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Companies play a vital role in the transition to an economy that respects the boundaries of nature and people. For the sake of our wellbeing, and that of future generations, we need to take action now. Regulators, customers, employees, suppliers and shareholders also call for an effective ESG (environmental, social and governance) policy.
Making the value chain more sustainable is a precondition for retaining a competitive edge both now and in the future. This applies not least to companies that create the physical value found in industrial and consumer products. It is also clear that sustainable companies outperform the market average, and we expect companies with sizeable negative externalities to lose their licence to operate in the medium term.
The call to action for a sustainable value chain
Different companies and industries have different needs for a sustainable value chain. Making the value chain sustainable ideally positions family firms in the manufacturing industry to build a future for the next generation. Private equity firms are compelled not only by socially driven institutional investors to commit themselves to ESG. Doing so is also becoming more likely to boost value creation upon sale. Listed companies are increasingly accepting their responsibility. They report not only on ESG but also on corporate sustainability in their internal management and operations. Sustainability should ultimately lead to sustainable financial results, more confidence and less risk.
A sustainable value chain in five questions
The need is usually clear, but how to tackle it is complex: the term ESG alone is such a broad concept that many companies hardly know where to start. Most companies and directors agree on the importance of ESG at a basic level, but there is no silver bullet and there are many dilemmas. We would be happy to help you answer questions such as:
- How and where is ESG relevant to you and your value chain?
- How do you embed sustainability in your company strategy?
- How do you secure the pursuit of that sustainable strategy and control it within your organisations?
- What is needed to improve the sustainability of your physical supply chain?
- How does your sustainable business case shaped, including tax schemes and/or subsidies to finance the sustainability of your company?
This is how PwC can help you
- How is ESG relevant to you?
- Sustainability in your strategy
- Embedding sustainability in your organisation
- Sustainable supply chain
- Sustainable tax management
How is ESG relevant to you?
How relevant ESG is to you can take various forms, depending on the industry you operate in. You will be aware of one form because it concerns your direct stakeholders: employees, customers, suppliers or shareholders may ask questions or set requirements. But of course, sometimes prompted to take action by current or new laws and regulations. We can also help you with an initial ESG assessment and benchmarking, and our industry experts can share the latest insights and expectations based on our research.
Sustainability in your strategy
To what extent does sustainability already occupy a position in your value creation process? For most companies, there is nothing new about sustainability. We help you establish what you are already doing in terms of sustainability and help you identify themes that need to be structurally included in your strategy.
We help you produce a sustainable rather than a sustainability strategy - we make sustainability an integral part of your business operations. Our experienced strategy consultants are there to support you if you decide to make a fundamental change to a circular business model, for instance.
Sometimes it makes sense to start small, e.g. by preparing an internal ESG report and taking it from there. We can help you create a more sustainable value chain by taking a close look at the steering mechanisms you use to set your course. We advise (among other things) on sustainability in your strategy definition, portfolio management, project management and risk management.
Embedding sustainability in your organisation
How do you ensure that sustainability becomes an integral part of how you work? We help you to set up your sustainability governance and control procedures. We consider who is responsible for pursuing the strategy: do you assign a board member? Set up a sustainability team? Or place responsibility at various places in the organisation? And then there is the question of which financial and non-financial KPIs you use to measure progress and how you report on them. We advise you on enterprise performance management and organisational design to incorporate sustainability in your organisation's DNA.
To achieve real change, you need to align your sustainability ambitions with your corporate culture, which comprises the values and behaviour of your employees. Authentic leadership and engaging, training and coaching employees as part of an in-depth change management approach are essential success factors for switching to sustainable business operations.
Sustainable supply chain
Traceability and transparency are indispensable to making your value chain sustainable, especially when it comes to your supply chain. Do you know about your suppliers' quality procedures? How do you make sure that the products you sell meet your sustainability standards? Can you minimise the impact of the transport factor? We advise you on making the chain more transparent and making raw materials, semi-manufactures, and products traceable. This lays the foundation for green procurement, production and logistics. If you aim to move to a circular business model, you cannot do without insight into and control of your supply chain.
Sustainable tax management
Europe, its individual Member States and countries outside Europe have made sustainability a policy priority. As well as taxing polluting activities more heavily, governments offer tax allowances for sustainable initiatives. Which tax rules help finance your sustainability transformation? Throughout the process, we also support you with the tax challenges associated with transformations, such as transfer pricing, exit taxation, VAT and Customs. Our tax experts always stay abreast of the latest tax incentives, innovation and investment grants, and their conditions. We help you make use of these benefits and incorporate them in your broader tax strategy and final reports.
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