Don't just tell us how sustainable you are, but show it

20/10/20

Sustainable strategy execution

Making things sustainable is a social duty for some and an intrinsic goal for others. Action is required in any case, and that calls for the right approach. The most important aspect here is and remains 'to walk the talk'. Explicit reporting on what you do (talk) is less important when it is already clear what you are doing (walk), according to PwC professionals Taco Bosman, Willem-Jan Dubois and Thijn Felix.

The first step towards a sustainable organisation

You can see it as the first step towards a sustainable organisation. Over the past few years, organisations have started to report and communicate their sustainability plans more explicitly internally, but above all externally as well. For example, a PwC survey conducted in 2019 showed that 88 percent of Dutch listed companies now refer to the sustainable development goals (SDGs) in their annual report. The clear momentum surrounding the reporting of sustainability goals is also evident from the arrival of more far-reaching guidelines and standards in this area (for example, the Science Based Targets initiative, the Task Force on Climate-related Financial Disclosures, the Sustainability Accounting Standards Board and the Global Reporting Initiative). It shows that stakeholders have a need for transparency, and this development also has an impact on, among other things, the annual financial reports of listed companies.

Making sustainability concrete and tangible

An organisation's sustainability objectives form a good basis and hook to make the subject more concrete and tangible. This opens the door to a new phase, in which the focus will be on achieving the objectives and getting the internal organisation on board instead of communicating these objectives to external stakeholders.

Sustainability as an integral part of strategy

Achieving the set objectives requires a different approach from each type of organisation. However, a number of common denominators can be identified as success factors. Many organisations struggle with making external goals concrete and translating them into internal control and action. The internal institutionalisation of the subject as an integral part of the philosophy, mission and/or strategy of the organisation is important, just like any other strategic theme. We identified two approaches that can reinforce each other, but that have also proven themselves independently: there are organisations that work proactively with the subject and organisations that act reactively because they have to.

Proactive organisations: alignment on vision

Proactive organisations are driven by themselves to make the world a more sustainable place, because this is in line with their vision or mission, or perhaps even is their central vision. The organisation itself and its staff believe in the need for change, not only out of the organisation's own (financial) interest, but also as part of their social duty. As a result, the subject automatically becomes part of the discussion at the operational, tactical and strategic levels, not least in the innovation column. It is the managements’ task to steer these initiatives in the right direction. However, this approach often depends on the initiators or those responsible for adapting the company, processes, structure and organisation to the sustainability goals.

Reactive organisations: adapting and redesigning

Reactive organisations act less on the basis of ideology. They react more explicitly to what society asks of them or what they are forced to do. Both in the automotive sector and in the so-called fast-moving consumer goods market, there are plenty of examples of organisations that adapt their product portfolio, rearrange processes or enter the market 'differently'. Sometimes under pressure from legislation and regulations, but often also on the basis of social pressure. For example, investors who are looking for information on climate-related risks, customers who demand circular solutions for waste streams or simply consumers who need 'fair products'. Reactive organisations do embed sustainability in their strategy, but this is often accompanied by a limited embrace and focus on traditional themes.

Success factors for achieving objectives

Success stories and unfortunately also many unsuccessful stories can be found for both approaches. Seen from a distance, it is striking that four clear success factors play a role in the successful realisation of the sustainability objectives:

Decisive leadership

Leadership must be prepared to make difficult choices and act upon them. The subject lends itself to difficult choices, in which the right choice only produces results in the long term and is therefore less popular. Having a long-term vision, perseverance and decisiveness is essential.

Support internal stakeholders

The support of a functional group of senior stakeholders (e.g. CFO, business unit leaders, procurement, R&D) is needed, a so-called leading coalition. It is therefore important to set up governance for the company-wide sustainability agenda. This means that sustainability ownership is integrated into an organisation's processes, roles, systems, reports and strategy. In this way you create support and at the same time nurture the drive of employees in this area. It creates a platform for this thinking so that people actually do what they say they are going to do.

A clear roadmap

The third common denominator is a clear roadmap or set of initiatives. These should be carried out by a substantial group, which has an insatiable dedication (the fourth success factor) to the subject and is fully committed to it. This group does not allow itself to be stopped by the status quo and ensures that it progresses step by step. This can come from the intrinsic drive towards the subject, but also from strong professionals who understand their profession well.

Realising your strategy

In this way, organisations can keep their promises, in other words, walk the talk. Organisations achieve their objectives in their own way. The type of organisation usually does not have a one-to-one relationship with the realisation power of the sustainability agenda. However, there are standard aspects that every organisation must have in order to give itself a good chance: leadership, support, a number of insatiable champions and commitment to promises. In short, everything you need to be a leader in order to realise your strategy.

How to make the Green Deal real?

The European Union’s Green Deal is the answer to a growing general ambition across Europe to tackle the existential dangers of climate change. The Green Deal and climate policies of individual Member States, such as the Dutch Climate Agreement, will have a profound impact on the way we produce, consume and live. Businesses have a key role to play in a successful transition to a more sustainable society but will also face threats, challenges and opportunities from upcoming policies. With our Green Deal Monitor, we will inform you periodically about the impact of (proposals for) new laws and regulation, provide data and insights, inspire you with best practices and fuel the debate on the dilemmas that will inevitably arise.