Your top ten sustainability reporting questions answered
October 08, 2022
“To create an informed sustainability strategy, you need a clear view of the issues that are material to your business.”
Why is it important to develop a sustainability strategy?
Creating a holistic and pragmatic sustainability strategy can be key to future-proofing your business, taking you from compliance to purpose.
On the one hand, it can be key to ensuring compliance with increasingly stringent regulations. On the other hand, it’s essential for meeting rising consumer expectations and improving your resilience to future disruptions. Read on for practical tips on developing your sustainability strategy.
Step 1: Identify your impact factors
To create an informed sustainability strategy, you need a clear view of the issues that are material to your business.
This means being aware of all the factors that could affect your growth strategy, as well as how your company impacts the environment and communities. We recommend assessing the materiality of issues according to the four pillars of sustainability, which include human, social, environmental and economic factors.
Each company’s unique set of material issues will differ based on a variety of factors, including:
Your industry
For companies in high-growth industries, where new hires are key to your growth, human factors such as the availability of qualified staff may have a greater impact.
The size of your company
The impact of social factors such as labour strikes and your ability to resolve them can vary depending on the size of your business.
The location(s) of your company
Depending on the locations of your business operations, you may need to take into account environmental factors such as floods, droughts and pollution.
Your position in the supply chain
The effect of economic factors such as state investment or reduced consumer demand may vary depending on your position upstream or downstream in the value chain.
Taking a broad view of your organisation’s impacts
One of the best ways to determine your impact factors is through dialogue with internal and external stakeholders. Surveys and interviews can be very useful tools to understand the issues they consider relevant.
For example, imagine your company produces consumer goods, and retailers find that end-consumers are becoming more aware of the environmental impact of their purchases. In this case, the ecological footprint of the product would become a material issue.
You can also draw insights from your company’s EcoVadis assessment. Undergoing the industry-specific assessment process is a great way to learn about the key sustainability challenges in your industry. During the assessment process, you’ll receive an evaluation of your sustainability practices, and EcoVadis will then provide you with tailored advice to help you improve your performance.
Learn more about the benefits of the EcoVadis assessment in this article.
Finally, a sustainability consultant can support you in every step of your sustainability journey, from strategy development and the measurement of impact factors to the implementation of sustainability initiatives and best practices.
Step 2: Determine your long-term vision and mission
Once you have defined your material issues, you can start to identify the ones you can have the most impact on. At this stage, we recommend that you formulate long-term mission and vision statements. This will provide clear goals for your company and employees, and a guide to drive continuous improvement.
Driving progress on your sustainability strategy roadmap
A mission statement is focused on your company’s current situation and provides a summary of an organisation’s core purpose, focus and aims. A vision statement, on the other hand, is a succinct description of an organisation’s aspirations and the wider impact it wants to have in the future.
It’s therefore crucial that your vision and mission statements build on the findings of your materiality assessment and reflect your company’s material issues.
This will help you to prioritise impact factors and create long-term alignment within your company – meaning that every decision will be more likely to bring you closer to your ideal future.
For example, at Nexio Projects, we’ve defined our mission as:
Supporting organisations on their journey from compliance to purpose.
This statement forms the basis of how we do business every day. That’s why I’ve written this blog: to share our experience of creating sustainability strategies, and to highlight the benefits that come with taking sustainability beyond compliance to purpose!
Step 3: Formulate your sustainability strategy
Your sustainability strategy is a shorter-term translation of your vision and mission. By understanding your company’s material impact factors, you can identify the short- and medium-term goals that will help you achieve your long-term vision and mission. This will enable you to break down these high-level statements into tangible and manageable targets.
Setting impactful sustainability goals
Well-defined goals enable you to objectively judge your company’s progress. Goals should be SMART: Specific, Measurable, Achievable, Realistic and Time-bound. For example, a SMART goal for reducing production-related emissions for consumer goods might be to reduce the CO2 equivalent emitted per product sold by 10% annually.
Once you’ve defined your goals, you can determine what it will take to achieve them. At this stage, ensuring horizontal and vertical cohesion is crucial.
Horizontal cohesion refers to the alignment between different departments and sustainability pillars. In our example, a particular project might reduce the environmental footprint of your product, but what if this has a negative impact on the quality of the product? Collaboration between business units is therefore key to success.
Vertical alignment, on the other hand, refers to the alignment between decisions within a business unit and the capacity of the unit to execute them at the operational level. In other words, the goals you set for your employees must be in line with their ability to achieve them.
Step 4: Implement your sustainability strategy roadmap and monitor your progress
Creating a strong sustainability strategy starts with understanding the material issues specific to your business. Using the step-by-step approach outlined above, you can design a framework to help you target investments, measure performance and engage internal and external stakeholders. And once you have the fundamentals in place, the next step is to put your mission, vision, strategy and goals into practice!
Check back soon on our sustainability blog for insights on rolling out your sustainability strategy. We’ll be discussing the importance of policies and reporting, and how to improve stakeholder engagement to drive lasting positive impact.
Want to find out more about getting support with your sustainability strategy? Visit our Sustainability strategy page today or contact us for a free consultation with one of our experts.
