How to be a sustainability leader, not a follower

Alessandra Del Centina is a Managing Consultant and sustainability specialist at Vendigital. She recently shared her insights with Board Agenda.

A board that looks to embed sustainability as a ‘guiding force’ in the business will give its company the competitive edge.

Recent research conducted by Vendigital has revealed that ‘competitive positioning’ is the number one driver for sustainability initiatives within businesses according to 49 per cent of respondents, with one in three also highlighting market perception. With public perception of sustainable businesses positive, many companies are rushing to put initiatives in place to differentiate themselves in their chosen markets.

However, doing things in a hurry is not necessarily the best strategy. If sustainability strategies are not properly considered, businesses could resort to ‘bolt-on’ solutions that aren’t truly lived throughout the organisation; leading to inauthenticity that customers are likely to reject.

The businesses that are most successful when it comes to implementing a sustainable agenda are those that place it at the centre of their strategy and business model. This goes beyond swapping out products or raw materials for more sustainable alternatives, which may provide a quick win, but not necessarily a holistic solution.

Instead, companies should consider their overall impact on the environment and wider society, from their supply chain and materials to considering sustainable consumption patterns. This could involve promoting the repair of items rather than contributing to a replacement culture, as well implementing a circular economy or closed loop model designed to minimise waste.

Implementing sustainability as a guiding force will not only improve business practices; it could also boost the company’s standing with existing and prospective customers. It also helps to ensure that the business stays compliant with tightening environmental legislation as the fight against climate change continues to develop.

However, it is important to understand that when it comes to sustainability, one size doesn’t fit all. Many businesses may be able to adopt the same changes and initiatives as their competitors – for example, utilising renewable energy where possible over fossil fuels or reducing or replacing packaging with environmentally-friendly alternatives. However, in reality, each business’ journey will be unique.

Boards should lead the way by focusing on their own business’ specific impact and challenges rather than following their competitors, and make sure that they are treating sustainability as a guiding force. This could include fundamentally changing product portfolios, business models, production technologies or even operational locations. However, undertaking fundamental changes like these often involve significant investment that may not provide an immediate return. There could also be challenges around legacy processes or equipment that cannot be easily swapped, retrofitted or upgraded, with an ever-increasing risk of faster depreciating assets.

Smaller businesses or start-ups may be freer to design and implement sustainability strategies, as larger businesses will require proof that a concept works before it can be implemented. Having sustainability as a guiding force within a smaller business could mean that they are more open to experimenting with technological advancements or other initiatives; becoming leaders for larger businesses to follow.

Most Boards are acutely aware for the need to ensure transparency when it comes to measuring and reporting on their sustainability initiatives – as failure to do so could lead to accusations of greenwashing.

However, many industries lack a unified and standardised method of measuring and reporting on progress to sustainability goals. Where this is the case, businesses should seek information from industry bodies and the government’s sustainability reporting guidance. Some businesses have chosen to cut back on their sustainability communication in order to avoid potential scrutiny – a practice known as ‘green-hushing’. However, this could backfire, as consumers might believe that the business is ignoring the issue or failing to make sustainable improvements.

Trapped between these two risks, businesses must bear in mind that transparency and authenticity are key to success. It is more important than ever to disclose the actions the business is taking to improve on their sustainability and report on the progress made. Effective reporting will need to include a strong set of KPIs and firm implementation timescales, and for added robustness, the business could use independent industry bodies to ratify its metrics and measures.

Transparency doesn’t just mean reporting what the business does well: the Board should be prepared to disclose gaps in information too. An example of this can be seen in the fashion industry with the Fashion Transparency Index; a scheme that is designed to review fashion businesses sustainability information and provide transparency ratings. Such schemes are becoming more prevalent to help consumers make more ethical buying decisions.

When aiming to make sustainability a guiding force, in addition to ensuring that the business is compliant with all regulation, Boards should seek to understand the wider challenges that affect their specific operations or sector and aim to solve the problems that matter most or make the biggest difference in terms of sustainability performance.

This could involve making big, strategic decisions about how to change the organisational footprint and amend the company’s sourcing strategies. Processes within the organisation should also be closely considered to establish if there is scope to minimise waste by encouraging reuse or recycling. For labour intensive industries or industries that rely on rare materials, it is important to understand how labour is used and to be aware of the risks associated with modern slavery – at home and abroad.

Healthy competition can be a driving force for sustainability across sectors, however, collaboration is absolutely key in driving sustainability initiatives. Businesses should aim to become agents of positive change – collaborating with third party advisors, industry bodies, innovation groups, coalitions and more to share resources, technology and best practice.