Enterprise Sustainability Management: An Emerging Paradigm
The management of sustainability is one of the most rapidly evolving areas in the industrial space. Over a long history, it’s gone from an ideology to a strategic initiative embedded into daily operations. Leaders no longer manage sustainability in a reactive and local manner. Rather, in what is quickly emerging as the paradigm of Enterprise Sustainability Management (ESM), it’s managed proactively and globally as part of larger operational excellence initiatives.
The Road to Sustainable Operations
Surfacing decades ago as a focal point within organizations and the media, concerns around waste, emissions, pollution, and toxic materials prompted companies to take more accountability for actions. As a consequence, the term Corporate Social Responsibility (CSR) appeared. Over time, the management of CSR, in addition to the growing complexities of other environmental and stakeholder factors, has fallen under the umbrella of sustainability.
Challenges with Managing Sustainability
Sustainability touches every area of the value chain, including product development, procurement, manufacturing, maintenance, sales, delivery, and customer service. It’s often ill-defined, even within the same organizations. For some groups, it’s about reducing energy and carbon use or designing eco-friendly products. While for others it’s about reducing operational risks with Environmental, Health and Safety (EH&S) processes, and so on.
In such a scenario, each area of the business ends up with its own systems, data models, compensation structures, management systems, leadership, and more. These activities have a positive local force, but it’s difficult for the organization as a whole to capitalize on the benefits or effectively communicate the improvements to the market and external stakeholders.
Management Systems and Technology for Sustainability
Beyond the challenges of siloed departments all trying to address sustainability in different ways, there are also challenges around management systems and IT. Traditionally, there have been limited IT applications available in the market for environment, safety, risk, and product stewardship among other areas. In response, organizations have developed internal solutions or adopted point solutions that are not likely integrated with other applications.
At the same time, there has been an explosion in management systems beyond just quality management and ISO 9000. Today, there are many different standards based on roughly similar management systems that incorporate the processes of Plan, Do, Check, and Act. These numerous standards, regulations, and processes all impact a different area of sustainability.
With growing complexity and interconnection of the space, homegrown IT and the various systems that were initially created to manage these processes are starting to become roadblocks for business improvement.
Enterprise Sustainability Management Emerges
Over the past few years, LNS Research has witnessed the convergence of a common set of themes surrounding sustainability. LNS Research identifies six core areas of ESM: EH&S, energy management, carbon management, operational risk management, product stewardship, and sustainability reporting.
The benefits of a holistic, integrated, and streamlined information system to connect these areas are quickly bypassing the effectiveness of manual processes and proprietary solutions. Increasingly, market leading companies are adopting ESM strategies to manage operations.
ESM can be viewed as a strategic information management framework used by companies to standardize, consolidate, and centralize business processes to promote sustainability and business performance. Organizations are implementing ESM strategies to add a sustainable perspective into the product and process lifecycle, which extends from the conception of the idea through disposal. When fully utilized, ESM acts as a platform for sharing cross-functional information and orchestrating cross-functional business processes.
Building ESM into Operational Excellence
To be successful in implementing the new ESM paradigm, LNS Research advocates for companies to build sustainability initiatives into operating systems and models of operational excellence. This means aligning the right mix of people, processes, and technology with strategic objectives.
In the case of leadership, companies may create a Chief Sustainability Officer role with a supporting organization and integrated management by objective compensation program. For processes, the ISO standards listed above may be a main focus area and built into a common model of operational excellence.
Finally, for technology, companies should begin to phase out disparate processes and systems, looking into an implementation of a holistic ESM solution that connects across functional areas as well as all the way from assets, facilities, and production processes up to the enterprise layer.
We expect to see a further convergence of sustainability strategies as well as an increased focus on ESM as an information management framework. In the coming months, LNS Research will be covering this topic more in depth, releasing a sustainability best practices guide and a solution selection guide.
Matt Littlefield, is president and principal analyst of LNS Research. He covers sustainability, enterprise quality, manufacturing operations, asset performance and industrial automation. Mike Roberts, a research associate at LNS Research, is a researcher and writer focusing on technology in the industrial and manufacturing spaces. To download the complete, complimentary white paper from LNS Research, please visit at www.ihs.com/info/ehss/esm-research-report.aspx.
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