November 9, 2010
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Many corporations acknowledge that a gap exists in their management team’s ability to successfully manage the risks and opportunities of sustainability. Few understand how to fill that gap.
Here we examine the nature of the sustainability management gap, the risks of allowing the gap to go unmanaged and how to fill it.
The sustainability management gap is not unique. Virtually all corporations suffer from the same condition to varying degrees. This treatable condition is a result of any combination of the following:
• The passion of the employee and the organic nature of company culture: Corporations are organic creatures. Even without direction, they tend to take new directions through the will of employee initiative. When an employee feels passionately about an issue, they develop programs, products or services that align to their values. The challenge for a management team is how to prevent these initiatives from becoming uncoordinated, which can then put the business at risk.
• Cost control measures and responsive issues management: The combined effects of recent cost control efforts and staff reductions at corporations and the tendency to manage by crisis rather than through advance planning, results in corporations having inconsistent sustainability initiatives that are often a mile wide and an inch deep. These initiatives are inherently unsustainable; employees become overloaded and program management costs spiral out of control.
• Failure to understand that sustainability complements rather than competes with existing priorities: Often a choice is presented to a management team – should we invest in sustainability or not? This is not the right question. In fact, asking this question tends to lead to a delay in action or outright rejection. The management team should instead be provided with the knowledge it needs to assess all issues with sustainability in mind. This is not an option. This is a business imperative.
• Fear of change: The only constant is change. Yet corporations resist change – especially change that may be regarded as putting their traditional processes and profit at risk. However, the unavoidable consequences of issues such as the physical impacts of climate change will render corporations that fail to adapt helpless.
Whether large or small, all corporations require the same fundamental tools in order to manage for sustainability. These include strategy development and implementation, risk and opportunity management, program governance and stakeholder engagement. These tools are intended to help corporations increase their competitiveness and profitability, manage their risks and protect and enhance their reputation.
It is impossible to meet all – or even some – of these objectives without a thorough understanding of the interests, influences and pressures corporations face. It is any combination of these influences and pressures that build the business case for proactively managing sustainability. Some examples may include:
• Regulations proliferating in the face of environmental and social issues, such as water stress resulting from climate change
• Non-governmental organizations threatening or taking action against corporations by papering their headquarters with propaganda
• Customers demanding a shift in the environmental efficacy of your products or services
• Competitors innovating faster, differentiating themselves and ultimately outcompeting
Now that the management gap, risks and value-at-risk have been identified, you can begin addressing them. The following activities provide the management team the guidance they require to take appropriate action. These steps are not regarded as isolated elements from which one can pick and choose; rather they are the elements of a comprehensive sustainability management approach.
• Appoint a senior member of the Board or management team to oversee the initiative: This provides a necessary bridge between the sustainability initiative and the operational and commercial control centres of the corporation.
• Retain a senior manager to assume the operational lead: Retain a sustainability professional with skills in public affairs and communications, risk management, finance, operations and change management. This individual must be the ultimate corporate generalist. Someone who can speak the language of the environment and of public and business communities – and moreover, help these communities talk to one another. The professional must be a skilled influencer who sets the stage for change and follows through.
• Define the medium and long-term strategy: Conduct an analysis of the priority sustainability risks and opportunities relevant to your business and develop a strategy for managing them proactively in alignment with the company’s strategic goals and objectives.
• Develop an implementation plan: Allow your operational lead to see the project through to maturity by dedicating sufficient resources and decision-making authority to implement the strategy.
• Assemble the data, set goals and measure progress: Identify the data points that will be used to measure performance. This is the key to managing existing and emerging risks and opportunities. No decisions should be made without sufficient information.
• Disclose information and advocate your positions: Current and forthcoming regulations and stakeholder priorities will affect how you manage your corporation. Stay abreast of the concerns of your stakeholders, share information and advocate your positions clearly. Manage your program to three ends – the priorities of your stakeholders, your commercial interests, and the environment and society.
Embedding sustainability into your business offers remarkable opportunities. You will be able to outperform your peers, enhance recruitment and retention, open markets, reduce costs, increase profitability, supercharge your brand and strengthen customer relationships. However, this can only happen if you fill your sustainability management gap by taking action.
Remember that it takes specialized expertise, knowledge and networks to manage for sustainability and shift corporations from the back foot to the front foot. So if you are considering filling the gap, consult an expert who can guide you through the thicket.
To download a copy of this asherinnovationTM, click here.