The fundamentals of a good sustainability strategy
Sustainability strategies are no longer optional for a business. A combination of regulation, legislation, pressure from stakeholders and customers and a necessity to remain competitive have propelled Environmental, Social and Governance (ESG) issues to the forefront in Boardrooms and to the top of senior leadership mindset.
Businesses of any size and scale can design and implement an effective ESG and sustainability strategy. While there are standards, benchmarks, regulatory and best-practice implications for any sustainability programme, there is no one-size-fits-all strategy for any business. A strategy must be robust, practical and ambitious, yet achievable. It should be entrenched within the wider business strategy and not an abstract, stand-alone piece. One of the greatest benefits of a comprehensive sustainability strategy is that it can drive positive outcomes across all areas of a business, from supply-chains, employee engagement, sales and marketing, product development and can be as far-reaching as to help determine the way a business is financed and how its ownership structure is determined.
In the past there have been various myths that encompassing sustainable principles within a business may somehow be contrary to commerciality and may impact shareholder returns, however quite the opposite is true. An insightful strategy will help mitigate risk within a business and leverage commercial opportunities and increase value.
To develop a good sustainability strategy, an organisation needs to understand the business, both internally and in the wider macro environment in which it operates. This analysis should look at the heritage and culture of the business, its balance sheet, its purpose, products and services, where it operates and its ambitions for growth. A horizon scanning process needs to take place where external political, legal, social, technological and environmental and geographical drivers should be assessed, along with a stakeholder, competitor and industry analysis.
To ensure buy in stakeholders and to really understand the impacts that are most relevant to your business, a materiality or double materiality assessment should be completed. In short, this means any material issues for internal and external stakeholders should be analysed, along with the financial impacts of these (if completing double materiality). Stakeholders will provide critical information to inform the strategy and so their insights are integral.
One of the greatest benefits of a comprehensive sustainability strategy is that it can drive positive outcomes across all areas of a business…
Materiality is essential to developing a robust ESG and sustainability strategy. Whether using materiality or double materiality, it is an essential exercise to fully understand the specific strengths, weaknesses, opportunities and threats to the business. Risks are assessed and the best-practice, regulatory, statutory and reporting requirements for the business, both present and future, are mapped out.
During this entire process, it is imperative to look at the business and determine what it does best. What makes it unique and how can we leverage its end-to-end assets and resources, whether through positive approaches that will enhance its success, or processes designed to mitigate risks and challenges to future-proof the business. A robust strategy is built: one that is pragmatic, sensible and achievable and one that can be measured by tangible metrics or results. The strategy will be integrated throughout the business through training and communications channels and promoted to external stakeholders.
The ESG and sustainability landscape moves quickly and is continuously evolving. A well planned and robust strategy can also evolve, grow and respond to changing externalities.
There has never been a more exciting (or critical!) time for your business to start its sustainability journey.
To find out how our expert team can help with your sustainability strategy, request a call back today.
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