Understanding Corporate Sustainability
In a business context the word sustainability is often interchanged with “triple bottom line”, referring to sustainability in a balanced context between human capital, natural capital and profit.
Corporate sustainability makes good business sense. Research into the performance of ASX100 listed companies indicates that throughout the global financial downturn, companies that have corporate sustainability embedded within their organisation performed financially better then others that have poor or no corporate sustainability. The reason for this is that a business that values and responds to community, staff and environmental issues as a comparable issue to financial issues becomes more robust and better equipped to manage problems when one aspect of the business is threatened.
The concept of triple bottom line demands that a company's responsibility be to stakeholders rather than shareholders. In this case, "stakeholders" refers to anyone who is influenced, either directly or indirectly, by the actions of the firm.
Corporate sustainability also overlaps with corporate responsibility and governance – with fair and transparent business practices, accountable to stakeholders of the business.
Corporate Sustainability Journey
As a business faces emerging social, environmental and economic issues, the journey of sustainability will continue to evolve. The best place to start the journey is by understanding what sustainability it to your business, and then to plot a path of how sustainability will be addressed to become core business practice.
The following steps have been outlined to enable businesses to begin the journey, but it is also important to regularly check in, either through reporting, visioning, stakeholder engagement, seeking feedback or reviewing of goals and objectives, to ensure that the sustainability vision is still relevant to the business. These steps are best followed as a group exercise amongst senior/executive management team.
- Why focus on sustainability
- What is sustainability (definition and vision) for OUR business
- What are the drivers for a sustainable business – social, environmental, economic
- What is the relationship with BRAND (ie what are our key messages both internally and externally).
Top down engagement and buy in, clear and realistic expectations to filter down through the business. The WHY needs to be addressed as the first priority throughout the Business as it creates a forum for people within all levels of the organisation to understand the reason for the journey, creating engagement, ownership and commitment.
- Who are our stakeholders – internal, external
- Who are champions at Board level and across business
Each stakeholder group may have different drivers, expectations and needs on sustainability. Commitment is needed from top down management to allow resources and time for engagement and collating material – two groups may be used for this – advisory group (Board level), working group (Representatives from Human Resources, Finance, Systems – Environment, Safety, Property Portfolio Managers) – each group will be required to contribute to the reporting process by setting goals and objectives specific to their business unit, supplying content, reviewing or committing budget for reporting expenses.
- What issues are important to us and our stakeholders
- What are our goals and objectives – Set goals and objectives based on current performance
- What is our current performance – Benchmark
Transparency is the key – stakeholders do not want good news stories, they want to see how the business evolves and learns from challenging or difficult situations. Stakeholders want to know strategies and current performance on issues important to them. Benchmarking may include establishing new KPIs to link with sustainability vision, as well as other performance indicators such as building ratings, consumption data, financial and social metrics.
- Goal setting – targets and objectives to achieve vision
- Government legislation, schemes and associations eg Mandatory disclosure, carbon disclosure project, NGERS
- Internal business schemes and responsibilities eg business/ personal KPIs
- Reporting – Tools and Assurance: GRI, DJSI, CRI, FTSE4Good, AA1000
Communicating performance, targets, goals and objectives can be done in any forum – internet, intranet, annual report – online or hardcopy. But the reporting style will depend on expectations of stakeholders – what do stakeholders want from reporting. Some stakeholder groups may not be familiar with some tools. Goals will be linked strategically with vision and will be relevant to stakeholder groups.
- What is the timeframe for achieving for sustainability vision (backcast – set interim goals on timeline)
- Annual – Fiscal or calendar year reporting
- Annual stakeholder engagement and feedback process for continual improvement in refining and developing goals and strategies for achieving sustainability vision.
Financial year reporting ties in well with annual reporting – clear link between sustainability objectives and core business practice.
6. Role Models
- Who are role models for the business
- Learn from their successes and failures
- How do we compare to them, industry, and the expectations of our stakeholders.
Looking to role models can help to set a clear plan and timeframe for achieving similar level of disclosure and reporting.
Go to Sustainability Hub