Senior executives are typically foresighted and clear-headed in matters that are material to their business, yet are not sufficiently informed as to understand how externalities can effect financial materiality. So, first, understand what sustainability is.
Sustainability is more than being seen to be green. Sustainability is a compass for a business to navigate to a clearer, robust business model, designed and fit for purpose in the 21st century.
Whether a company, a school, an NGO, a government, they all have a leader who cares about reach, cost, risks and revenue of their organization. As such, the circles of sustainability allow you to truly understand the impact your organization has on the environment and society. The circles of sustainability allow you to anticipate and manage risks through waste, as well as conspiring environmental and social stressors, that will surely undermine long-term competitiveness. Yet, to understand risk better is to understand the opportunities better: to remove silos, and elevate your ability to retain top talent, innovate and be creative to drive new revenue streams, improve return on assets and so strengthen the balance sheet. Sustainability is a fundamental rethinking of the definition and measurement of value, with the creation of instruments, tools, standards and incentives that deliver oxygen to your organization and propel you on a race to the top. To leverage sustainability for economic profit, and, as McKinsey, a consultancy company, have reported in their recent paper, economic profit is a strategic yardstick you can’t afford to ignore.
Yet, to be ahead of me-too competitors, who give the perception of sustainability, your sustainability needs to be delivered with balance, that is material and relevant to the stakeholders to whom you wish and need to communicate with, where quantitative indicators may serve as proxies for qualitative aspects of the organization. And, evidence of strong sustainability management speaks to the interdependence of sustainability and financial materiality of your organization. Furthermore, organizations that define and measure their success in a sustainability context are likely to be those with superior, forward-looking strategy and management – a key ingredient in long-term business prosperity.
Ultimately, sustainability is an investment in reputation enhancement, risk management, customer retention, expenditure control and the identification of new market opportunities as well as the attraction of a lower cost of capital. It speaks of excellence in management and tone; therefore is a signal to the market, indeed, the outside world, of the organization mindset, culture and quality.