability to look at the real trade-offs, which in itself creates new dilemmas. How on earth, literally, can we decide which is the better option?
I think most of you will recognize that a lot of decisions end up as compromises. Finding common ground is mostly what we do in our work as management accountants. This requires that we keep an open mind, that we listen, and that we understand that resources are limited and valuable. Many times, challenges like this arise when we’re considering issues related to sustainability. Investment decisions are always trade-offs, where you must decide how to allocate money in the face of one or more sustainability dilemmas. In all cases, you must use tact to steer the data into the direction of an agreeable compromise.
We see these tough choices everywhere, which underpins why these conversations are so important. For a big change, the direction is always more relevant than the speed. Integrated thinking is an answer to a lot of our dilemmas, but there’s a clear need for objective facts and strong data. The finance department is perfectly positioned to give insight into an entity’s resource usage, which ultimately drives the development of new strategies and sustainable business practices. It’s important to spot the real trade-offs inside and outside your organization and make sure that you generate the facts and forecasts needed to create meaningful organizational results. Compromise is vital, but know where you want to make a difference and let the data speak for itself. For more information, go to IMA’s Technology & Analytics Center.
September 2022
