Beginner’s Mind: The Essential Point of View for Innovation
As prepared for delivery at the CAQ Tenth Anniversary Event
By Jean Rogers, PhD PE
Hello, my name is Dr. Jean Rogers. I’m the founder and CEO of SASB, and I’m honored to be
here. Congratulations to Cindy and CAQ—you are 10! I have a daughter who is 10, so I know
what that journey looks like. Right now, you may be thinking about painting your office purple. I
say go for it. You can always paint over it when you get tired of it, and it’s cheaper than getting a
pony. Happy Birthday, CAQ.
Innovation is a topic that’s close to my heart. When I was getting my PhD in environmental
engineering at the Illinois Institute of Technology, I was immersed not only in measuring
environmental impacts, but also in design culture. IIT has an extraordinary modernist campus
designed by one of the greats, Mies van der Rohe. Instead of analyzing my thousands of soil
and groundwater samples, I was constantly sneaking over to the design school to use the
darkroom. I’d bring my pipettes and petri dishes and beakers that I was supposed to be using in
my experiments, but it turns out they make extraordinary photograms when exposed to light, in
the tradition of Man Ray and Moholy Nagy. At IIT, I was exposed to a whole new way of
thinking—less is more, god is in the details, and form follows function. We embrace these
concepts at SASB, in our standards setting work. I was enamored of the Bauhaus school of
thought, from which Mies came. It was a radical concept: to reimagine the material world to
reflect the unity of all the arts, for the betterment of society. Wow. A force for good, like the
CAQ.
After more than 20 years working in sustainable development, I realized that the scope and
urgency of issues our world faces—such as climate change and resource scarcity—cannot be
solved one project at a time. Rather, we need to move entire industries to measure and manage
the most important issues of our time. And we need investors to drive capital to the most
sustainable outcomes. In 2011, I started the Sustainability Accounting Standards Board, or
SASB, to address the lack of investor-grade sustainability information available to our capital
markets.
Even with a PhD and a career’s worth of experience, I approached this new challenge not from
the mindset of an expert, but from the mindset of a beginner. I had a vision that any investor
could type in a ticker and pull up sustainability fundamentals right alongside financial
fundamentals. If material information is the right of all investors, and sustainability information
could be considered material under existing law, why don’t we have it at our fingertips? This is
the question that drove me.
If necessity is the mother of invention, a beginner’s mind is its first footsteps.
Suzuki Roshi, a Buddhist monk who wrote “Zen Mind, Beginner’s Mind” teaches that Beginner’s
Mind is the mind that is innocent of preconceptions and expectations, judgements and
prejudices. Beginner's mind is present to explore and observe. “In the beginner's mind there are
many possibilities, in the expert's there are few," he wrote.
SASB sits at the intersection of finance, sustainability, accounting, and securities law. As a
result, I—and my staff—have had a lot to learn. I believe our willingness to see things afresh is
why SASB is here today. When we encounter problems to solve, we explore what’s already
known, see what we can learn from other disciplines, and innovate. I’ll give you three examples.
Our first innovation is simply the way we look at the world. Prior to SASB, conversations about
environmental, social, and governance issues were about just that: issues. Usually, arguments
being put forward by advocates about the importance of the issues and bemoaning the fact that
the “mainstream” markets didn’t seem to care. But here’s the thing, analysts cover industries,
not issues. So, at SASB, we put the user at the center and turned sustainability on its side. We
crossed issues with industries in a matrix, applied the filter of materiality, and produced an array
that translates sustainability into the language of the financial markets. Rather than addressing
climate change or resource constraints directly, we examined each industry to identify which
issues are likely to be material and how they manifest. For the first time, issues were actionable
by analysts. Applying systems thinking and a dispassionate approach to these issues helped us
to unlock their potential relevance to the capital markets.
Our second innovation at SASB was to design an industry classification system. Before we
could begin setting standards, we needed to settle on a categorization of industries. Should we
use the one of the many existing systems, such as BICS or GICS, ICB, SIC, or NAICS? As it
turns out, the proprietary systems were out of reach due to licensing fees, and the government
systems still contained industries like buggy whips and blacksmithing. So, we decided to create
our own, SICS. In SICS, we group industries with similar sustainability characteristics, which
gives investors a new way to see and understand the ESG risk profile of their portfolios.
Finally, I can’t talk about innovation without mentioning the Disclosure Intelligence tool we
recently launched in the SASB Navigator. This tool provides the first look at the quality of
corporate sustainability disclosures in thousands of SEC filings. We developed it using artificial
intelligence, applying machine learning to natural language processing and information retrieval.
Now, at the type of a ticker symbol, users can compare sustainability disclosure quality within an
industry, between two firms, or on an issue. For the first time, the markets can see the
disclosure quality in the filings, and understand where there is boiler plate, and therefore,
unpriced risk.
In order to advance the field of financial reporting and disclosure, we need more people willing
to cultivate their beginners’ minds. We need securities lawyers, accountants, finance
professionals, and sustainability experts to be willing to NOT be experts. We need them to be
willing to not know, and to learn from each other.
Which brings me to Cindy. Soon after I started SASB, Cindy was one of the few experts who
was willing to be open minded to our very existence. For every beginner’s mind, there is
someone that needs to listen, ask more questions, offer encouragement, and show you where
the minefields are. Cindy is a great leader who’s at the forefront of where the profession is
going, and who is willing to explore and ask the questions needed to advance the profession.
Fortunately, cultivating a beginner’s mind is not difficult. Opportunities are all around us. Start by
reading something challenging – by an expert in a different field. Since I founded SASB, I’ve
had the pleasure of reading Seligman and more recently, Langevoort on securities law, Justice
Brandeis on transparency AND on the right to privacy, the FASB’s conceptual framework, Barr
Rosenberg’s PhD dissertation on factor analysis at the UC Berkeley, from 1973, and the UN’s
Bruntlandt commission report which gave us the first definition of sustainable development—all,
while on vacation. These are works of art each in their own way. I appreciate the complexity,
and the effort, and the sincerity, that went into developing these concepts, even if I don’t
completely understand them. Develop your capacity for awe, and the connections to your life
will follow.
Or, just take a walk. With your dog… or in my case, with my daughter. She is my partner in
appreciating all that is awesome in life, from the structural engineering of a dragonfly wing, to
the beauty of a special sunset. She reminds me every day, in the words of Tolkien, that all who
wander are not lost (they are just thinking about the future of the profession). Exploring is the
way our beginner’s mind stays open to possibilities.
When the CAQ turns 50, so will my daughter. She will be in her investing prime—the
“reasonable investor” the SEC exists to protect. I hope she can type in a ticker and get
sustainability fundamentals right alongside financial fundamentals—and take it for granted, the
way we now take financial data for granted. To get there, let us—together—apply a beginner’s
mind to our work, and to our lives.