Sustainability Strategy – Inside Out
Sustainability is, at its core, a fundamentally strategic issue, but how many companies see it that way?
If one had to rank sustainability performance on a continuum, one might see that companies could be categorised into 3 groups: they are either ‘laggards’, ‘adopters’ or ‘forerunners’.
Laggards
Laggards have little or no interest in the implications of sustainability for their business. Whilst they pay lip service to the sustainability agenda, they practically and demonstrably fail to deliver any tangible results. Amongst the FTSE100, this group is – thankfully – a dying breed.
Adopters
Adopters are organisations that have taken steps – albeit tactical – to address their sustainability challenges. They typically measure and publish sustainability information and ensure they comply with market expectations around their sustainability performance.
Forerunners
Forerunners address their sustainability issues strategically, recognising not only the inherent challenges they face in their business, but – just as importantly – the potential opportunities. Effort cascades from a top down mandate that focuses on both incremental and transformational initiatives that drive long-term value.
Historically, ‘Forerunners’ may have had a higher sustainability risk exposure than their ‘Adopter’ counterparts, thus making management, investment and innovation more prominent features of their sustainability agenda.
However, what tends to differentiate these companies is a proactive leadership with a deep desire to exceed market expectations and do business better.
Leaders of ‘Forerunner’ companies are not scared to challenge the status quo or rethink corporate strategy and business practices.
In some instances these companies become market makers or quasi-regulators, but more often see windfall returns from efficiency gains in their value chain.
When asked where companies would place themselves on this simple continuum, the vast majority say they are ‘Adopters’. Taken at face value, this is a fairly pleasing result.
When asked, though, what their key strengths are that might make them qualify as ‘Adopters’, very few have a compelling or concise answer.
Although they may have reached important sustainability milestones, their initiatives have often been conceived and implemented in a bottom-up and apparently random way.
All too often, sustainability initiatives are driven by market fads or by senior management casting the net too wide in an attempt to address all of their company’s sustainability challenges as urgently as possible. This is understandable, as sustainability is such a cross-cutting and complex area.
However, such a haphazard approach seldom delivers long term results.
There are four key elements to an inside out strategic approach.
- Firstly, and most importantly, a company needs to define what they are really good at and how they can translate that into their sustainability approach. These strengths are often not immediately obvious. For some companies it may be manufacturing or innovation, whilst for others it may be communication or people development. Whatever the key strengths, they should be defined as they are the essence of what makes a company successful in the long-run.
- Secondly, an analysis of the context within which a company operates is critical. What are the material sustainability issue and opportunity areas for a company? What are the political, legal or market pressures facing a company in the medium to long-term? Who are the company’s key stakeholders and what do they care about?
- Thirdly, a tangible vision of where the company wants to get to should be set and openly communicated. This requires crystallised target-setting that aligns with the corporate strategy. Unilever’s vision to double sales whilst halving their environmental impact is a great example.
- Finally, a clear plan that leverages the company’s key strengths, reflects the issues and opportunities and resonates with stakeholders should be developed to achieve the vision.
A truly strategic approach to sustainability – one that plays to your business strengths and is singular in mission, communication and implementation – will be better for your business, better for society, and better for the planet.
About the Author Jess Nielsen
Jess has spent years travelling the world full-time. Nothing else comes close to the reaches of this emotive activity...