UNDERSTANDING SUSTAINABILITY AS A CORE COMPETENCE
Feb 7, 2022
The article “Global 100 companies prove sustainability is good for business” published by Mike Scott in Corporate Knights on January 19, 2022 is very well worth the read as it provides clear and factual evidence that corporations which are leading in the field of Sustainability are not only making stronger progress than their lagging peers but also generate stronger shareholder returns*.
Having understood the importance of establishing Sustainability as a key plank in a business’ set of strategies to secure the long-term survival of the company, the key question then becomes where to start and how to go about it.
This task alone can be daunting given the complexity of the issue as well as the many different and sometimes conflicting expectations from different stakeholders. What has been helpful in my experience is to use an established framework as a reference guide to identify the initial key priorities. The best -albeit admittedly quite complex- framework which Sustainability leaders have been using in this regard are the UN 17 Sustainable Development Goals which serve as a blueprint to achieve a better and more sustainable future for all. We all know that “in business we get what we measure and what we don’t measure we don’t get”. Therefore, breaking down the most important and relevant of these development goals into operational targets is an important key first step. And we should not be afraid of our initial actions to not be 100% perfect or complete. Quite honestly, they can’t be and they won’t be! Every journey starts with a first step and it’s more important to start and keep moving than standing still contemplating being paralyzed and confused!
Whether its climate action (#13), affordable and clean energy (#7), no poverty (#1), good health and well-being (#3), responsible consumption and production (#12) or any of the other sustainable development goals, taking any of these and break them down into operational targets for individual departments and senior leaders of the organization is a key first step.
For example: “climate action” can be broken down in emission reduction targets for our manufacturing organization, as well as the “use of clean energy” and “responsible production (for example zero waste to landfill). “No poverty” can be translated into targets for our procurement organization in ensuring we support small hold farmers with fair trade practices and prices when procuring key raw materials or include minority sourcing into the relevant goal set of our procurement leaders. Supporting “good health and well-being” as well as “responsible consumption” can become highly motivating targets for our innovation and R&D teams. Changing consumer behavior through innovative new products like for example waterless shampoos, detergents which support lower washing temperatures, cosmetic actives derived from biosynthetic processes not reliant on fossil fuels, are just a few examples of how innovating new and better products can help drive Sustainability.
Once we as organizational leaders have embarked on the Sustainability journey by making these important first steps, we have in fact started to build a culture centered around Sustainability. To continuously nurture and further develop this culture will ensure we make it systemic and lasting. Some organizations have embarked on the journey by establishing Sustainability as a senior management position, for example through the appointment of a Chief Sustainability Officer. However, as our ambition is to build broad-based buy-in and commitment across the entire organization, an alternative -or complementary- approach is to install Sustainability Ambassadors in each and every department. Such an approach is more likely to ensure that Sustainability is engrained in each department’s activity system and goal set versus it being a “standalone” organization with its own sets of targets and operating procedures which may or may not be compatible or even synergistic with such department’s core business KPIs. In my experience, installing Sustainability Ambassadors can have a great “grass root” impact in unleashing seemingly endless creativity, commitment, and enthusiasm within the teams to drive the company’s Sustainability agenda and with that leverage its operational performance. If you would like to share your own experiences and or best practices around installing Sustainability as a core business activity feel free to comment on the blog or email me at email@example.com.
*Since its inception on February 1, 2005, the Global 100 Index has generated a total investment return of 331% compared to 279% for MSCI All Country World Index (ACWI).
Jan 29, 2022
The case for understanding Sustainability as a core competence and indeed critical success factor to secure the survival of literally each and every business regardless of what sector it operates in has never been clearer before than it is today. According to the United Nations’ 2021 Intergovernmental Panel on Climate Change (IPCC) report, global temperatures will rise to at least 1.5°C above preindustrial levels within the next two decades if no meaningful decarbonization can be achieved. Resulting consequences will potentially be very severe, dangerous, and with irreversible effects. Already today, the economic toll of ever more frequent climate disasters is staggering: According to Bloomberg, the price tag for last year’s ten worst climate disasters was a staggering $170 billion, making 2021 the 6th year since 2011 that the bill for natural disasters exceeded $100 billion on a global level.
While globally coordinated governmental action is desirable, the world simply can’t wait for this to happen on a meaningful scale. It is therefor imperative that we as individuals, in our various roles a parents, consumers, employees, executives, entrepreneurs, shareholders and the like take action, and exercise powerful influence we hold over the many decisions which affect climate change and carbon footprints.
Looking at Sustainability from a company’s perspective, it covers in its broadest sense 3 key areas, also known as ESG: environmental, social and governance. In my series of blog posts on “Understanding Sustainability as a Core Competence” I will provide insights on to how to systemically embed Sustainability into a company’s core processes and through that, hopefully, contribute to meaningful progress to secure our planet with all its bounty and beautifulness for many more generations to come.
Reflecting on my own personal experience in embedding Sustainability as a core plank in the business strategy, the beginnings were more than humble. Even though in my personal life I had always made it a point to teach my kids to turn off the lights in a room when they left it, shut off the water faucet while brushing their teeth or be mindful of single-use plastic waste when ordering take-out food or going shopping, my initial reaction to Sustainability when it first emerged in the business context some 12-15 years ago was more one of confusion, insecurity and, frankly, avoidance.
Those early days were marked by many unanswered questions: how will embracing Sustainability impact my P&L? Will this be another drag on operating expenses without adding incremental value to the value proposition? Will consumers be willing to pay for enhanced Sustainability practices which are driving up cost of goods? What are my customers’ expectations and how shall I best address those? What about the employees? Will they see this as the newest management “flavor of the month” adding to their already overburdening workload without offering any incremental recognition and reward? And, most importantly, given the complexity of the matter and the fact that Sustainability touches literally every single aspect of the business I’m responsible for, what is the best course actions in regard to where to start, and which aspect is of most importance and will have the greatest impact?
Fast forward to today, and many if not all of these questions have been answered one way or another. Investors, consumers, clients and employees alike are increasingly seeking out companies with a strong ESG profile which means that ignoring Sustainability or, even worse, making it a half-hearted effort easily to be de-masked as a mere “green-washing” exercise will make it increasingly difficult, if not impossible, to attract and retain top talent, drive profitable growth and innovation and through that, correspondingly, shareholder value.
With that in mind, I’m looking forward to sharing my insights on how to systematically embed Sustainability across the core processes of a company’s activity system and engrain it in the prevailing organizational culture in the follow up posts to this introductory blog.
Should you not want to wait for these insights to unfold here, please feel free to email me at firstname.lastname@example.org or comment to this blog.