Step back, assess, act: sustainability and the bigger picture for business

Increased appetite for sustainability 

As sustainability strategies have grown, so too understanding its value. Importantly, we have seen sustainability move from simply a focus on environmental factors to areas such as an organization’s risk and governance. In addition, there is an increased appetite from leaders to engage in professional assessments, which will help them make the most of sustainability and its many applications.

This increased understanding depends on a willingness to learn. When I talk to clients, there is often an early conversation where we discuss how they define sustainability and we compare that to its full use. These conversations often reveal an interest in becoming more sustainable - with a concern that it will be costly to do so. This is where sustainability can turn a perceived challenge into a business opportunity.

Protecting the bottom line

Here’s just one example of how sustainability was used to improve the bottom line. I have a client who founded a very high-performing business, and the co-founders were working 12-hour days while the managers failed to hold up their end of the bargain and could not be held accountable. By applying a sustainability strategy to the issue, the founders were able to step back and realize they needed a light governance structure that would introduce greater accountability. That governance structure is now supporting staff and managers, helping them share information and report back on their work. One of the core principles of sustainability is transparency and some businesses need to be coached to understand its power and practical dimensions.

Sustainability also encourages leaders to consider the world beyond their own four walls. If business priorities are only shaped by what’s occurring in the immediate environment, then they are vulnerable to wider risks. A business may build a valuable asset, for example, but that asset could soon become worthless due to shocks from the wider environment. One example is when boards and management executives fail to identify how climate change risk will impact their business. When a region is suddenly affected by extreme weather, such as severe droughts, it becomes imperative to reposition the business for continued prosperity.

Countries have different legislative requirements on social sustainability. In South Africa, failure to comply to the wider broad-based black economic empowerment legislation, for instance, could render a business irrelevant by limiting trade opportunities as a result of non-compliance. 

Sectors and supply chains

Commitment to sustainability varies according to the local legislative mandate. Public interest entities, meanwhile, have a mandate to be transparent in publishing their integrated annual reports or integrated sustainability annual reports. The lever we want to see in action is when such entities and big corporations get to understand and appreciate the full value of non-financial information. Environmental, Social and Governance factors are critical in ensuring sustained profits.

Privately owned businesses, meanwhile, tend to dedicate sustainability efforts towards their people, for example, upskilling them to ensure they are prepared for changing work environments such as automation. In terms of business areas, supply chains are a key focus for sustainability action. As trade agreements undergo revision by countries, businesses are reassessing their chains to minimize risks that could otherwise create delays. Changing customer tastes are also leading businesses to consider their local options, rather than always opting for international partners. This is where sustainability, with its focus on what a business needs for a healthy long-term future, comes in.

Covid-19 response

A sustainability strategy also helps businesses survive turbulent times such as the impact of Covid-19. As much of the world quickly moved into remote working, the need for large office blocks came under scrutiny. Many organizations are now planning for a sustainable future that may not feature a physical hub where the majority of employees are present. If that becomes the norm, then companies will have to reassess how people communicate with each other: looking at how you maintain personal relationships on virtual platforms, for instance, spot signs of strain in teams and keep motivations up. Managers all around need to be skilled to manage output instead of input (time). Sustainability – with its big picture focus – is a route that businesses can go down to find solutions in this ‘new normal’ that fit them. 

Impact on reporting

A robust sustainability strategy ensures that the principles of sustainable development are lived, rather than just appearing in a glossy report. As sustainability continues to gain ground, so does its reporting - founded on core principles of transparency. There is real value for a business in reflecting what it does and demonstrating to key stakeholders how it is different to others, but sustainability strategies come first, and reporting comes second.

Sustainability, as a concept, finds its strength in its ability to make leaders pause and consider the numerous ways in which their business makes an impact. It can be treated as a starting point for a business to thrive over the long term, as well as a steppingstone for organizations to stop and re-think what they’re doing for the future.

Countless businesses have already benefitted from prioritizing sustainability. The strategic focus only grows stronger: it is imperative for leaders to define and understand the business case of sustainability and, in doing, play a positive, transformative role in the world.