Sustainability
strategy

There’s no one-size-fits-all approach to defining sustainability goals and developing a sustainability strategy. However, a number of steps are essential to the process, starting with the identification of material ESG issues. Ideally, this is conducted in line with the ESRS double materiality assessment (DMA) guidelines. In this step, it’s critical to map and engage all the stakeholders that need to be involved in the DMA process, and to define the impacts, risks and opportunities (IROs) that these material topics and their sub-topics present throughout your value chain. A second step is to measure where your company stands on the various material topics to establish a baseline and understand current gaps. In parallel with this step, it’s important to have a clear vision and set SMART targets that clearly define the desired outcome.

Here, it’s key to engage stakeholders, conduct peer benchmarking and scan the regulatory horizon to define the level of ambition and set science-based targets. Once you’ve set goals and targets, you’ll need to develop and implement action plans to achieve your sustainable business goals. It’s also important to put in place the right data processes and systems to measure and monitor your progress against targets. Finally, don’t build your sustainability strategy in a vacuum! It’s important to decide how you'll integrate ESG goals and strategies into your broader business plan, and create an incentive structure that prioritises sustainability goals as much as financial ones.

Common challenges we see in the implementation of sustainability strategies include: limited leadership buy-in and commitment; cultural and engagement challenges; difficulties in collaborating across the value chain; inadequate data quality and limited non-financial data structures and processes; and moving beyond the ‘compliance-centric mindset’ to focus on innovation. To overcome these, it’s essential to create a clear vision based on material impacts and opportunities, set SMART sustainability goals, build an appropriate organisational structure, align incentives, streamline data collection early through scalable data processes and systems, and engage with key suppliers to ensure your value-chain impacts are reflected.

One of the first steps in developing a sustainability strategy is to map the entire value chain and identify stakeholders. This exercise should reflect the industry, activities and operational specifics of the business. Typical stakeholders involved in these journeys include internal (e.g. senior management in key departments and sustainability teams) and external (e.g. key suppliers, investors, local communities, NGOs and industry associations) parties.

When structuring sustainability roles and responsibilities in your team, consider key roles such as a senior ‘champion’ for high-level sponsorship, ‘deciders’ who can approve projects and allocate resources, and ‘doers’ who can implement different aspects of the strategy. In addition, it can be helpful to categorise stakeholders into the following groups: ‘active’ supporters of sustainability efforts, ‘agnostic’ individuals who are indifferent but can be persuaded, and ‘disgruntled’ stakeholders who are resistant to sustainability efforts. This structure ensures a balanced team with clear roles and diverse perspectives, which is critical for developing and implementing an effective sustainability strategy.

At Nexio Projects, we use over 40 benchmarking tools and frameworks, including ratings and certifications such as EcoVadis, B Corp, CDP, Sustainalytics, Dow Jones Sustainability Index (DJSI), MSCI, ISS ESG and Refinitiv. We also use benchmarking tools such as the World Benchmarking Alliance (WBA) rankings and non-financial disclosures from companies themselves.