The importance of sustainable approaches, particularly in business is now more palpable then ever before. This is due to the impact it has on business risk and strategy, operational aspects, community and government policy. Sustainability is no longer a nice to have, but a collective moral and economic imperative. Both stakeholders and government policy intervention is shaping the business requirement to be transparent in their activity and ensure that investment and or impact is positive, strategic, measured and delivers value. But how do we make that real, tangible and relevant?
We are now seeing the emergence of best practice and governance guidelines - from the World Economic Forum on ‘How to set up Effective Climate Governance on Corporate Boards’, the Australian Institute of Company Directors ‘Climate Change Governance Principles’, through to the COSO WBCSD ‘Enterprise Risk Management’ application to Environmental Social Governance (to name a few) – providing intentional guidance on how businesses can apply sustainability frameworks to their business model.
The challenge that comes with this is two-fold; 1) Some areas of private sector have yet to embrace incorporating sustainability as a model for competitive growth and doing good business; and 2) The how to integrate and implement, particularly to a mature business across multiple jurisdictions, can bring challenges and raise many questions.
Businesses are encouraged to look at incorporating sustainability programs as integral to strategy, operations and the end-to-end value chain, by choosing methods and approaches which align with governance guidelines, whilst allowing for the flexibility to operate within boundaries. Doing so is an opportunity for growth moving outside of traditional models, where the key outcomes are based on two principles that operate in unison:
- Risk minimisation to people, environment and systems within the business, across the supply chain and communities; and
- How businesses demonstrate smart outcomes towards efficiency and productivity with sustainable outcomes.
The outcome of these principles and the solutions will vary dependant on the industry, jurisdiction, market access and area’s of operation. However, simplistically it is what all businesses need to focus on today, with the difference of understanding what this means through a sustainable lens across the business model and value chain.
While there are many factors to be considered from a macro-economic and global perspective, the key gaps that tend to exist for businesses on how to incorporate sustainability to existing business models, can come down a few factors including (but not limited to):
- The confusion in how to chose the best approach and apply current best practice standards;
- Any continuing disconnect between leadership and operations;
- Full visibility of sourcing, suppliers and activity across supply chains and value chains; and
- Possible isolation of sustainable practices across the company’s operations and value chain.
Some the key steps Boards and Leadership can undertake to integrate sustainability include:
- Establish the Environmental Social Governance (ESG) framework in a way that best aligns with your company strategy.
- Chose to focus on initial sustainability programs that are real and relevant to your business, industry and areas of operations (for example, focus on incorporating the specific United Nations Sustainable Development Goals that relate to your operations).
- Build the chosen sustainability programs into your existing governance, risk and compliance frameworks with key drivers linked to operational outcomes (which are then reported, measured and continuously improved on).
- Establish a clear implementation pathway considering what is practical against organisational maturity and resources available.
- Plan and execute for transformational change across the business model.
- Whilst embarking on this journey, the Board and Leadership need to be transparent and open with key stakeholders beyond the Annual Report.
- At times, have courage to engage conversations that matter within the business, with external stakeholders and industry partners.
By doing so, some of the demonstrable long-term benefits of this approach include:
- Leveraging alternative business models in response to challenges facing businesses and communities;
- Reduction in waste, negative impacts, risk, reputational damage through the demonstration of environmental social leadership;
- Creating social, environmental and economic benefit to the business and community; and
- Realising efficiencies and productivity through environmental, social and stakeholder process improvement and redesign, creating sustainable evolution and development.
It is time for businesses to catch up with the way great companies operate and see their role today, in a way that creates economically sound approaches whilst having a positive influence and impact. Microsoft CEO, Satya Nadella describes it well “the job of a multinational is more important than ever. It needs to operate everywhere in the world, contributing to local communities in positive ways – sparking growth, competitiveness and opportunity for all”.
While we are facing significant macro-economic pressure globally, opportunities exist everywhere. It is how we engage the conversations that matter, go about exploring the external variables in the market and engage available technology platforms that determine new and viable pathways. We can no longer simply tick the boxes; we have to move outside the lines to be strategically transformative and incorporating sustainability is part of that. Remaining competitive involves engaging audacious thinking and approaches, where business models need to transform for growth and long-term viability.
The role private enterprise plays (together with their stakeholders) is critical to engaging and leading solutions to improve sustainable development outcomes and solve some of the challenges we face today. Great outcomes can be achieved by driving a vision for leadership, incorporating the social, environmental, economic, human and ethical principles of sustainable development as core to strategic intent. By doing so, organisations are able to play an active role in impactful market engagement, competitiveness and disruptive transformation.