Sustainability Consultant | Business Coach & Teacher | Founder of The Academy of Human Potential.
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It’s incredible to think that a decade ago issues like environmental impact and socially responsible investing were considered sidebars on every corporate agenda. Now, in the past two years alone, the number of companies that have committed to sustainability goals has increased tripled as a result of efforts such as new government policies and international efforts.
Lack of awareness is no longer a barrier to adopting sustainability practices; however, organizations seeking to have a positive impact on their environmental, social and governance (ESG) activities face new challenges. In my experience, the most pressing challenge practical implementation. Sustainability experts seem to agree that the solution to this challenge lies in the overall approach to a company’s core strategy.
Although there are many advantages for organizations to adopt sustainability, such as long-term cost savings, customer loyalty, risk management and innovation, actual implementation is often difficult due to outdated business practices. As a sustainability consultant, I’ve found that many companies’ usual reactive approach to maintaining industry certifications, competing in the marketplace, and complying with regulations is what makes sustainability so challenging for them.
Since sustainability is still relatively new as a business topic for most industries, efforts are often detached from core strategy rather than treating it as an opportunity with real impact on the bottom line. What business leaders are now realizing is that it is no longer enough to pigeonhole sustainability activities, in the past ten yearsdemand for durable goods, services and industry standards has increased dramatically.
Incorporate sustainability into the business model.
Many companies are successfully taking advantage of the opportunities presented by sustainability by incorporating it directly into their business models. I’ve found that companies are more likely to promote return on capital, innovation and risk management when they embrace a long-term strategic approach to sustainability. This path also helps address issues related to ESG reporting. To improve sustainability performance, executives and investors demand accurate, measurable and detailed data. However, many business leaders and investment professionals argue that this is due to a lack of tangibility factstheir companies do not assess competitors, suppliers or capital markets based on ESG factors.
Therefore, sustainability goals need to be linked to relevant business objectives and regularly monitored for improvement to have a real impact. The problem is that organizations need to take the time to review and restructure their business models to include measurable goals directly related to sustainability.
Align ESG objectives with business goals.
Material risks and opportunities across industries are inherently addressed by a well-thought-out ESG strategy, ultimately contributing to a stronger foundation for growth. The key to successfully implementing a sustainable business model is to create goals that are consistent with the company’s overall mission and quality policy, and then carefully select quantifiable goals that are achievable using the right indicators. Taking the time to create a quality policy that includes sustainability goals is the first step to measuring performance.
Objectives typically include legal and compliance requirements, financial, operational and business requirements and stakeholder interests, often including sustainability. Examples of sustainability objectives are the amount of raw materials or energy used, the amount of waste produced, the number of ISO-certified suppliers or investments in social programs. Once sustainable business practices are incorporated into the corporate structure, measuring performance can become easier as sustainability indicators become common business metrics during management reviews.
That is the advantage of being a new entrepreneur. One can build a sustainable business model from scratch without having to disrupt operations to restructure business strategy. The idea is to start with a few worthy goals, hit your goals, and build from there.
It is important to remember that the management team is responsible for assigning members to achieve goals, creating an action plan and establishing a time frame. Once the resources and processes are in place, monitoring and assessing performance as a priority can become less challenging.
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