Sustainability Series: Part 2
Long-term value creation — A key for sustainable engagement
In part 1 of the series, we introduced you to the problem of challenges faced by climate change and the need to walk towards sustainable development.
In part 2 of the series, let us look at how organizations can strengthen their engagement towards sustainability. Focusing on long-term value creation while achieving sustainable performance happens when businesses can apply considerable attention to reduce their environmental footprint, which benefits their bottom line and benefits the environment broadly.
The current sustainability indices don’t delve deep into a company’s operations, engineering, research, and other business processes in sufficient depth to guide what a company should do to be more sustainable. They are not data-driven -, but rather more checklist-oriented.¹
A data-driven strategy allows the organization to maintain the competitive advantage over a one size fit all checklist strategy. A more data-driven approach would be one that is rooted to understand the interrelation between the organization and the environment and built around its business strategy. The key is to identify the environmental issues that intersect with the business practices and prioritize the relevant SDGs (Sustainability Development Goals)to benchmark them. This creates a win-win situation where profit meets purpose.
Furthermore, one needs to ensure that the benchmarking criteria is specific to each strategy or business driver. It makes sense to have multiple sets of criteria applied to relevant drivers as appropriate for long-term value creation.
A six-step process to achieve sustainability benchmarking would be as follows
- Collect
The first step is understanding the landscape, the environmental impact, external factors, and internal business drivers. Establish a sustainability vision and mission. Furthermore, within the scope of the effort and business priorities, set measurable objectives against the sustainability goals.
- Evaluate
This step is the most detailed and important one particularly if you have just begun your benchmarking journey. Evaluate who or what is being benchmarked. Moreover, assess the current value-chain and do a gap analysis to identify the areas to be improved.
- Define
In clear and incisive language, define the entity, supply chain scope, and the problem — making it compliant with appropriate scientific knowledge. Direct towards necessary and relevant conditions for sustainability standards.
- Implement
Communicate expectations with internal and external systems. Set up a process to align and follow up. Collaboration and strategic partnership should be targeted at this stage.
- Measure
Measure your KPI’s and their progression performance towards or away from them. Further, invest in relevant certifications and memberships to measure the impact.
- Communicate
Transparency is the key. Communicate to all audiences, be aware of the information channel for different audiences. At the minimum, have information for customers, investors, NGOs/Govt, and management. Having a sustainability section on the website and making the sustainability report publicly available to cover the claims is essential.
While every change comes with its set of challenges and we might see some barriers to adoption within the organization, having a data-driven process helps dampen the effect. In case of conflict of interest between stakeholders, a data-driven approach helps influence the situation and handle it better. Another potential barrier is the lack of resources. For lean organizations, building this into their DNA will allow them to continue their sustainable competitive advantage with minimum or no resource constraints. This can be achieved by inscribing sustainability improvement projects into the value-chain of an organization.
In the next part of the series, we will see how to utilize value-chain to evaluate sustainability in the fabric of the organization.
[1]: Beloff, Beth, Tanzil, Dickson (Accessed on Feb 17, 2021) Benchmarking Sustainability https://www.researchgate.net/profile/Dicksen-Tanzil/publication/279715735_Benchmarking_sustainability/links/5d8ed0d792851c33e94300a6/Benchmarking-sustainability.pdf
