We all know that sustainability is central to the new economic order. What isn’t as clear is how to incorporate sustainability into the bottom line of your business. We want to walk you through a roadmap to get you thinking about sustainability.
Sustainability - a broad term that seems to pop up everywhere these days. What do we mean, when we talk about a sustainability strategy? We evaluate sustainability in three buckets; environmental, social, and governance—otherwise known as ESG. Sustainability for our company means progressing toward an ESG positive future. It starts today and should be achieved within the near to medium-term horizon (3-5 years). That means taking out more emissions from the atmosphere than we are putting in; creating a significantly more quantifiable, verifiable social impact each year; and ensuring that our company is governed in a way that is more transparent, equitable, diverse, and stakeholder-represented each year.
Here is the ESG+ road map to achieve these goals:
- Identify a baseline for your ESG footprint.
- Commit to a multi-year environmentally, socially, and governance positive (ESG+) business.
- Design a plan to achieve those commitments.
- Integrate that plan into operations as well as annual reviews.
- Establish tools and a plan to evaluate progress.
- Decide how to transparently report and renew the commitment.
Let’s dig into the importance of each of these steps to see how your business can craft a sustainability strategy aligned with your business’s passion and purpose.
Identify a baseline. Let’s start with the three buckets of ESG:
- Environmental. The overarching question that you want to evaluate is what is your business’s impact on the environment; is it “positive” or “negative?” That includes your carbon emissions footprint, impact on climate change, use of natural resources, pollution and waste, as well as opportunities to build green and use renewable energy.
- Social. The essential question you need to evaluate under the social bucket is, what is your company’s impact on society? That includes how you treat and empower your employees, what shared values you have with your partners, what are you committed to donating each year from your net profit, and more broadly what impact is your company having beyond the four walls of your office to make people’s lives better as related to the UN Sustainable Development Goals (SDGs).
- Leadership or Governance. Traditionally this has been a really important topic for investors, since there can be significant risk associated with poor governance. Do you have a whistleblower policy? Do you foster equality and diversity in your company? Do you have a code of ethics? How are you ensuring you root out any corruption or conflicts of interest? Are you transparent with your stakeholders?
Commit to a multi-year environmentally, socially, and governance positive (ESG+) business. Your commitments to the environment should revolve around internal reduction of emissions, water use and waste; external sourcing of energy (renewable or not); and mitigation of remaining emissions through high-quality offsets. Your social commitments should be framed by community and stakeholder engagement, as well as civic engagement and giving. Your governance commitments should be rooted in your mission, ethics, and workplace equality.
Design a plan to achieve your commitment. You will know where you stand on sustainability after step 1.Step 2 will help you to understand where you want to land and with step 3 you will figure out how to get there. The key to designing a plan to achieve these commitments is being able to quantify progress, since it is important to be able to measure your sustainability performance year after year. For every company this process will look different, but typically it looks like an ongoing assessment of your ESG footprint, to make sure you are staying climate positive, quantifying the impact of all your giving, putting transparency and inclusion into your by-laws, and making sure that your partners are doing the same.
Integrate your plan into daily operations and annual reviews. This step is critical because it incorporates the vision into each employee's performance, as well as the company as a whole. It's like creating a new set of financial statements. Each plan will look different, depending on the type of business and the depth of the sustainability strategy. Take a procurement manager at a regional furniture manufacturer that is overseeing the flow of inputs through the business. It becomes part of his job description to source materials from businesses that have the same commitment to sustainability, environmental protection, and stakeholder representation as his/her company does—just as an example. Now, part of his annual review is to evaluate his performance on sourcing sustainably. This same procurement manager is tasked with improving year over year and has tools to evaluate progress and hit new milestones. Once the plan is in place the business has to decide how to transparently report and renew these commitments.
Maybe you already know you need a “sustainability strategy” but you aren’t sure where to start? We would love to talk more about tailoring a sustainability strategy to fit your long and short goals. Find out what we can do for your company.
About the Author
About Elizabeth J. W. Spencer
With a varied career in international politics, social enterprises and a tech start-up, the common thread for Elizabeth over the past decade has been the pursuit of sustainable development in emerging markets. Writing has been the medium to synthesize her experiences in between changing diapers and kissing skinned knees. Elizabeth believes that power of purpose-driven businesses to deliver profitable products at the intersection of societal and environmental benefits can change the world. She lives in an ‘01 converted Blue Bird school bus with her husband, two kids and a Vizsla.