Why is it important to build a sustainability strategy?
Modern businesses are facing more and larger challenges every day. In the recent events of COVID-19 for example, some business struggled. However, the organisations that proved to be more resilient were sustainable businesses. That’s one reason for a strategy to be put in place. But where do you start? How can you take your efforts to the next level? In this blog post, we will give some practical tips on how to design or finetune your sustainability strategy. This will help you to define your unique path and get the best out of your company in the long term.
Step 1: Identify your impact factors
Before you can start designing a sustainability strategy, you first need to understand which issues are material to your business. Each business is different, depending on:
- The industry you operate in;
- The size of your company;
- The location;
- Your place in the supply chain;
Different aspects will be relevant to your business.
The four pillars of sustainability
In order to ensure your sustainability strategy has the biggest impact possible, it is crucial to understand which factors are the most relevant to you. In order to do so, companies should conduct a materiality assessment. We would advise including the four pillars of sustainability in your assessment:
- Labour and Human Rights
- Business Ethics
- Sustainable Sourcing
By collecting data from different sources your main risk and opportunities can be identified.
One good way to determine your impact factors is by starting up the stakeholder dialogue with both internal and external stakeholders. Conducting a survey or taking interviews will give you a better understanding of the issues they find relevant. For example, end-consumers are becoming more and more aware of the environmental impact of the products they buy. So, for consumer goods, the ecological footprint of the product became a material issue.
In addition, you can use existing databases such as EcoVadis. When registering on this platform, you will get immediate insight into the most critical sustainability challenges for your company. This information is based on years of experience and a major database. Lastly, partners like us can help you conduct thorough research to determine your impact factors. We also answer questions about the company’s power to change or influence these material issues.
Step 2: Determine your long term vision and mission
Once you defined your key material issues and you identified the ones you can actually influence. It is time to formulate a long-term mission and vision. These two statements are crucial for strategic planning to be effective. They will provide continuity and set boundaries for your company and employees.
Your ideal future
A mission statement is focused on the current situation of your business and provides a short summary of an organization’s core purpose, focus, and aims. A vision statement, on the other hand, is a short description of an organization’s aspirations and the wider impact it aims to create in the future. It is, therefore, crucial your vision and mission statement clearly reflect your core materials issues and build upon your findings of the materiality assessment. The unique characteristics of your company need to be considered. This will help you to prioritise the impact factors and create long term alignment in your company. With every decision you take, the question needs to arise whether it brings you closer to your ideal future.
At Nexio Projects, our mission is:
To support organisations on their transition from compliance to purpose
This statement has formed the base for how we do business every day. By writing this blog, I am contributing to the mission we set for ourself.
Step 3: Formulate your sustainability strategy
In the third phase, you can finally start designing the actual strategy, which is a shorter-term translation of your vision and mission. It should encompass all impact factors (identified in step 1) that are relevant to your company. More specifically, you need to identify which short- and mid-term goals you will have to achieve in order to reach your long-term vision and mission (identified in step 2). By breaking up these long-term high-level statements, you will make each step more tangible and manageable.
The goals should be SMART:
They are formulated so that you can objectively judge your company’s progression. Looking back at the example of the ecological footprint of consumer goods, you could, for example, set a target like reducing the CO2 produced per product sold with 10% on an annual base.
Once you have identified a set of relevant targets, you will need to determine which actions your company will take in order to achieve them. Project outlines and processes need to be described on a high level. Important is to ensure your strategy supports both horizontal and vertical cohesion.
Horizontal cohesion refers to the alignment between different departments and sustainability pillars. Imagine a proposed project has a positive impact on one material issue – e.g. the ecological footprint of your product. But a negative impact on another – for example, quality of the product and safety of the end-consumer-, questions regarding the appropriateness of this project should arise. In an ideal situation, new projects are aimed at achieving several of your goals at the same time. Therefore, the collaboration of different functional units is often required for obtaining corporate targets.
Vertical alignment, on the other hand, refers to the conformity between decisions on a management level (group and/or entity) and an operational level. In other words, the strategy forms the bridge between your long-term high-level ideas and day-to-day operations.
Step 4: Implement your sustainability strategy and monitor your progress
The next step will be to put your ideas into practice. In the next blog post, we will provide you with another set of insights on how to roll out your strategy. Discover next week how policies and reporting will help you to successfully implement your strategy. Amongst others, we will advise you on how to create stakeholder engagement and optimise the buy-in to increase the success of your strategy.
Creating a strong strategy starts with gaining relative insights and understanding your main material issues. By taking a step by step approach, you will be able to design a framework which helps you focus on investment and drive performance, as well as engage internal and external stakeholders. In the next blog post, we will focus on the outer circle and explain the next steps to implement sustainability within your company.