A study recently published by A.T. Kearney revealed that even during the current economic slowdown, companies that show a “true” commitment to sustainability appear to outperform their industry peers in the financial markets.
By an average of about $650 million in market capitalization per company.
So what exactly is a “true” commitment to sustainability?
According to the A.T. Kearney study, this included, A) a focus on long-term health rather than short-term gains; B) strong corporate governance; C) sound risk management practices; and, D) a history of investing in green innovations. This list could easily be expanded upon, but I’ll let it rest for now in the interest of brevity.
The study concluded that, “The most sustainability-focused companies may well emerge from the current crisis stronger than ever—recognized by investors who appreciate the true long-term value of sustainability.”
Okay, okay—this all sounds really good. But what does it actually mean and how can you get your company to be one of those corporate winners?
Sustainability is all about making our everyday practices socially, environmentally and economically responsible so that we can meet our needs today without compromising the ability of future generations to meet their needs.
Sustainability is easy to say and hard to do. But the companies that actually roll up their sleeves and rethink their business models, operations, and products and services ultimately reap the benefits.
Developing a strategy for sustainability and implementing it throughout an organization is no small accomplishment. It requires systemic change that is challenging for any company, regardless of its size.
What we have found, however, is that there are many small steps an organization can take to become increasingly socially and environmentally responsible within a realistic timeframe. Cumulatively, these steps can be part of a larger process that gives an organization the impetus, momentum and tools for change.
Step One: Organizing for Success
Although an organization can “begin” their journey at any point in the process, many choose to start by creating an internal structure to sustain progress. During this first step, an organization might create a sustainability council or “green” team that is charged with establishing a vision for sustainability. Executive engagement is essential during this first step; without their support, progress can be difficult. Developing a strong business case for sustainability, in addition to education, can be helpful in gaining advocates and supporters who will champion the cause.
Step Two: Stakeholder Engagement
With a structure and vision in place, organizations should ask internal (employees) and external (customers, suppliers, shareholders, non-profit organizations, etc) stakeholders about the sustainability issues that are most important to them and the organization. What emerges from this stakeholder engagement process is a set of “material” (or relevant) issues that align with the organization’s key sustainability risks, opportunities and impacts.
Step Three: Goal-Setting
Once an organization has identified its material environmental, social and economic issues, the next step is goal-setting. Sustainability goals provide the foundation upon which the organization can develop a strategy for sustainability. Set goals around the material issues that emerged from the stakeholder engagement process and make them specific, measurable and realistic. An organization might consider referencing the Global Reporting Initiative’s (GRI) G3 Guidelines to find quantifiable metrics that align with each goal area.
Step Four: Implementation
With established goals in place, organizations are ready to create action plans and measure performance. During the implementation step, teams, departments, individuals and working groups will be making changes and doing the “work” that will ultimately make the organization more sustainable. Throughout the entire process, gather data to track progress towards company goals. Appoint individuals who will have ownership over the data collection for specific goals.
Step Five: Information Sharing
Critical to the success of any sustainability initiative is ongoing, timely, effective and engaging communication. Basic communications ensure that internal and external stakeholders understand how the organization is approaching sustainability, how it will improve performance and how stakeholders can get involved in the process.
One particularly unique and effective form of communication for sustainability is an annual sustainability or corporate social responsibility report. In it, organizations share the results of their environmental, social and economic activities, offering a transparent picture of the organization’s sustainability performance. Publishing a sustainability report allows stakeholders to see where an organization has made progress and where there are opportunities for improvement.
Business strategy is about maximizing profit and building organizations that can survive (or sustain themselves) in even the harshest economic environments. Many of the most successful companies in the world are demonstrating that making a “true” commitment to sustainability is essential for strengthening business strategy today.
Sustainability, at its core, is about growing profitability by approaching business in a way that takes into account the rapidly changing external environment. It means paying attention to the social, cultural, environmental and economic factors shaping the business landscape.
BrownFlynn’s approach to sustainable development focuses on helping organizations design an inspiring and engaging vision for future success and then creating the action plan necessary to achieve it.