Clare Fowell of Finch Consulting looks at the need for a sustainable business strategy and how to get started. There are many drivers for businesses to consider sustainability initiatives, including the integration of the UN Sustainable Development Goals (SDGs), the legally binding UK target of ‘Net-Zero’ by 2050, and the wake-up call of Covid-19.
2020 was a year of disruptions and it highlighted the risks of being unprepared against social and environmental threats. 2021 is more focused on a green economic recovery, including the upcoming COP26, which should drive the focus onto long-term objectives on sustainability, and energy transition and resilience. There is also the Environment Bill, which will set out new legal measures on waste and resources, air quality, water, and nature and biodiversity.
Investors are increasingly demanding transparent sustainability targets from companies, insurers require that businesses manage their environmental risks, and there are Government requirements on carbon and energy reporting, along with an increasing array of environmental taxes.
A sustainable business can adapt and change as needed to create economic value within social and environmental limits, capable of withstanding future threats. Environmental, Social, and Governance (ESG) criteria are commonly used by investors to evaluate and measure the more intangible risks and growth opportunities related to the sustainability of businesses. It is in businesses’ interests to include ESG criteria as a part of their overall risk management portfolio and to link the ESG criteria with what is important to your business and your stakeholders.
Over recent years, businesses have become more aware of Corporate Social Responsibility (CSR) which is an approach to address their current responsibilities to wider stakeholders, particularly reporting performance and progress on social and environmental impacts. It focuses on compliance with statutory and regulatory requirements to ensure that there is a ‘licence to operate’, and on being accountable and building a good reputation. CSR is an important stage towards becoming a more responsible and sustainable business.
To get started with the transition to a sustainability, ask some questions and think about what sustainability means to your business and what type of approach would work best.
Q What are the main concerns regarding your business and global issues? Has there been a regulatory or policy change that needs a response? A product ban? Consumer pressure e.g. single-use plastics? Industry requirement?
Q Where do you want to be in the future and what are your long-term goals? What is your vision and ambition for the business? Is it realistic? What do your stakeholders require? Have you identified all your stakeholders? How do the ESG criteria link to the fundamental purpose of the business? What are the possible future scenarios that affect your business? How much control do you have to make changes? How relevant are your goals and how do they fit with your business strategy and corporate values?
Q What are your priorities? What are the right opportunities for your business? What gives you a competitive advantage? Which of the Sustainable Development Goals (SDGs) are most relevant to your business?
Q What is your starting point? Are you legally compliant? Do you have the relevant baseline data? Are you measuring the necessary KPIs? Are you following best practice and industry / international standards? Have you identified the gaps? Do you understand your existing energy use, resource use, packaging, waste production, and supply chain? Do you understand the wider societal consequences of your business practices?
Q How will you achieve your goals and vision? How will you incorporate the goals and vision into the overall business strategy and into the business governance, values and principles? What are the appropriate milestones within a route-map to measure progress? What are the most suitable targets within the business objectives and action plans? How will you allocate resources and budgets? Is training required? How will you review progress and take corrective actions?
Q How will you publicise your commitments? How will you report on your commitments and progress? How will you engage with your stakeholders and employees? How will you ensure that the reporting is authentic and accurate?
A sustainable business strategy should be embedded into an overall business strategy focused on long-term goals and strategies. This will provide more resilience and responsiveness to a range of risks and that is the benefit of using Finch Consulting with their unique integrated risk management service that covers engineering, environment, health and safety, and noise and vibration.