Innovation and investment value through Sustainability Strategy

9 July 2014 in Environmental Sustainability, Strategic Growth, Sustainability, Transformational change

Sustainability Strategy is pushing beyond Corporate Social Responsibility, with a vision for business leadership in sustainability and a pathway for creation of investment value that drives efficiency and productivity with tangible outcomes.

In this article by LVP, we look at the challenges facing businesses, what are some of the gaps in sustainability approach and the start of strategic engagement for business leaders on this topic.

Futurist patterns and current market behaviour indicate key competitive pressure points, where the challenges facing businesses requires a shift in approach outside of traditional business models.

Strategic engagement through Sustainability (ESS) is an opportunity for growth moving outside of traditional models, where the key outcomes include risk minimisation, investment value and demonstrable smart outcomes in productivity and efficiency.

 It is time for businesses to catch up with the way great companies operate and see their role today, in a way that creates economically sound approaches whilst having a positive influence and impact in engaging stakeholders and government.

The challenges facing businesses

Businesses today face a challenging landscape of balancing market competitiveness with innovation and investment value. Through our research and experiences, some of the main challenges facing businesses in tackling environmental and social issues strategically, include:

1. Businesses are being called to be leaders beyond, Corporate Social Responsibility, demonstrating vision beyond providing charitable support to social causes (only) for brand value.  The reality is, social and environmental issues are intrinsically linked. Whilst businesses are not exclusively responsible for the causes and outcomes to social and environmental impacts, the business community is certainly part of the conversation and needs to be part of the solution. Strategically for businesses, pushing out beyond CSR, increasing efficiency and productivity to deliver tangible results to the business, shareholders and stakeholders is an untapped opportunity to be innovatively competitive.

2. Increasing macro economic shifts forcing change. We are seeing a demonstrable long-term and lasting shift in market power, with increasing macro economic shifts requiring traditional business models to change. With an increasingly globally interdependent market, expectations are high, resources need to be well managed and competitive pressures are forcing key industries to adapt and adjust business models to be agile, responsive and more productive.  In Australia, for example industries across mining, oil and gas, aviation and retail are being forced to adapt their business models in response to global competition.

3. Increase in stakeholder power. Multi-stakeholder groups are informed and active, with strong protest against proposed projects and / or boycott of companies due to their negative impacts. This is now much more prevalent through accessible knowledge and news and the use of social media.  Increasing stakeholder power is instrumental as to why businesses need to engage in conversations around social and environmental issues.  Though it’s not economically viable to entirely cease projects, particularly when open engagement with stakeholders, including governments, can actively reduce risk and create positive engagement.

4. Increasingly, governments are engaging in policy creation for sustainability issues. Governments are legislating in emerging countries where companies are required to minimise environmental and social issues and risks whilst demonstrating how profits from significant projects will be reinvested in local communities, in order to gain license to operate.  The Obama Administration is leading the way in the Western community with the Clean Air Act, an unprecedented clean energy economy approach to fight climate change whilst providing reliable and affordable energy sources.

Both stakeholders and government policy intervention, is shaping the business requirement to be transparent in their activity and ensure that investment and or impact is positive, strategic, measured and delivers value.

Realisation of gaps for businesses in sustainability implementation

Through our project delivery experiences and discussions with companies, some key gaps remain for businesses and how they can bring about strategic engagement in sustainability.  Some of these gaps include:

1. Existing confusion in standards application. Confusion exists around governance standards application and how to integrate and apply them strategically outside of silo’ed management systems in order to provide tangible and sustainable outcomes.

2. Disconnect between leadership and operations. We also see disconnects between leadership and operations where the lines of accountability, communication and operational activity are blurred in strategic intent and organisational silos. At times, sustainability managers are actively employed and driving sustainability culture across the organisation, but in isolation from the leadership team and true accountability.

3. Not sure how to go about it. In many cases we see companies and their leadership teams demonstrate a desire and understanding of what needs to be done, though they are not sure how to go about it or where to start.

4. Look at “Environmental” and “Social” as isolated elements. The most concerning gap,  “Environmental” and “Social” aspects of strategy and operational activity, are considered as isolated elements. The most frustrating part of this, is outstanding work is being done in both “environmental” and “social” spheres, but in isolation. Environmental and Social elements are infrequently interlinked and integrated as part of strategic intent and applied to everyday operational activity to create efficiency and productivity. Some of the integrations we look for is how to go about optimising supply chain for ethics and productivity maximisation or leveraging human capital and key stakeholder groups to create innovation capacity.

More work needs to be done to strategically engage both internal and key external stakeholder groups, and interlink environmental and social aspects of business activity, as a whole system.

Strategic engagement thorough Environmental Social Sustainability

Strategic engagement enables a whole system integration approach to the environmental and social challenges facing businesses. Environmental Social Sustainability is about creating innovation and investment value.  This is achieved through:

  1. Risk minimization to people, environment and systems; and
  2. How businesses demonstrate smart outcomes towards efficiency, productivity with sustainable outcomes.

 This is where true investment value exists for businesses.

 It is achievable through:

  1. Business leadership and strategic engagement of stakeholders; and
  2. Using a methodology towards Environmental Social Sustainability, to create a pathway for strategy creation and operational implementation of tangible outcomes.

Some of the demonstrable long-term benefits of the Environmental Social Sustainability approach include:

  1. Leveraging alternative business models in response to challenges facing businesses
  2. Reduction in waste, negative impacts, risk, reputational damage to demonstrate environmental social leadership
  3. Creating social, environmental and economic benefit to the business and community
  4. Realising efficiencies and productivity through environmental, social and stakeholder process improvement and redesign, creating sustainable evolution and development.

Some of the challenges facing businesses today and in the future, requires a shift in approach outside of traditional business models. Strategic engagement is an opportunity for growth moving outside of those traditional business models in a way that is engaging of stakeholders and creates positive benefits beyond purely social outcomes.  Where businesses can create sustainable investment value through risk minimisation, and demonstrable smart outcomes in productivity, efficiency and sustainable outcomes.

It is important to all of us, because of how it impacts on board decisions and strategy; how the strategy then integrates into operations; how both then engage stakeholders; and how it can influence the governance agenda.

All possible by looking at business models and strategy through a different lens, remaining competitive, with an appetite for adaptability.

Author:
Lorena Paglia
Director
LVP – Lateral Visionary Projects

Lorena Paglia won the Top Practitioner Presentation Award for her Sustainability Strategy approach at the International CSR and Sustainable Development conference in Jakarta, June 2014. 

The Sustainability presentation was awarded by the conference panel, with the strategy approach recognised as the 1st Best Practitioner method out of the representing speakers from over 20 countries, who are all professionals in the field of CSR and Sustainable Development.

The conference provides a common platform to the corporate, government agencies, NGOs, civil society, academics and the other groups to share their expectations, aspirations and responsibilities. It also brings together representatives from various parts of the globe to share their experiences, challenges and opportunities. – See more at: http://www.serd.org.in

Tagged , ,