When I was starting out my sustainability and environment career, several of my key mentors drove home the important distinction between activity-based and effects-based thinking.
Activity-based thinking starts by categorising what we do: the industry we operate in, the processes we use, the products we sell and use as the basis for the prioritisation of sustainability efforts. Effects-based thinking asks what consequences those activities have, and what makes those consequences significant, then draws the line back to our activities (for cause and minimisation).
Town Planning provides a useful illustration. Traditional zoning regimes allocated activities to particular places: industry here, housing there, commercial development somewhere else. The activity category was a primary organising principle; certain activities were desirable in certain locations; and providing the activity was occurring then it was (at least in part) assumed to be permissible.
During the 1970s and 80s, this began to shift. Partly in response to the rise of environmental politics, but perhaps also as land use and business activities started to diversify, perhaps as the boundaries between traditional modes of economic production began to blur.
US-based Environmental Impact statement law from the 1970s arguably kicked off a 40 year process, which started from prescribed sets of activities which had to demonstrate their impacts. In the mid 1980s, European (EEC) Environmental Impact Assessment introduced the discipline within existing planning systems: examining the consequences of a particular development in its setting. EIA screening processes helped bridge the move from purely activity-based, to effect based analysis of projects.
New Zealand’s Resource Management Act (RMA) 1991 was one of the earliest planning systems which deliberately shifted the emphasis towards managing environmental effects, rather than the activities. Under the RMA, the regulators did not explicitly care what the activity was (e.g., whether you are building a factory, a residential subdivision, or a commercial warehouse). Instead, the legal focus being on the effects that the activity would have on the environment and people. This shifted the burden: Instead of checking a government list of "approved activities," a developer would have to look at the potential change to environmental baselines (the environmental qualities or sensitivities of the area) and design their project backward to ensure they do not breach those environmental thresholds.
There is a parallel here with sustainability reporting
If we squint a little bit, the Omnibus decision to abandon sector-specific ESRS can be read as reinforcing the need for effects-based thinking. The stated rationale (as we know) was simplification, but the resulting architecture puts greater weight on common standards and circumstantially guided materiality assessments.
Certain effects are, of course, more commonly associated with particular sectors. Agriculture is an obvious starting point for investigating nutrient pollution; mining for investigating habitat disturbance. But under an effects-based approach, associations with activities should guide our enquiries, rather than define their boundaries or significance. Waterbody nutrient-loading matters because of its consequences, whichever sector causes it. Habitat loss does not become less important because it arises in an industry where we would not normally expect it.
In that sense, effects should and can be assessed in a sector agnostic way. Sector knowledge helps us find them but their significance depends on what happens to people and the environment. The sensitivity (or value) of the environment itself drives our understanding of its importance.
Back to the “delta”
For impact, the central problem is evaluating the change an activity causes (or could cause) to people or the environment, relative to what would otherwise have happened. This is the delta, some kind of change to (or deviation) from the environment/ expected environment.
Under and effects-based approach, the magnitude of the delta itself is not always enough. The delta also needs context. A quantity of water withdrawn tells us something about an activity. Understanding what that withdrawal changes in the receiving catchment,and how important the catchment is tells us much more about the effect.
This can be expressed as follows:
Magnitude of change to the baseline × value of the receiving environment = Significance/importance of the effect
This is where environmental sensitivity deserves greater prominence in ESRS double materiality assessments
EIA has long recognised that significance depends partly on the sensitivity and capacity of the environment receiving an effect. The same magnitude of change can have very different consequences in different settings.
A water withdrawal from an abundant catchment and an equivalent withdrawal from an already depleted one are numerically identical activities. Breaking a glass window in an apartment block is not the same as breaking a window in the Notre Dame Cathedral. The same principle applies to people: existing vulnerability can fundamentally change the significance of an effect.
ESRS provides room for this thinking, even if it has not been explicitly implemented. Scale concerns how serious an impact is; scope concerns how widespread it is. Alongside irremediable character, these describe the impact—not simply the size or reach of the activity causing it. When we consider “scale” to account for the value of the receiving environment and when we bound the scope with the boundary of the receiving environment, we have effectively incorporated effects-based thinking in top the assessment. The LEAP approach dovetails perfectly.
It is arguable, that many assessments have fudged this by relying on readily available business information in lieu of this kind of analysis. Production volumes become a proxy for scale. The number of operating sites becomes a proxy for scope.
Those measures can help identify and investigate impacts. But treating them as the primary basis for scoring severity risks systematically prioritising large activities while overlooking smaller activities with severe consequences.
An activity’s importance, pervasiveness or criticality may rightly dominate a marketing or commercial strategy discussion. Sustainability assessment requires an additional discipline: following the causal chain through to the people, ecosystems and business outcomes affected.
Effects-based thinking opens this right up.
