Sustainability in the context of Business
“Where does Sustainability ‘sit’ in my organization?” is a question that should be front-of-mind for every CEO.
The answer, which still eludes most leaders: “Everywhere!”
Diving right in with the punch line: “Sustainability, planned for and executed diligently, ticks many boxes on a leader’s list of ‘Must Do Well’. Whether related to a P&L Statement, Balance Sheet or Cash-Flow Statement, Sustainability reduces risks (financial and non-financial), saves money, drives revenues, stimulates innovation and enhances brand reputation. Sustainability engages and delights clients and customers (and colleagues) and gets the right kind of attention from the investor community. In summary — it creates shared value.”
Sustainability is the single biggest challenge facing corporations today and it’s a challenge worth rising to and tackling head-on.
This is not only relevant for a company’s shareholders — but for their stakeholders too, ALL of them: clients and customers, employees (and their families), the communities within which they operate and serve, media platforms that may influence and be influenced, as well as governments and regulators within their local, regional, national and / or global jurisdictions.
“Creating ‘shared value’ provides the sharpened focus required to deliver long-term sustainable growth for ALL entities affiliated with an organization — including its shareholders.”
It follows then that understanding where Sustainability sits in an organization is a critical first step. Oftentimes the Chief Sustainability Officer (if there is one, otherwise the Head of Sustainability) reports into one of the following functions:
Operations — as a compliance-led reporting function of the “Environmental Health & Safety” team;
People / HR — due to the critical understanding that an organization’s employees are increasingly seeking “employers with a Purpose” and not merely a pay-check;
IT — this report-to line rarely happens but when it does it’s largely because the organization is IT-led first and foremost;
Marketing — principally as a “Communications” function with responsibility for delivering an organization’s Annual CSR Report;
Finance — originally as a “cost center” control mechanism and now, more positively, with an alignment to “ESG Reporting” and the increasing importance of understanding “materiality” as a key driver for ongoing dialogue with Investors; or
Strategy — likely because there is a more than fundamental understanding of Sustainability as a new business and or brand value creator and hence is front-and-center on the CEO’s radar.
This typically progressive “placement” of the ‘report-to’ function of Sustainability plays out as a journey in most organizations.
A goal of Regennabis is to help condense this journey and help leadership ensure that Sustainability is pervasive throughout the organization; and in turn open-up a myriad of possibilities to open up a $12 TRILLION opportunity [Harvard Business Review, May 4th, 2017], allowing businesses to optimize their shared value, propelling revenue and returns.
The real trick to this organizational design is that every function recognizes — and plans for — each opportunity AND that they do so as a team, not in their functional silos. Imagine the agility of a cross-functional leadership team equally aware of each and all opportunities upon which an organization can deliver!
Likely, some culture transformation effort would be required — yielding a laser-like focus throughout the organization to deliver an understanding of why the organization does what it does.
Is your organization ready for this challenge? The following are some examples of how every functional leader in the Executive Team could apply a Risk-lens to identify “best practices” and turn each of them into growth drivers:
Operations — thinking “beyond compliance” and embracing a Circular Economy mindset and practice;
People — understanding “Recruitment & Retention” challenges in a talent-constrained world [think Millennials and their unique drivers for entering the workforce] as well as the hiring and development of “Sustainability-savvy Leadership” through an effective Executive Recruitment process;
IT — moving from “Digitization” to “Digital Transformation” with its myriad of opportunities that “Big Data” and new technologies (e.g. Blockchain) bring in terms of a transparent Supply Chain;
Marketing — enhancing Brand Value in an increasingly customer-centric, digital marketplace through the creation of a purpose-centric narrative;
Finance — learning the language of ESG Reporting, Materiality and understanding long-term Investor demands that will deliver CFOs as corporate heroes through a multi-capital approach to “doing business by doing good”;
Strategy — embracing new product / market entry opportunities with go-to-market alliances with like-minded corporations, NGOs and Civil Society to deliver to a more diverse and inclusive world and ensure success for all not for a few; and finally
Board Membership — positioned to help fend off all unwelcome short-term, Activist Investor interest and help play the long(er)-term game?
Recognizing that “Business is a subset of Sustainability” is to understand the pervasiveness of risk and opportunity across an entire organization, ensuring that the CEO/CFO team is squarely focused on optimizing the opportunities that will result from this paradigm shift.
Business as usual — the status quo — is no longer an option. The only road to greatness is through an active embrace of this new imperative. Is your organization ready to re-focus?