Congratulations! You have established a sustainability program. This is a great decision for People, Planet and Profit!
Here’s what you may have already encountered: measuring your footprint, establishing targets, improving energy efficiency, purchasing renewable energy, and publishing reports. To add to all the tasks, there are a plethora of reporting tools and frameworks.
It is easy to feel a little lost in the details.
How Do You Set Yourself Up for Success?
It is important to take a step back and approach the program holistically. A successful sustainability program needs to be incorporated into the strategic agenda of the company. The goals of the program need to be aligned with increased stakeholder value and the company’s performance.
With this holistic approach as the basis, consider the following:
1. Engage Stakeholders
A successful program must consider multiple stakeholders.
Engaging your entire business ecosystem early in the process will help prioritize issues as well as identify any conflicting requirements, paving the way for a truly impactful value-driven sustainability program.
Cast a wide net: instead of only involving your internal stakeholders (such as your employees and the board), also look externally — government, investors, business partners, suppliers, and customers. Their participation and support can be crucial to the success of any sustainability program.
2. Identify what is Material
Central to any sustainability effort is the concept of materiality.
Materiality defines aspects of the organization that have significant impact on its sustainability. Not all ESG factors have the same influence, and different factors are material to different industries. The Sustainability Accounting and Standards Board (SASB) provides industry-specific material topics.
Establish SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) goals to measure and track the material issues. Tailor these goals to be coherent with your broader corporate goals and commitments.
3. Build the Business Case
A strong business case will alleviate concerns about the costs of the program.
This might be the most challenging step and the key to management buy-in. The “Return on Sustainability Investment Framework”, from NYU Stern: Center for Sustainable Business, shows that investments in sustainability improve risk management, operational efficiency, talent management, and supplier relations, among other things.
Look for cost reductions through improving energy efficiency in the production process, choosing secondary sources for raw materials, and taking advantage of incentives to buy renewable energy. Identify non-financial benefits like recruiting and retaining employees, improving your brand image, and acquiring new customers. Highlight revenue sources from new opportunities. Capture the financial impacts of your sustainability program.
4. Ensure Management and Board Participation
Management buy-in will ensure company-wide support for the sustainability program.
The Task Force on Climate-Related Financial Disclosures (TCFD) requires you to disclose the board’s oversight and management’s role in evaluating and managing climate-related risks and opportunities.
Provide management with the business case, adding in goals, budgets, timelines, and KPIs to measure and track progress. Further strengthen the case by capturing how the program will directly impact company performance.
5. Broaden the Scope
A company-wide sense of ownership will increase the chance of success.
Not all ESG factors might be under your control. To increase the impact of your sustainability program, involve your supply chain. Provide them with incentives like financing and involve your procurement department in adding requirements for supplier commitments.
Engage your employees in sustainable initiatives like recycling and community outreach. Spotlight your achievements in customer material. Augment your program to track water consumption and waste.
6. Tell Your Story
Every program has its own unique challenges and achievements.
There are multiple reporting formats available that capture the financial, environmental, and social impacts of your sustainability program. Review the different options and report using the framework that best suits your needs.
Publish your report to demonstrate performance against the material issues addressed by the sustainability program. Include data tables(along with relevant validating information) that investors and ESG score providers can use. Highlight how your programs align with the United Nations Sustainability Development Goals. And above all, capture your company’s unique story!
Combining multiple stakeholder objectives to identify topics of material impact helps create a strong business case for a sustainability program. Company-wide participation with support from the board and management will serve to closely align sustainability investments with operational risk and opportunities. This will ensure that your sustainability program is successful and effective for the planet, the people, and the company’s profit!
