A successful sustainability strategy depends on understanding the business within a broader system, determining potential impacts, and integrating this approach into every area of the organisation, according to consultants.
Last month, The Green Mile looked at carbon emissions measuring, and what some of the local industry developments were. But once companies have the right data at hand, how do they go about implementing a strategy to guide the entire process?
Tony Frost, CEO of Sirocco Strategic Management, says companies need to make sure whatever they do integrates all three elements of the bottom line. This includes products and commercial activities, social corporate responsibility initiatives, and environmental policy.
He adds that sustainability has to be approached holistically. “Often people only speak about environmental sustainability, but it's about sustainability of the organisation in a total sense - social, commercial, and environmental.”
Nicky van Hille, MD of consulting company The Moss Group, adds that companies often struggle to formulate a plan because they don't really understand the meaning of the term 'sustainability'.
“Sustainability is simply about looking at your business through a slightly wider lens than you have previously done. It is really about understanding that companies operate within a broader system.
“The starting point for any sustainability roadmap needs to be an understanding of how your business impacts the world in which you operate, as well as how that world impacts you, on a social, environmental and economic level,” she explains.
The next step, according to Van Hille, is to develop scenarios around how these impacts may change over time, and what the effect on the business may be.
“Once you have that level of understanding of the system in which your company operates, you are in a good position to identify where you need to focus your attention in terms of addressing these impacts and preparing your business for future scenarios.”
Nicola Robins, a partner at consultancy Incite Sustainability, says the first question a company should ask is: 'How might sustainability trends impact on our ability to create value?'
“This highlights the link between sustainability and the value drivers of the company - it keeps sustainability focused on the core business rather than fiddling at the margins,” she explains.
“Sustainability is not about how we spend 1% of post-tax profits - it is about how we make those profits.”
At the core
When addressing sustainability issues, notes Van Hille, as with any other strategic issue, resource focus is critical. “Strategy is about where and how you focus your resources. Organisations need to align their resources behind those areas with the greatest impact.”
First up is get the right people involved from the start. “Without cross-functional representation of the business, you will have already lost significant value,” she explains. “Then commence with a 'systems' review to identify where to focus, and move on to determining your vision and engaging stakeholders.”
According to Frost, the biggest pitfall for companies is sticking the three elements of the bottom line into silos. “The people responsible for these divisions seldom talk to each other about what they're doing,” he says.
The most effective way of eliminating this silo-based approach is to focus on the brand: “What it represents and what you want it to represent,” he notes. “It's about building the brand from the inside out, so everything focused on the brand is integrated in a holistic way.”
Van Hille agrees that a key stumbling block is separating the core elements of sustainability from one another and also from the strategy of the business.
“In order for the power of sustainability thinking to be effectively leveraged, businesses need to look at the concept in a holistic sense. By not doing so, companies may miss major opportunities and may also not clearly identify some of the trade-offs and risks they are facing.”
Robins points out that any measure has to be linked to the first focus of the business - profitability.
“The 'triple bottom line' might be conceptually appealing, but there are no prizes for guessing which bottom line will always be the most important.
“Rather than having additional bottom lines, sustainability should put the financial bottom line radically into context - linking it to long-run competitiveness through enhancing social and natural capital.”
She explains that although the focus remains squarely on profitability, “sustainability requires us to move beyond our obsession with short-term returns”.
Elisabeth Tanguy, Nokia's head of environment for Middle East and Africa, says lack of executive support can sabotage the best attempts at introducing change. “A sustainability strategy will not be successful unless it has the buy-in of the decision-makers in the company.”
She adds that consumers are becoming more educated, and expect products or services to deliver real sustainability benefits. “Companies must be prepared to have transparent and measurable strategies in place - not just 'greenwash'.”
According to Barney Kgope, climate change programme manager at the National Business Initiative, it's imperative to fully understand relevant issues, how they relate to the business, and getting the right information into the right systems.
“If you're looking at the greenhouse gas emissions (GHG) of the company internally, for example, you might have 100-plus people sitting with information you need. It looks impossible, but it's a step-by-step process. You have to get one stream of data flowing in, and make sure people understand why it's important to submit data and do it accurately.”
He adds that the biggest concern for local companies is being uncertain where to start and not knowing where to go for assistance. Kgope says there's an increasing trend in business, however, to share ideas and solutions on sustainability issues, through various platforms and discussion forums.
“Collaboration and engagement are two of the most fundamental pillars underlying true sustainability,” says Van Hille. “Yet, it is also an area in which business is relatively immature, particularly in SA.
“Companies need to start developing the competencies required to engage and collaborate with their key stakeholders if they wish to see fundamental business shifts in the area of sustainability.”
However, Robins advises companies to wise up, as there is a growing body of ill-informed guidance-givers on sustainability. “Before launching into an initiative, ask every sustainability manager you know for the best guidebook and the best thinkers in the business. Talk to them.”
She stresses that a strategy is not simply a to-do list of activities with set completion dates. “A strategy is what links sustainability to your core value drivers and clearly defines what competencies you need to ensure long-run competitiveness. Without this, sustainability will be well-intentioned fluff.”
In the driver's seat
According to Van Hille, these issues need to be driven from the top, and board level accountability is critical, as outlined in the King III and the Global Reporting Initiative guidelines. “This is true for two reasons. Firstly, unless something is driven from the top of an organisation, it will not get the required focus or airtime.
“Secondly, and in my opinion more importantly, sustainability issues are about the long-term strategy and longevity of an organisation in the context in which it operates. This is clearly an area for the board's agenda.”
Van Hille adds that while the CEO should certainly be the key driver of the programme at an operational level, this extends to every business unit head, who needs to be responsible for the implementation of the strategy within their area. “By its very nature, sustainability is a cross-functional concern and should therefore be considered across an organisation.”
Robins argues that whoever initiates the process, be it the CEO or a visionary director or an astute sustainability manager, it should increasingly be driven by a shared vision and a growing team of change agents, rather than a particular person.
“As organisational development pioneer Richard Beckhard says: 'One person seeking to change an organisation will get killed; it doesn't matter what position the person is in. Two can commiserate. Three can become a full-fledged conspiracy.'”
Ultimately, argues Robins, sustainability should become a way of thinking within the organisation: “Whether you are the financial director, the cleaner, a lab manager or working on the assembly line, sustainability will help you to think and ask questions about ways to do things better, more optimally, and that add more value to the company and its stakeholders.”
According to Kgope, buy-in from the board and CEO can help in terms of resources, time and staff. “From there you can take things forward. It's like climbing up a flight of stairs, it takes time, and it's a challenge.”
“Truly embedding sustainability considerations into a business involves identifying focus areas, developing plans, measuring progress and communicating all along the way,” says Van Hille. It is about transformational change, not incremental change. This requires tenacity and vision by leaders.”
Time is now
Kgope says while more companies are reporting GHG emissions, and beginning to show confidence in setting targets and reducing energy use, the area where a challenge remains is adaptation.
“Climate change is still going to happen, even if we make changes, so businesses have to look at putting measures in place in terms of what they're going to experience.“
Robins points out that the gravity of the situation is not acknowledged by many businesses. “I would say about 85% of South African companies are still under the impression that sustainability is about being nice, ticking the JSE social responsibility index, celebrating Earth Day and giving to a local charity.
Sustainability is not about how we spend 1% of post-tax profits - it is about how we make those profits.
Nicola Robins
“The degree to which sustainability is informing strategy discussions, building agility, driving innovation and opening the company to new branding opportunities is limited to a handful.”
She adds that it's time to get going. “The companies making the big money in the coming transition and future sustainable society are those that got it first. They moved quickly up the learning curve, linking their core business to the innovations and new markets emerging in the sustainability space.”
Truly comprehending the complexity, timeliness and breadth of the sustainability challenge may be sobering enough to curb the tendency to get carried away by the 'fluffy stuff', says Robins. While greening the office and donations may not be fluffy in themselves, mistaking them for an informed sustainability strategy is, she explains.
“My advice: take 10 minutes, close your eyes and allow yourself to become completely overwhelmed.
“Once you have fully appreciated the challenge, pick up your pen and write down the first thing you are going to do about it. Then make it happen.”
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