Wondering How to Successfully Integrate Sustainability Into Your Business? Here's How.
Without embedding sustainability into business decision-making and processes, the work will be at risk of not being properly championed and resourced.
But how do you go about this transformative integration to remove sustainability from a niche silo?
Here are the three foundational elements needed to successfully integrate sustainability into your business.
This is part 2 of 3 in a series highlighting the what, why, and how for robust sustainability integration in your business. Read part 1 here.
Recall: What does sustainability integration mean & why should it be a priority?
We hear this a lot: “sustainability must be part of corporate strategy” to make progress. That’s true. But how it’s integrated can make a huge difference in successfully implementing programs at an enterprise level and achieving your goals.
In the first part of this series we dug into what sustainability integration means from our perspective and why it should be a priority for your business.
For us, the simplest way to think about sustainability integration is to consider how materially relevant impacts (in other words sustainability risks relevant to the products or goods you provide)are embedded into business decisions including strategy development and funding.
At the core of business decisions is the allocation of resources (time, expertise, money, materials, etc.) in pursuit of your mission. Where you spend your money is the simplest reflection of what you value.
Here’s three reasons why integrating sustainability into your business operations matters:
Your business will struggle to make real, lasting progress on your sustainability goals without robust integration into your business decisions.
Your sustainability function will be chronically underfunded because the work involved is not effectively linked to the full value it creates.
Fewer people will feel responsible for addressing sustainability impacts as part of their jobs and the level to which they choose to collaborate on those efforts.
Understanding Current State of Where Sustainability is Considered
For more mature businesses decision making happens before the budget includes the development of goals, strategy, and operational plans. For many younger and high growth businesses the operational processes can be less established and sometimes less rigorous (that’s a challenge for a future article).
In working with younger businesses (and candidly, even some more mature businesses) we like to start by documenting the current ways of working.
Once we’re able to visualize and articulate how decisions currently happen we can formulate the best way to integrate sustainability considerations into the existing process.
We then like to map out a multi-year transformation plan to help create more consistency and due diligence around the decision making processes, which not only benefits the future integration of sustainability, it also helps the business planning process overall.
This ideal future state helps in many ways beyond sustainability integration.
Incorporate Foundational Elements for Proper Governance
Once we have a clearer understanding of the current state of decision making in the business we work with key stakeholders to co-create an integration roadmap.
The roadmap identifies the what/when/who/how for sustainability integration to move the organization from current state to future state. When building this plan we also attempt to reference (at a minimum) and integrate (ideally) other related business transformation initiatives (e.g. updating legacy tech platforms).
Typically our roadmap breaks out the relevant business processes into three “foundational elements”.
While the nature and extent may vary by company, these elements must addressed in some way for sustainability to be effectively integrated into business decision-making:
Goals
Strategy
Planning & Governance
Importantly, they not all need to be integrated on the same timeline or to the same extent - the nature of this transformation depends on the needs of the business.
The reason we break them into these three buckets is because it helps to organize them by a rational hierarchy as they would occur in an integrated business planning process (goals>strategy>planning>governance).
The most challenging integration, and the most important in our experience, is the last one - operational planning & governance.
Foundation 1: Setting Sustainability Goals and Building them Into OKRs for Widespread Buy-In
We know that having smart goals is a key ingredient in driving performance, engagement and lasting profitability. We’ve worked with clients to set science-based climate goals, packaging sustainability goals, biodiversity goals, and others for material impact topics for their businesses.
Building goals and enterprise objectives & key results (OKRs) that link those high-level goals to nearer-term plans and action is a critical foundation for sustainability integration.
There are numerous ways that we see sustainability goals represented at the enterprise level:
Stand-alone: A sustainability issue or impact category has a dedicated goal
Example: Net zero climate goals
Integrated: Sustainability issues or impact categories are embedded into other goals
Example: A product category expansion that features key results related to priority material issues like raw materials sourcing, ingredient safety, and human rights
Hybrid: Goals include both stand alone and integrated
At the functional level, or step down in decision-making hierarchy for many organizations, these enterprise goals should cascade into increasingly specific targets and KPIs.
If your organization is using an OKR goal management framework then the sustainability key results for enterprise level objectives can directly feed functional or department level objectives, which feed team level OKRs and so on.
Foundation 2: Develop Supporting Strategies to Ensure Success
Once you have sustainability integrated into enterprise goals and/or OKRs, you have the basis for determining how you’ll achieve those goals. Building out a strategic plan that effectively integrates sustainability is the next step.
Similar to how sustainability is integrated into enterprise goals, we see a similar dynamic when it comes to strategy: Stand-alone strategic pillars focused on sustainability-related impacts or sustainability issues (risks and/or opportunities) embedded into other top-line strategies. On occasion we see both.
For example: We just finished a six month sustainability integration project for a well-known global athletic apparel company. Our objective was to lead integration of their impact programs into the operational planning & financial planning processes. However, their enterprise strategies were already established and include a stand-alone, multi-issue sustainability pillar.
At a strategic level, we believe there are a few key questions that should inform how sustainability issues are integrated.
Here are some examples:
Building resilience: What are the material risks to the business related to material sustainability impacts that could jeopardize our ability to effectively meet our customers needs?
Capturing opportunities: What are the most important ways we can create competitive advantages or differentiate our products and brand in ways that meet the needs of new or existing customers?
Responsible business: What are our ethical obligations to the communities where we operate, including partners in our value chain, and to future generations?
The answers to these questions should directly inform what sustainability issues are integrated into enterprise level strategies.
Foundation 3: Establish Planning & Governance Measures to Support Multi-Year Execution
Here’s what few people talk about and even fewer people have experience doing:
Effective sustainability integration requires translating strategy into where the real decision-making happens in a business - operational plans, department roadmaps, financial plans (aka budgets), and corporate governance. This is where we have unique expertise and experience.
Enterprise planning and governance is the central nervous system of an organization. When it comes to having a successful sustainability program, plugging into these workflows is crucial to ensure your program is not just looked at as an add-on but core to a business's strategy, operations, and investments.
Depending on the specifics of how your business runs their operational & financial planning processes, there are numerous opportunities to effectively integrate sustainability into decision making.
In our experience, here are the places where we find consistent opportunities across industries:
Strategic insights
New program development
Program intake
Program scoring
Program ranking & prioritization
Program tracking
Quarterly business reviews
Performance management
We’ll provide more details about each of these integration opportunities along with some specific best practices in the next blog in this series.
Does Sustainability Need to be Embedded into a Company’s Mission to Be Effective?
You may be wondering where a business mission fits into sustainability integration efforts? We’ve decided not to include a discussion about mission as it relates to sustainability integration in this blog for a couple of reasons.
In short: Is it helpful to have sustainability called out in a mission statement? Yes. Is it mandatory for successful integration? No.
While having sustainability and impact embedded in the mission statement of an organization can certainly help when it comes to the transformation necessary to successfully integrate sustainability, it’s not a requirement. Changing an existing mission statement can also be an incredibly time consuming and challenging process.
The amount of time and effort to successfully change a mission statement can be applied to integration in the operational areas of business decision making with greater impact and speed.
Also, mission statements can often be interpreted to mean many things, which makes them pliable enough to justify many strategic decisions.
Stay tuned for part 3 of this blog series where we’ll provide some specific recommendations for how to integrate sustainability into enterprise planning & governance.