I ran an assessment to find out: does the company contribute to—or undermine—the future we want? Here’s what I learned.
What’s this all about?
After twenty years of sustainability consulting, including conducting a lot of materiality assessments where I felt like we were side-stepping the real conversations — e.g., about business models and economic structures that incentivize harm — I launched a project called Matereality. It’s a twist on the materiality assessments done for environmental, social and governance (ESG) reporting and strategy, infusing a dose of reality. (See more context here or a 4-minute explainer video here.)
This is an experiment, like an art project, not a client engagement nor a prescription. It’s just me standing back, using the tools I’ve been exposed to and offering up some ideas.
This article outlines what I found out when I conducted a Matereality assessment on Alphabet (aka) Google. The assessment is free to access here, and the findings are summarized below as well as in a 5-minute explainer video, here.
So what happened?
I examined the company’s business model, their ESG-related communications and their four most recent investor earnings calls. I also asked diverse stakeholders how they understand Google in relation to the future they want.
“Does Google belong in the future?”
What I mean by this question is, “Can they create conditions that enable us to live well in a healthy biosphere? And, can they do so without also undermining those very same conditions?” Those are big questions that touch on a range of topics which lots of people have been thinking about and acting on for a long time. I outline details of what’s behind these questions on slide 7 of this methodology deck.
It’s about the business model
In a nutshell, Google sells advertising. It didn’t used to be that way—it started out much more noble and potentially regenerative. But that’s how it is now.
They do other things too. You can read up on “Other Bets” in their annual report, but 80% of their revenue—$US257.6 billion in 2021—comes from advertising. That includes everything from ads you see on YouTube to the results at the top of a Google search.
However, there is zero transparency, as far as I could find, on who is advertising and what the impacts of those companies are. And this is what really matters in relation to the future we want and Google’s current business model. To paraphrase the late Ray Anderson, if everyone did more of what they’re doing, would we be better off?
As interviewee, Samantha Suppiah commented (see slide 9 for stakeholder interviews video, audio and transcript links):
I would like for large companies such as this to be very transparent and open about what they actually do in the world, who they’re actually working with, who their biggest clients are, what they do with them etc, because if you’re providing a commons service or you purport to, then your company is the commons. So act like it and start being accountable to not just the states but — I think — the communities who are most marginalized in your business model.
If all the advertisers promoted awareness of the invaluable biodiversity of the Atlantic Forest—as interviewee Ricardo Cardim suggested—then the more, the better. But that’s just not how the algorithms work right now.
So how is Google contributing to the future we want? It likely isn’t. It is likely undermining it, fueling the twinned crises of collapsing human and biospheric health.
How about their conversation with investors?
I marked up notables from the four most recent calls (slides 10–14). There isn’t a lot of signaling that makes me optimistic about their contribution to our future, unless things change significantly.
On straight-up ESG related topics, the disconnect is real. For example, the company’s claims to carbon neutrality completely miss the climate impacts of their advertising customers’ growth. While Google operates its facilities in a way that can technically be counted as “carbon neutral”, the net effect of its business is that other companies grow. Google appears not to measure or consider the impacts of their clients — beyond their financial growth. So “carbon neutrality” is simply not reality.
Where a typical material issue might be something like “data privacy” or “data asymmetry”—which certainly surfaced in the stakeholder interviews—when these issues come up in investor dialogue, it is about how the company will navigate shifting regulations to be able to press on with their current model.
CEO Sundar Pichai commented in the 2021 Q4 earnings call:
“As a company, we have always been, you know, constructive in how we have approached, and we are open to sensible updated regulations. […] There are areas where we are genuinely concerned that they could break a wide range of popular services we offer to our users.”
“Demanding privacy from surveillance capitalists or lobbying for an end to commercial surveillance on the internet is like asking Henry Ford to make each Model T by hand or asking a giraffe to shorten its neck. Such demands are existential threats. They violate the basic mechanisms and laws of motion that produce this market leviathan’s concentrations of knowledge, power, and wealth.”
In sum, the company’s financial success currently hinges on selling advertising, with ever-more savvy algorithms and AI. Any nice social and environmental impacts are more or less a by-product.
What about ESG disclosures more broadly?
They publish a fair bit on what we might call “ESG” though they do not have a straight-up ESG report. They certainly contribute to great stuff, including business-model related activities, not just charitable initiatives.
For instance, they provide tools for small businesses, students, and marginalized communities around the world. I myself am using these tools for this project — the assessment is built in Google Slides, I captured the interview notes in Google Docs, and the summary of these findings is available in this 5-minute video hosted on YouTube.
But in this recovering ESG reporter’s humble opinion, they aren’t really reporting on the truly material issues, such as how they impact society and biosphere as a result of their business model.
What do others think?
Part of the Matereality process — mimicking traditional ESG materiality assessment methodology — is to gather external stakeholder feedback.
In a perfect world, there would be another 100 or so conversations to tap into here, to get a deep and diverse sample. And they would be in numerous languages. In the world I live in, I managed to do a shallow and diverse handful, most in English with two in Portuguese.
I want to draw your attention to two things that break from the traditional materiality approach in relation to stakeholder input.
First, you can see whom I spoke to and what they said — watching the full videos, listening to the audios or simply reading or skimming the transcript notes, all accessible on slide 9 of the assessment, by clicking on the stakeholder names. You don’t have to take my word on anything you see here. You can form your own opinions.
With typical corporate materiality assessments you can see a bunch of issues and a paragraph that says something like, “We talked to lots of people…” But we never know who, nor what they said. As someone who has conducted many of those interviews and written a few of those paragraphs, and as someone who has been interviewed by other consultants, I can tell you that a lot is lost in that glossing over.
Second, this is a first attempt at taking into account the perspective of non-human stakeholders. While this is kind of impossible, I went for it anyway.
For example, with Ricardo Cardim he goes into perspective as an architect in São Paulo, and he role-plays on behalf of the Atlantic Forest. I also got great perspective from Penelope Mavor of the Earth Converse podcast, and in my own stakeholder response I go there a little bit as well.
I wonder what you think? If you were to ask your local river basin or migratory birds and the flyways they follow — how do they experience Google and what do they want for the future?—I wonder what you might sense in response.
I am not in favour of 2 x 2 matrices (I have mentioned this before) but I created one anyway to provoke discussion about the societal and ecosystem health impacts of the company.
As you can see, there is a lot of disparity of perspective.
All agree that Google has made things possible that were not possible before — access to information and collaborative tools — and that this has tremendous benefit.
The biggest concerns are about the business model — essentially taking user data to sell ads — as well as the risks of mis- and dis-information, or more simply put, controlling who can see what.
So what’s the conclusion?
There are summary slides that capture the key points (slides 5 and 6). My primary concern about the company’s prospects for our future is the lack of evidence that decision-makers are considering the future, beyond having organized the world’s data for ever-increasing profit.
The design of their algorithms and AI seems poised to push further in the wrong direction. This does not bode well for creating the conditions that enable humans and the biosphere to thrive.
I offer up a few suggestions about what would need to be true (see slide 5). It all boils down to a business model that succeeds when the wellness of humans and the biosphere improve.
If Google could be that, they would be welcome in the future.
This post originally appeared on my Medium page in March 2022.
To see the assessment slides, visit: https://docs.google.com/presentation/d/1BeL2piFWNoBPkX6IRlI4C_ipJ6WAneA-w17SZXOZnks/edit#slide=id.g11a0ffcd9c7_0_1
To see a 5-minute explainer video about this results, visit: https://www.youtube.com/watch?v=0VKPAw3Nn1c
For more about the Materiality project, visit: https://www.blorrainesmith.com/matereality
To subscribe to my newsletter or support my work, visit: https://www.blorrainesmith.com/contact-me