The three principles of sustainable transformation
Over the next few years, sustainability will become a top priority for CEOs. Their ability to transform their business is essential to survive and take advantage of a new wave of business disruption. Becoming an environmentally, socially and economically sustainable business requires profound and fundamental change. Like the digital transformation before it, you can’t just lock it in. Traditional companies wishing to embark on their multi-year transformation journey towards sustainable development must adopt three key principles:
- Bold direction. Lead with a bold vision that aligns your business model with a single goal.
- Long-lasting performance. Drive action by embedding sustainable execution deep within your organization.
- Stakeholders aligned. Align internal and external stakeholders while respecting your commitment to sustainability.
Let’s not be naive, but realistic: moving away from maximizing shareholder value and moving to a participatory economy will take time and will depend on the evolution of US / European standards and the pressure that citizens exert.
To reconcile economy and ethics, business leaders must reinvent their way of:
- Define what sustainability means to them. The United Nations 2030 Agenda for Sustainable Development has defined 17 interrelated Sustainable Development Goals. Seven of them are directly related to environmental sustainability; others, such as gender equality or quality education, can help companies define how they play a larger role in building a sustainable society to gain the trust of stakeholders.
- Measure the value they create beyond profit. Concepts such as the triple bottom line will foster the emergence of new accounting rules (eg, triple capital accounting) and new business models.
- Manage a sustainable business and operating model. Carbon offsets, offsets and philanthropy tackle the symptoms, not the cause. Businesses face tough choices about what and how to do it.
Stakeholder confidence in your sustainability commitments will generate a competitive advantage
PwC announced a five-year plan to invest $ 12 billion and recruit 100,000 employees to help its clients transform on environmental, social and governance (ESG) issues. Robert E. Moritz, PwC Global President, said: âTrust has never been so important or so difficult to gain and maintain. There is a growing need for organizations to gain trust on a much wider range of issues, with a much larger stakeholder group than in the past. In addition to customers, employees, partners and shareholders, companies also need to work more closely with civil society, non-governmental organizations (NGOs), local governments and political institutions. Pragmatically, companies should not only embrace ESG reporting and align with key frameworks such as the Climate Related Financial Reporting Working Group (TCFD) and the Sustainability Accounting Standards Board (SASB); they must also:
- Act with empathy to build consumer confidence.
- Act with integrity to build employee confidence and acquire and retain talent.
- Embrace transparency and align with shared values ââto ensure partner trust.
This blog post is part of the Forrester COP26 series. For more Forrester sustainability information, check out the full Forrester bundle climate action blogs.
This article was written by Vice President, Senior Analyst Thomas Husson and originally appeared here.