In order to develop true sustainability policies, companies need to understand the nexus between energy, water, bio-diversity, and green house gas emissions, as well as the wider societal impacts of their company, and then combine them into one coherent policy and reporting framework.
Companies also need to understand the interdependence of the functional areas of the business, and how they can work against one another, causing a destruction of value. And, particularly for the larger global corporations, they must understand the interdependence of cross border politics, economies and climate science: how to not go beyond global as well as localized environmental and social tipping points.
Stress points on an organization can have a significant impact on corporate value, whilst the addition of multiple agents of risk can accumulate and lead to a crash. The most recent example is the financial crash of 2007 – onward.
To understand the effects of multiple stressors upon one another, it is vital to have a holistic vision to see how the functional areas across geographies cause risk and affect cost on each other. This includes the supply chain, which may well operate across different geographies. Ignorance in the over-arching chain of events, that is sustainability, can destroy a reputation and a company’s value.
Moreover, embracing sustainability as a model for environmental and social protection will aid economic protection. In order to facilitate this model effectively the company needs to embrace a new entanglement between the functional areas to see cost, waste, emissions and inefficient resource use as a negative impact on value.
Essentially, this is the challenge when embarking on a sustainability strategy and the development of a coherent sustainability policy. Sustainability is a new era of deep customer engagement and customers no longer separate a company’s actions from the products and the brand. Sustainability has become part of the customer experience and is therefore part of the company.
Furthermore, there is empirical evidence suggesting the actions of an organizations’ sustainability through employment engagement as well as environmental credentials are value-generating to long-term investors, hence screening takes place to remove poor sustainability performers.
Essentially, it is important to establish a new set of relationships, developing sustainability to become a new engine for customer engagement. Sustainability will deepen partnerships both within the eco-system of the value chain within which the company operates and within wider stakeholder groups.
Equally, sustainability buttresses the sales and marketing functions, assisting the company to move from monologue driven communications to dialogue, strengthening the bonds the company has with its markets. Companies are accountable for what customers, suppliers, investors and other societal stakeholders say about them. It follows that society gives legitimacy for the company to exist, making sustainability critical for competitive advantage.
So, sustainability helps give the company leverage to control what the world has to say about it. For example, with the growth of social networks, blogs, on-line reviews etc, customers have been empowered to create further reaching touch points than in the previous era of conducting business. Society is going to decide whether what a company does has value – and, society will position a company’s sustainability efforts. If a company’s sustainability reporting is integrated, accountable, verified and coherent with all actions and outcomes reported, society will position accordingly. The company will be seen as an engager, or a negative doubter — that is, whether it is a member of a sustainable community or stands outside that community, on the fringes of what is expected.
Equally, from a procurement angle, there is comfort and safety in dealing with a highly sustainable supplier, a sense of going home. It is important to avoid being associated with a company of negative, out of date, old school ideas – which in itself creates fear to purchase. The sagacious purchaser will choose the supplier that has strong sustainability credentials.
Meanwhile, to ease the inception and implementation of sustainability, companies must break down the silos for cross-functional discussion and collaboration, gaining valuable insights for understanding what is adding or destroying value. Such discussions create more fluidity and enterprise wide understanding. Additionally they create more initiatives leading to more cohesive positive value generating outcomes.
Teams need to understand and build skills in other parts of the business to make sustainability work as effectively as possible with the intensification of reporting, building business-critical touch points that drive engagement.
This environment can be created using external partners if the company has neither the time, budgets or skills to build the necessary data gathering and analysis in-house whilst instilling the skills, processes and working environments to create on-going value through leveraging continuous improvement. Either way, it entails the re-design of core business elements, which will only be tethered without the cross-functional collaboration to deliver insights, disseminate data and, create the KPIs for an effective yield management process.
Essentially, in order to be effective, the emerging Chief Sustainability Officers must collaborate with the C-suite colleagues to adapt the organization and assist in redefining traditional marketing and communications. If not, the challenges will remain in place, leading to business exclusion through a reduction of legitimacy, handing customers over to the engaged and sustainability coherent competitors.
Sustainability is not a minefield of conflicting ideas, engagements and conflicts of interest; sustainability is about keeping an eye on the bigger picture that is employment, environment and society.
Sustainability is becoming a major part of the brand. Sustainability creates a positive halo for the brand amongst customers and suppliers. Additionally and very importantly, it creates a positive halo for the brand amongst staff, developing the right experience, chemistry and attitudes for the staff to be proud of being winners.
Christopher Gleadle is author of Sustainable Growth Through Sustainable Business and CEO of Sustainable Viability.