MANAGEMENT & SUSTAINABILITY
Sustainability Strategy
Sustainability is the most significant change management exercise in human history. Think about it: every industry will be disrupted and transformed by the issues and aspirations captured by the Sustainable Development Goals (SDGs). In light of the challenge, what role can strategy play in the shift to a sustainable future?
What is strategy? According to the seminal article Are You Sure You Have a Strategy? (Hambrick and Frederickson, 2001) strategy is “a central, integrated, externally oriented concept of how the the business will achieve its objectives.” Strategy is built from company vision and values but adds five essential components:
- Arenas: where will we be active?
- Vehicles: how will we get there?
- Staging: what will be the speed and sequence of moves?
- Differentiators: how will we win?
- Economic Logic: how will we obtain financial returns?
That all sounds good, right? These components are necessary but not sufficient. The problem is this definition of strategy has created companies and markets blind to social and ecological costs. So how must strategy evolve to be fit for the purposes of addressing the Sustainable Development Goals (SDGs) and the environmental, social and governance (ESG) demands put onto the modern enterprise?
Defining Sustainability Strategy
According to the Encyclopedia of UN Sustainable Development Goals: Decent Work and Economic Growth sustainability strategy is “the integration of economic, environmental, and social aims into a firm’s goals, activities, and planning, with the aim of creating long-term value for the firm, its stakeholders, and the wider society.”
Developing a Sustainable Business Strategy
The Step by Step Guide to Sustainability Planning by Darcy Hitchcock and Marsha Willards offers one of the most practical, straight-forward process for developing a sustainable strategy. From a careful assessment of what the change will require (Preparing for Change) to the key task of identifying material issues (Impacts and Priorities), Hitchcok and Willard share a sound process based on their years of work with companies.
Their prescribed steps are presented below:
Steps in sustainability planning:
- Preparing for Change – when is the best time to start or ramp up our effort?
- Refining the Business Case – what is the financial argument for tackling social injustice and environmental degradation and pollution?
- Creating the Vision – what could be our ultimate and greatest contribution to a sustainable world?
- Impacts and Priorities – where should we start?
- Metrics and Reports – how will we measure and report on progress?
- Implementation Strategy – what projects will we work on and who will be responsible for which parts of the plan?
- Management System – how will we manage all the projects, people, information and resources associated with the work?
- Governance Structures – how will we best structure people, committees and boards for effectiveness?
- Engaging Employees- how will we make sure employees at all levels are engaged at every step of the way?
Eight Key Ingredients for Effective Sustainability Strategy
In one of the largest and longest studies ever on sustainability strategy, Boston Consulting Group and MIT Sloan looked into sustainability in business over 8 years in a study involving executive and management respondents in 118 countries from a broad mix of industries, totalling over 60,000 respondents plus 176 in-depth interviews.
What did they find? Read the full report here but in essence they found that 90% of companies consider sustainability a strategic priority but only 25% have developed a strong business case for it. They identified the eight (8) key ingredients below for building the business case and constructing a durable, effective sustainability strategy.
ADVANCE YOUR KNOWLEDGE OF MANAGEMENT AND SUSTAINABILITY
Learn what sustainable management is all about and its importance
Learn the important things to know in this field
Learn how sustainability fits into your courses
Learn how sustainability relates to your career