If we were to equate the world’s sustainability journey with the theory of evolution, then COP 21 in Paris would represent the first emergence of terrestrial life out of the swamp.
In the nine years since the Paris Agreement was signed:
- The language around the issue has evolved, we now talk of net zero, Biodiversity net gain (BNG), biodiversity, creating habitats, etc).
- The earth has continued to heat up.
- UK politicians now consider ‘green’ policies to be almost as critical an election battle issue as the economy, NHS and ‘small boats’.
- ‘Green’ policies have accelerated up the corporate agenda.
On the other hand, the spectre of ‘greenwashing’ has also grown exponentially as less scrupulous companies try to manipulate facts to either steal a march on competitors or for financial gain.
However, the ‘green policemen’ are slowly catching up. Consider four recent national and international initiatives designed to regulate this still relatively nascent issue:
- IFRS S1, an International Sustainability Disclosure Standard came into effect on 1 January 2024. It requires the disclosure of all information about sustainability-related risks and opportunities which could impact a company’s prospects.
- The FCA (Financial Conduct Authority) recently launched a consultation on new guidance concerning claims made about the sustainability of a product or service.
- The EUs recently introduced Green Claims Directive is designed to address the greenwashing issue across the EU. It requires companies to substantiate the environmental claims they make or face legal consequences or financial penalties of up to 4% of turnover.
- In the US, the Federal Trade Commission’s Green Guide is also under pressure from critics who claim it needs updating to avoid misleading environmental claims.
That is why 2024 will be a watershed year for private and public sector organisations as they try to adopt and be seen to adopt environmentally friendly policies and practices. Some argue that the age of ‘showboating’ greenwashing claims is drawing to a close as regulators demand greater honesty and transparency.
The property sector for example, now focuses far more on the fabric of a building and construction techniques, as we accept that just installing energy-saving light bulbs is no longer a valid quick hack.
The recent Reinforced Aerated Autoclaved Concrete (RAAC) crisis highlights the fact that short-termism is no longer an option. Thirty years ago, the industry used RAAC because it was lighter in weight, which reduced the load placed on supporting structures and foundations and because it was cost-effective. But yesterday’s decision is today’s problem.
This is why responsible organisations and investors are now thinking long-term. They know that stranded assets, which fail to meet current and potential regulations, will require additional investment to ensure they are fit for purpose and marketable.
So, how will public and private organisations square the net zero circle ie adopt environmentally friendly strategies, behave responsibly and adopt ethical processes, protocols and behaviours whilst operating under the twin shadows of increasingly stringent regulatory frameworks and tough economic conditions?
Having advised a number of companies on this issue, we think that there are perhaps five indicative milestones which could kick-start, or accelerate, your sustainability strategy development journey. They include:
Clarify what you want to achieve
The term ‘sustainability’ is now banded around boardrooms and permeates every sales and marketing initiative, but what does it actually mean for your organisation?
Be sure you know and align your environmental objectives with your strategic, financial, and operational goals.
Is it part of your core values? Is your sustainability strategy part of an integrated ESG plan ie an environmentally friendly programme, that intrinsically benefits local communities and improves the lives of employees, as well as those who work in your supply chain?
Audit
Audit your operations to ascertain your current (sustainability) status. You will identify gaps and operational ‘weaknesses’, but you might also find that you are already implementing green initiatives (like planting trees as part of your landscaping plans).
A comprehensive audit should review how your organisation impacts the environment: from carbon emissions and plastic footprints, to how you manage waste and conserve water. Analysing the result will allow you to know what to prioritise/focus on to make the greatest impact.
At this stage, it’s as much about science as it is ‘hearts and minds’. Who are the influential stakeholders in your organisation (from the boardroom to the employees who are listened to and respected)? Who will act as catalysts to help your organisation achieve its sustainability goals?
Agree goals
Agree on your (sustainability) goals and what your KPIs will be.
As they say “If you can’t measure it, you can’t manage it. And if you can’t manage it, how can you effect change.”
Make sure your goals are realistic. Setting a goal to satisfy the demands of one stakeholder (eg consumers) might tick a box but it could have profound operational and/or financial ramifications. If that happens, the whole plan will be undermined (at best) or fail (at worst).
But above all, make sure you keep your ‘ambassadors’ fully briefed and all employees regularly updated – on progress and good news, as well as areas which might not be going to plan. Be honest about the remedial programme to address issues.
Develop a sustainable strategy
You need a strategy which has longevity and a pathway with clear auditable milestones.
If, for example, the goal is to reduce the organisation’s carbon footprint and the central plank of the strategy is carbon offsetting, perhaps an annual emissions audit coupled with an offset assessment plan would be the best option.
An agreed schedule of audits and assessments is the only way to measure KPIs and determine the (quantifiable) impact of the programme. To be fully compliant with existing and potential regulations and legislation, the audit should also include your supply chain.
Implementation
Never forget, to go from zero to hero or to travel any part of that journey requires a detailed plan and as much focus on ‘doing’ as you have on ‘measuring’. It’s all about progress measurement and management.
Internal audiences' and stakeholders’ buy-in is critical to the success of any sustainability plan. As is C-Level commitment – particularly as most markets will inevitably feel the chill wind of recession and cost escalation in 2024.
This is all about teamwork, commitment and an unforgiving focus on what is right for the environment, your stakeholders, your brand and ultimately your bottom line.
The road to environmental nirvana will inevitably be disrupted by obstacles and disruptions you will anticipate and some of which will arrive unheralded.
Somewhere along that journey, you will have to:
- Recalibrate
- Remind the purse keepers why the plan was and is sound
- Defend earmarked budgets
- Evolve the plan to respond to unforeseen legislative developments (in your home market and/or markets you are selling your products or services in).
But never lose sight of where you want to end up, why you are travelling this journey and the fact that the most important beneficiaries of your plan and your actions will be the environment and future generations.
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