How to Develop a Sustainability Strategy
One of the most common refrains we hear from our clients at LittPark is that they genuinely want to implement a sustainability strategy, but feel overwhelmed by the task. Business leaders know that a strong Environmental, Social and Governance (ESG) proposition can lead to higher return on equity and lower downside risk. And it’s about more than the P&L statement: leaders recognize the role that business can play in creating a more equitable and sustainable world, and they want to contribute. They just don’t know where to start.
We understand that there’s a lot to consider when you’re first looking at a sustainability strategy for your business. To help you get started, we’ve drawn on our years of experience working with clients in industries ranging from construction to nonprofits, to share our very best guidance for developing an ESG strategy that really works for your business.
What does your business do?
It may seem obvious, but any sustainability strategy you implement should be aligned with the nature of your business, and your current strategy. An insurance company will have a different ESG approach to a healthcare provider.
Your organizational strategy and values should inform the structure and content of your sustainability strategy. This is especially important when you consider that ESG should enhance your profitability, not detract from it.
For example, Maple Leaf Foods is working to improve food security across Canada, directly relevant to its business purpose. Similarly, it is Shopify’s mission to create equitable access to income for entrepreneurs, no matter their background or where they are based.
Once you have selected several big, overarching goals that align with your corporate strategy, you can begin to break those down into smaller steps, allocating responsibility and timeframes for tasks.
What is really feasible for you right now?
Having a budget and setting incremental, achievable goals will encourage those involved to do more over time. Progress over perfection is a great mantra.
Many businesses are tempted to make big, bold commitments when setting their sustainability goals. That might look like aiming to be net zero by 2030, to establish a completely transparent supply chain or to eliminate child hunger in their community.
Big goals are admirable, but it’s important that they are realistic. Setting goals that are not feasible for your organization’s capabilities and resources can lead to reputation damage, staff burnout and sustainability strategies being abandoned altogether.
Give the tiger teeth
Once you have a broad direction in mind, you’ll want to decide who within your business is going to ‘own’ sustainability. Will ultimate accountability sit with the CEO, Marketing, Investor Relations, or somewhere else? Perhaps you’ll have a cross-disciplinary team tasked with implementing the strategy.
Whatever your decision, the most important thing you can do is ensure that those responsible have the skills and the authority to deliver on expectations. Equip them to overcome bottlenecks and obstacles caused by internal structures or culture, in order to set the team up for success.
Sometimes it can be helpful to hire an outside consultant who has no skin in the game when it comes to internal politics and power structures, to help big decisions to stick.
Consistent cycle of stakeholder engagement
Many organizations make the mistake of engaging key stakeholders at the outset of the sustainability planning process, and then ticking this activity off their ‘to-do’ list. In fact, a consistent cycle of stakeholder engagement ensures that people who have a role to play in delivering ESG outcomes are aware of progress, and have the opportunity to raise any challenges, ask questions, or contribute new ideas.
What does success look like?
Once you’ve established specific, achievable goals that align with your organizational strategy, it’s important to know how you will measure and report on your progress. Some goals have easily quantifiable outcomes, whereas others may require more qualitative inputs. Spending time thinking about how you’ll know you’re on track, and what you’ll do once you’ve achieved your goals, is critical to demonstrating the return on investment for your strategy.
Just as important is thinking about who needs this information, and how you can best show them. For example, do investors require an annual report? Does the CEO want a monthly dashboard update? Do you want to show customers how you’re doing using social media?
Regular communication of progress, and honesty about challenges and roadblocks, build trust and confidence in your ESG program.
Build a support team
There is no need to be an island when it comes to establishing a sustainable business. Many others have gone before you, and others again will be at similar stages in the journey.
Creating a network of sustainability leaders within your industry can help to generate innovative ideas and overcome common challenges.
Establishing a formal industry-wide sustainability association can also support with important success factors for your strategy, such as lobbying for policy changes, establishing economies of scale with suppliers, and more.
Developing a sustainability strategy doesn’t have to be overwhelming. At its core, it’s about ensuring your goals align with your business, that the tasks you set are achievable, and that you have the buy-in from the right people.
