Winning Sustainability Strategies

Finding Purpose, Driving Innovation and Executing Change

Benoit Leleux, Jan van der Kaaij

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN: 9783319974446
• eBook ISBN: 9783319974453
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

Despite recent optimism and global initiatives, the implementation of corporate sustainability programs has been slow at best, with less than a third of global companies having developed a clear business case for their approach to sustainability. Presenting numerous award-winning cases and examples from companies such as Unilever, Patagonia, Tumi, DSM and Umicore alongside original ideas based upon 20 years of consulting experience, this book reveals how to design and implement a stronger sense of focus and move sustainability programs forward. This proven combination of purpose, direction and speed is dubbed "Vectoring".

Based upon practitioner cases and data analysis from the Dow Jones Sustainability Index, Vectoring offers a plain-spoken framework to identify the relative position of companies compared to their peers. The framework and its 4 archetypes deliver insights for practitioners to locate inhibitors and overcome them by providing practical suggestions forprocess improvements. This includes designing and executing new sustainability programs, embedding the SDGs within company strategy and assessing the impact of sustainability programs on competitiveness and valuation. Offering directions for CFOs to shift companies from integrated reporting to integrated thinking in order to accelerate their sustainability programs, Winning Sustainability Strategies shows how to achieve purpose with profit and how to do well by doing good.

Part IVectoring: Of Direction and Speed

© The Author(s) 2019

Benoit Leleux and Jan van der KaaijWinning Sustainability Strategieshttps://doi.org/10.1007/978-3-319-97445-3_1

Begin Abstract

1. Introduction

Benoit Leleux¹ and Jan van der Kaaij²

(1)

International Institute for Management Development, Lausanne, Switzerland

(2)

Finch & Beak, Breda, The Netherlands

Benoit Leleux (Corresponding author)

Jan van der Kaaij

End Abstract

Contrary to popular belief and the optimism generated by the ambitious global targets set by the Conference of the Parties 21¹ (COP 21) and the United Nations Sustainable Development Goals² (SDGs ), the implementation of corporate sustainability programs has been slow at best, sloppy and ineffective at worst. Less than a third of global companies have developed clear business cases or supported value propositions for their approaches to sustainability [1]. With many initiatives stuck in storytelling (i.e. good stories but little action) or cherry-picking (i.e. some actions but with limited objectives) mode, the need for the executive level to start thinking about transformation toward a more sustainable business model is rising as rapidly as the levels of carbon dioxide in our atmosphere. As reference, according to the UN weather agency, CO₂ levels are at their highest in the last 650,000 years, and so are the average temperatures, with the world’s nine warmest years all having occurred since 2005, and the five warmest since 2010 [2]. Companies and executives need to develop a new sense of urgency when it comes to sustainability, moving it from the realm of compliance to that of a key driver of performance and innovation, which requires imbedding it deeply into their core strategies. And crossing the chasm [3] in this case, that is, getting wider acceptance and implementation of this new reality in the higher circles of management, requires education, new skills, competences and tools.

As managers look for guidance in this new quest for speed and efficiency in sustainability implementation, the authors realized there was a need for an easy-to-use, practical book that would take them by the hand in this novel, high-velocity field and equip them with the tools required to ensure the smoother definition and adoption of ambitious sustainability objectives in their firms. Capitalizing on the experience of a large collection of award-winning sustainability champions, such as Unilever, Umicore, Novozymes and Bodegas Torres, and years of experience consulting with executive teams and companies effecting similar changes, this book attempts to reveal the keys to designing and implementing a stronger sense of focus and momentum in sustainability efforts.

The effective combination of direction and speed, which generates impact in sustainability programs, is dubbed Vectoring in this book because it is analogous to the navigation service provided by an air traffic controller, whereby the controller decides on a particular path for the aircraft, composed of specific legs or vectors, which the pilot then follows. Sustainability programs, unfortunately, lack air traffic controllers or often pilots for that matter. First, they tend to have weak direction, that is, with respect to the specific sustainability issues (referred to as materialities) that will be most relevant and impactful. Second, we argue that the board of directors and CEO should assume the role of air traffic controller. The absence of directional bearings, or the selection of inadequate ones, lead to misguided, uncoordinated actions and usually unsatisfactory results from the sustainability initiatives. Simultaneously, we discovered that “vectoring” is also used as a term in telecommunications³ to refer to a transmission method that employs the coordination of line signals for the reduction of crosstalk levels and overall improvement of performance, similar to the principles used in noise cancellation for headphones. The analogy is particularly poignant here, where, as will be shown later, an inappropriate sense of direction and the consequent lack of resources often conspire in many companies to generate limited results from their sustainability efforts.

How to Use This Book

Vectoring is presented here both as a diagnostic tool and a prescriptive method. As a diagnostic tool that has been developed based on clinical studies of actual business situations as well as data analytics from the Dow Jones Sustainability Index (DJSI ), vectoring offers a practical framework for identifying the relative positioning of companies compared to their peers. The framework, and its associated four fundamental archetypes, delivers valuable insights for sustainability practitioners, such as how to identify and locate inhibitors and how to overcome them. It is in that latter prescriptive role that vectoring becomes a key strategic tool, with numerous applications, such as:

• Designing and executing new sustainability programs
• Embedding the SDGs into the company’s core strategy
• Assessing the impact of sustainability programs on competitiveness and valuation.

The ultimate objective of vectoring is to provide a clear, potent framework that offers directions for executives to help shift their companies from integrated reporting to truly integrated sustainability thinking. To make the journey from compliance and reporting to integrated sustainability compelling and easy to understand, the book is organized in a very intuitive and logical manner, mimicking the natural cycle of adoption and acceleration of an effective sustainability strategy. The book’s structure is schematically summarized in Fig. 1.1.

Fig. 1.1

A schematic view of the book structure encompassing the vectoring approach

Developing winning sustainability strategies based on the vectoring approach can be visualized as a three-part process, corresponding to the three parts of the book. Part I introduces the concept of vectoring in general terms, identifying characteristics and themes from sustainability leaders and compiling the empirical evidence into a simple diagnostic framework with the four major archetypes unearthed during the research. The framework is then used to explore the key success drivers of winning sustainability programs, including the need to develop a clear business case for sustainability.

Part II proceeds to investigate in great detail the first pillar of effective sustainability programs, namely setting the direction or bearings right. More specifically, Chap. 3 focuses on the role a company purpose can play in successfully designing and implementing a sustainability strategy. Chapter 4 elaborates on the concept of sustainability issues, particularly how they can be mapped elegantly into a materiality matrix. The materiality matrix is a critical tool for the development of an effective sustainability program, requiring insights from multiple stakeholders. The chapter will review possible business-induced complexities and various approaches for uncovering the most material of these issues and assessing their business impact in a constructive way by covering both risks and opportunities.

Chapter 5 investigates the role played by multi-governmental efforts, such as the SDGs , in putting sustainability front and center in business. With an estimated $5 to 7 trillion required to finance the SDGs on an annual basis [4], the private sector has been entrusted with providing the engine for innovation and technological development. Incorporating these SDGs into the company strategy is no easy task, but the alternative, not incorporating them properly, is probably even less palatable. The chapter is thus devoted to making the adoption of SDGs as painless as possible, offering tools to select the most relevant SDGs for a company, how to align them with existing sustainability programs and the overall business strategy and how to develop action plans.

To gain a better understanding and help navigate through the jungle of non-financial reporting challenges and environmental, social and governance (ESG)⁴ ratings, Chap. 6 looks at the increased shareholder demands for transparency and the role of ratings agencies. To help calibrate the size of the new burden, the Reporting Exchange initiative by the World Bus...

Table of contents

• Cover
• Front Matter
• Part I. Vectoring: Of Direction and Speed
• Part II. Direction by Design
• Part III. Acceleration
• Back Matter