Many companies have a Corporate Social Responsibility (CSR) or sustainability program. However, many do not make the most of it. Sustainability is often approached as an add on to “normal” business and as such the impact of their sustainability initiatives is often limited. Corporate sustainability should be pursued strategically and holistically, and not as a collection of unconnected projects. Accordingly, corporate sustainability needs to be thought of as a strategic task and as such approached as an integral part of the business model. Most importantly, for it to succeed, the highest decision-makers must be involved. In short, sustainability is an executive issue.
Stakeholder approach instead of shareholder approach
Sustainability involves shifting from a shareholder approach to a stakeholder approach. In addition to the expectations of investors, management should know the needs and interests of customers, employees and society and integrate these into strategic planning and program development. By focusing on the issues most important to stakeholders and understanding the impacts these issues have on their business context, companies can both secure long-term business success and create value for stakeholders.
Central questions that, help managers assess the effectiveness of their sustainability initiatives are:
- How and for whom does the company create value (not only financial, but value for customers, employees, society and the environment)?
- Where do we have an impact on sustainable development?
The most promising strategic approaches to sustainability are closely linked to the core business. Companies that consider sustainability as part of their corporate strategy not only contribute to sustainable development but minimize business risks and look out for new business opportunities. When delivered in this manner, sustainability contributes to the bottom line and increases resilience of the business.
Six tips for companies to start
- Sharpening self-image: Make an inventory of economic, social and environmental performance of your company (“Triple Bottom Line” gives clarity).
- “Reduce to the max”: Focus on material issues. This helps, especially at the beginning, to take solid steps on the journey towards sustainability.
- Creating value: Fundamentally think about how and for whom your company creates value (customers, employees, environment, society). This will help to identify and act on the key issues and levers for sustainability activities.
- Set goals: Set ambitious but realistic and feasible goals.
- Stay calm: Don’t let the complexity of the requests and requirements drive you crazy. It is important to start somewhere and to understand sustainability as a journey. You cannot and do not have to solve all the problems in the world at once.
- Partnerships: Do not try to solve everything on your own, rather try to forge meaningful partnerships and alliances. Sustainable solutions almost always involve an entire value chain with numerous protagonists.
Core ideas of this article were used in a recent lead article by Robert Wildi of the Swiss Handelszeitung published on December 19, 2019.