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In the constantly changing world of business jargon, the rise of buzzwords like ESG (environmental, social and governance), sustainability and corporate social responsibility have left many leaders scratching their heads. “Which terms are going to stick around? Should we consider these terms as part of our long-term strategy? How much must we invest? And how would we implement such a plan, anyway?”
For many, these topics feel like a steep hill to climb, creating significant frustration and stress. However, like every good challenge, a strategic focus on sustainability can help your organization build a competitive advantage, reduce costs and drive profit.
Here are four ways to help in this journey:
Think long term
Because many new international standards have trickled down the supply chain, many small and medium-size businesses now find themselves trying to satisfy a variety of new reporting requests. As these requests come through, take a moment to consider what your customer is really asking, and consider how you might use this focus to create competitive advantage.
For example, is your customer asking about safety policies? If so, they’re likely looking to ensure they can fulfill their own people-focused commitments. In addition to highlighting your safety results, brag about your investment in protective equipment and showcase the efforts you’ve made to drive organizational safety.
Asked to report on your waste management processes? Use this external pressure to invest in new tools that will reduce your energy load or innovate on new materials that will differentiate your product in the market. Discuss any continuous improvement efforts you’ve made to reduce emissions and add value to your clients by helping them accomplish their Scope 2 targets.
Don’t reinvent the wheel.
Sustainability can mean many things to many people—but you don’t have to do it all at once or alone. Benchmark against your target clients and your competitors to identify your areas of greatest opportunity.
Reading the ESG reports from industry leaders can provide meaningful insights about the ways they are considering sustainability as a market driver. Alternatively, leverage free reporting tools from the Global Reporting Index or IFRS to understand which topics and focus areas are most likely to be relevant to your business in the next five years.
Start where you are
Most leaders are surprised when I tell them that they’re most likely at least 75% of the way toward a meaningful sustainability plan, even if they don’t have someone dedicated to sustainability in their organization.
In fact, the organizations that are most successful at meeting these challenges are the leaders who understand that everyone in the organization has a role to play. Specifically:
◗ Your CEO helps balance revenue and impact (positive and negative). At the helm, CEOs must juggle a myriad of priorities, from driving growth and profitability to fostering a positive corporate culture. Within the ESG framework, this means carefully balancing the revenue and costs associated with sustainability initiatives, ensuring they align with the company’s overall vision and prioritized activities.
◗ The CFO ensures fiduciary responsibility and transparent reporting. Chief financial officers play a pivotal role in ensuring that the needs of all stakeholders are met. This involves prioritizing investments through an ESG lens, ensuring fiduciary responsibility to investors, and ensuring accurate and transparent reporting on the company’s environmental and social impact.
◗ The CHRO establishes a safe, capable and reliable workforce. Especially within Indiana, where we have such a strong human resources presence, this is often the lowest-hanging fruit from an ESG standpoint. From recruiting and retaining top talent to fostering a diverse and inclusive culture, chief human resources officers are a key asset to help understand the human risks your organization must consider.
◗ COO teams ensure sustainable production across the value chain. Operations executives are tasked with optimizing efficiency and quality, but they are also your frontline asset to maximize your production processes and sustainability efforts. This may involve sourcing sustainable materials, minimizing waste and emissions, and collaborating with suppliers to uphold ethical standards.
◗ CMOs communicate, represent and advocate for customer health and safety. Marketing leaders play a crucial role in understanding and communicating customer needs. In the context of ESG, this means ensuring that the company’s sustainability efforts resonate with the target audience and are woven throughout the organization’s messaging and product development.
Progress, not perfection
Sustainability phrases use unfamiliar terms but well-known business strategies. Chances are your organization is already engaging in many of these practices, just under different names or initiatives. Leveraging these concepts to build competitive advantage, paying attention to the opportunities coming within your industry to differentiate your services, and encouraging your team members to engage in continual improvement opportunities can drive profit.
Positive benefits for our people and planet are just the icing on the cake.•
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Lutz is founder of GivingSpring and the creator of the Business Planning for Social Entrepreneurs course at Purdue University.
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