As the world slowly emerges from the pandemic later this year, all companies will be confronted with a growing global threat to business success. In 2020, for the first time, the World Economic Forum announced that five of the top 10 long-term risks the world is currently facing are directly connected to environmental sustainability. That means that once the Covid-19 situation is under control, we can expect governments, non-governmental organisations (NGOs) and businesses to step up measures to communicate, prevent and mitigate sustainability risks. If there’s one thing we’ve all learned from the pandemic, it’s the scale with which major global risks can impact business activities.
How can you make sure you’ve positioned your company to survive and thrive before the next big global risk threatens your bottom line? Here are seven tips for securing a sustainable future for your business and for avoiding the global risks that lie ahead.
1. Inform yourself and set goals
Those businesses furthest along in their sustainability efforts stand to win the greatest market share within the next decade. To prevent your business from being left behind, you need to do your part to reduce short-term and long-term environmental impacts. That means speaking with experts and informing yourself about the latest competitive trends in sustainability. Companies that fall behind in their sustainability activities will face challenges within this decade, as a younger, more climate-conscious generation comes to dominate consumer and business-to-business decisions.
To advance your sustainability initiative, we recommend setting clear goals that guide you along your sustainability journey. Following guidance from internationally recognised organisations such as the Science Based Targets initiative could be helpful. Setting a science-based target establishes immediate goals for your operations and products or services, while promoting global sustainability imperatives. It’s important that you set a Science Based Target and disclose your sustainability efforts through the Carbon Disclosure Project (CDP) in time for the 28 July 2021 deadline.
2. Align your business with rising investment trends
More and more investors identify a lack of environmental, social and governance (ESG) management as a serious business risk. During the 2018 United Nations Climate Change Conference (COP24), 415 investors with $32 trillion in assets demanded that governments move to address climate change. Large investment funds have already begun divesting from companies that fail to take ESG issues into account.
Once you’ve set your targets and are taking active steps to move toward your sustainability goals, your business will be in a better position to mitigate ESG risks and address issues raised by a variety of stakeholders, including communities, employees and investors.
3. Use sustainability to reduce costs and drive efficiency
Enhancing your sustainability initiatives frequently leads to cost savings as your business seeks greater efficiencies in its operations and production. Using fewer materials and less energy improves your sustainability as well as your bottom line. As governments impose more regulations and eventually enact other regulatory instruments, such as carbon taxes, companies that have already moved aggressively towards greater sustainability will be in a better position to thrive in a more regulated playing field.
4. Place your company at the top and unleash innovation
The STOXX Global Climate Change Leaders and the STOXX Global 1800 indices clearly show that companies that are actively working to enhance their sustainability initiatives consistently outperform other top-ranking businesses. The in-depth analysis and focus required to set targets, for example, can drive your business to create new and unique products and services and deliver better, more useful solutions for your customers, ultimately combining sustainability and profitable innovation.
5. Become a life cycle thinker
The accurate assessment of environmental impacts requires a systems-thinking approach. Thinking about your company and its impact on the environment in a holistic way helps you understand the complexity and interconnectivity within your value chain, opening opportunities for collaboration and business transformation. One systems-thinking approach is life cycle assessment (LCA). An LCA is the systematic analysis of the potential environmental impacts of products or services during their entire life cycle (production, distribution, use and end-of-life phases). Using LCA for your products or processes will help you focus on the system as a whole, harnessing a way of thinking that lends itself to insights in other areas of your business.
6. Secure future technologies
When you first inform yourself and set ambitious sustainability targets, it may seem that your business has an insurmountable challenge to meet. But you trigger greater focus when you set a goal. Even if the technological capacity to achieve your goals does not currently exist, simply setting a sustainability goal increases the likelihood of identifying a real solution. Goal setting in this manner focuses organisations on innovating for greater sustainability by leveraging the latest available technology.
7. Communicate your environmental efforts
The commitment to and approval of your sustainability goals provides transparency to stakeholders with respect to your environmental efforts. In light of the global transformation toward greater sustainability, it’s indispensable for your company to build and secure your company’s sustainability strategy.
Once you have solid data to support your sustainability efforts, you can feel confident that your communications to stakeholders will reflect the truth and avoid greenwashing. Your company’s stakeholders want to know that they are buying products from and working for companies they can believe in. Pushing a strong sustainability agenda is a powerful way to communicate the sustainability underpinnings of your brand to customers as well as current and potential employees, thereby further enhancing their loyalty to your company.
Inform yourself, set science-based targets and work towards achieving them, become a systems thinker to push innovation and communicate your sustainability activities to your stakeholders. In this way, you’ll drastically reduce long-term sustainability risks currently on the horizon.
To assess your company’s position along its sustainability journey and discover potential next steps for advancing its sustainability performance, visit: https://sphera.com/syndication-br-sustainability-maturity-quiz/
by Paul Marushka, President and CEO, Sphera