Let’s start by clearly defining what is meant by a Sustainability Strategy; a strategy is a collection of thoughts and documented ideas without a clearly defined Action Plan. Action plans are where the rubber hits the road for any strategy and are often known as tactical implementation.
Over the last ten years the constant feedback we have received from many organisations is that they have a clear idea of what to do next, but lack the buy-in from senior management and/or middle management to obtain the budgets and other resources required to follow through on the strategies outlined. Often the main reason this happens is that the senior management were not involved in the strategy development phase and hence have not bought into the true value of the strategy. Another reason which we are often given is that management do not see real business value in a strategy that includes sustainability as a central core.
Too often Sustainability, as a department, is seen as an entity created for meeting a required corporate governance role and as a tick box function, and not a platform that can add real value to one’s business. This viewpoint is a far cry from the truth. Investors of all kinds look to invest in profitable, well managed companies and sustainability can (as often is) a cornerstone in the company’s overall strategy to achieve increased revenue and cost reduction.
The key to understanding sustainability’s value to your business is understanding the concept of materiality in terms of the business’ impact economically, socially and environmentally. Once you have identified what is material to your business you will be able to create a strategy and action plan that is value adding. If your strategy is too broad and not aligned with material issues, invariably you will struggle to obtain buy in confirmation from your management. So prior to creating your strategy ask yourself what is material? Then create your strategy based around these important issues. Once you have created a comprehensive strategy ensure that you also have a clearly defined action plan with timelines, budgets, resources requirements and most importantly a return on investment (ROI) calculation, that is easy to understand and track. This leads us to talk briefly about the method for creating a strategy and action plan. Terra Firma Academy has created a carefully constructed course to help learners with a methodical process aimed at developing a well thought out strategy document. This course is a must should you want to develop a strategy based on materiality and value to your business.
The most successful sustainability strategies have always been ones based on adding value to shareholders and had clear buy-in from the senior executive. Take Walmart for example. They realised that the increasing input costs into their products were a material item, pushing up prices and hurting consumer sales. Realising that they had to squeeze costs out of their supply chain, they embarked on a program to make their suppliers more efficient. By doing so they squeezed more than $2B per year out of their supply chain costs. Another example is a property company client of ours which has realised that as the economy shrinks their rental income is under more and more pressure to not increase annually or only increase at single digit rates. By producing electricity on site with a rooftop solar PV solution, they are able to divert the electricity income that their tenants were paying to the municipality to their own pockets and now have a double-digit growth income stream.
It is strongly recommended that one develop an action plan immediately after developing a strategy as the two go cohesively hand in hand. Action plans often help us to ensure that the strategy is not pie in the sky and also ensure that timelines and costs are associated with the strategy. Asking a third party that was involved in the strategy development to create an action plan is not advisable.
So what kinds of resources does your organisation require to develop an Action Plan? These vary from company to company and industry to industry and will ultimately be dictated by your strategy. We recommend that you select the most material issues to build your strategy around and then create budgets that have clear returns on investment. For example, BEE. This could be a cornerstone strategy for your company so by achieving a Level 2 BEE it then becomes an investment and you can then quantify the revenue expected as a result. Always make sure that your sustainability strategy is based on a materiality analysis and that each step you intend to take has a clearly defined ROI.
Once you know you have the team to deliver on the Strategy, you need to consider what the best framework or practice should be following in order to implement the Action Plan. There is currently no international standard that can be strictly adhered too, however it makes sense to treat the implementation like any other project and manage accordingly.
What is critical in the implementation of an action plan is that you have a person or team driving the project and that, they create and share a project plan with all of the key stakeholders and sub drivers. Having a single well thought out plan with buy in from management is the most important kick-off document and all performance needs to be tracked against this. The simpler the better. Each key area within the project needs to have its own sub plan and ultimately if you are a large organisation, it needs a driver. For example, you might have a training plan, water plan, BEE plan with sub categories, energy plan, waste plan, communication plan, accreditation plan, tools plan etc. These each need a driver with a central person co-ordinating the whole plan. No one is a fan of excessive meetings but conference calls and centralised documents are an excellent tool to ensure momentum is maintained.
When it comes to certain organisations; the scope of the Action Plan will prove too great for the organisation to tackle the challenge without expert help. There are several different approaches including; keeping the consultant who developed the Action Plan on to manage the program centrally, keeping them on to assist the person managing the central program or not using them at all. If you used a consultant to create your strategy, then we recommend that you retain them through the implementation phase to ensure there is an objective opinion, as we all know “no battle plan survives first contact with the enemy” and should you get a little off kilter the consultants can help you realign.
So, now you have a strategy, and action plan and the team (possibly including 3rd party experts) to implement. How do you tell if you successfully implemented the strategy?
Well the first thing is to ensure you have met the timelines in your action plan. The next and most important is that you see the impact on the business from a value perspective, be it return on investment, costs savings, revenue generation, brand enhancement or risk reduction. While this is fairly broad a true strategy will have specific measurement strategies build into each key action item area. For example, if you want to reduce energy consumption you will have budget for installing SMART metering equipment on the specific circuits where you intend to implement projects. This will give you a clear indication of the savings and hence help you to motivate for additional budgets. Some common things that can be measured are: how many staff went on training, successful supply chain optimisation, Energy Efficiency recorded, Water Efficiency recorded, Energy Generation (solar PV or other renewable energy projects implemented), Waste Reduction recorded, BEE status achieved or maintained, CSI project success, Reduction in Hazardous Materials to name but a few.
Finally; how do you get the buy-in you need to implement an Action Plan? Focus on value and show the ROI calculations. Then get this in front of an EXCO member that has influence and authority and make it their campaign. This will get you mindshare and budgets. Show how the competition is doing the same and having an impact.
Position sustainability as a value adding differentiator to the business. Find people within the organisation that are passionate and have influence. Show how sustainability is the fabric of your culture as a company. Please contact us to find out how we can help you with your organisations’ Sustainability Strategy.”