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How to Get Sustainability Initiatives Under Control

ConfusionMany companies have more sustainability initiatives than they can effectively manage and would benefit from applying performance management principles, according to McKinsey & Company.

One of the biggest challenges companies face in sustainability is getting top leadership attention. If a company has too many initiatives and top management doesn’t prioritize them, then the results will be fragmented, decentralized and not necessarily aligned with one another.

Keys to achieving sustainability results include the following:

Focus. To develop a clear set of priorities, a company must analyze what matters most along the entire value chain. This should enable companies to identify the sustainability issues with the greatest long-term potential and to create a systematic agenda. Once the priorities are identified — with three to five being best — the next step is to develop a fact base from which to create a detailed financial and sustainability analysis.

Set concrete goals. After the financial and sustainability analysis, translate this information into external goals that can be distilled into business metrics. These goals should be specific, ambitious and measurable against an established baseline. They should have a long-term orientation (more than five years), be integrated into business strategy and their intent should be unmistakable.

Communicate the financial impact. Many senior leaders will give sustainability lip service but not capital if they do not see financial benefits. As a result, it is important to show that sustainability can pay for itself. This needs to be done rigorously, consistently and reinforced with fully costed financial data. It is also important to communicate other kinds of value, such as improved perception by important stakeholders.

Create accountability. Many companies fail to capture the full value of sustainability because of a lack of positive or negative incentives to do so. Among respondents to a McKinsey & Company survey, one in three named earnings pressure and lack of incentives as reasons for poor sustainability results. However, some companies have made progress in this area by successfully tying sustainability data to both short-term and long-term goals.

Although sustainability makes good business sense, not all leaders are convinced, according to a January study by the Shelton Group that found personal belief drives business decision makers.

Photo Credit: Confusion via Shutterstock

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