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How to develop an effective and inclusive sustainability strategy

Article by Max Jungmann

With an increasing amount of businesses being subject to sustainability regulation, such as the EU Corporate Sustainability Reporting Directive (CSRD) and the upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD), pressure on businesses to report on their sustainability measures continues to rise. At the same time, integrating sustainability into business models, processes, and organizational cultures enables organizations to gain a competitive advantage, attract talent, and build resilience.

As more and more organizations must provide transparency through their sustainability reports, however, it becomes apparent that without effective strategies to build on, sustainability reports often do not lead to strengthened action or actual transformation processes but rather highlight the damage organizations are causing to the environment, society, and the economy. While the goal of sustainability reports is to showcase the contributions of organizations to implementing the Sustainable Development Goals (SDGs) and the Paris Agreement, they can unleash this potential only if they are the culmination of a comprehensive transformation process and not merely a required act due to shareholder pressure, customer demand, or compliance measures. As a matter of fact, according to an MIT study, 90 percent of executives are convinced that sustainability is important, but only 60 percent of organizations actually have a sustainability strategy. Therefore, this blog post seeks to give a short overview of key success factors in developing a sustainability strategy.

If your organization is rather new to the topic of sustainable development, it is essential to lay the foundationby offering workshops that introduce stakeholders to key concepts, current trends, and potential actions that are directly connected to your organization. Initial introductory lectures or workshops can lead to topic-specific ones, such as sessions on certain business areas (e.g., procurement or human resources) or certain areas of sustainable development (e.g., climate action or circularity). When you start your sustainability journey, it is particularly important to gain both top-down and bottom-up support, as you require a mandate, budget, and willingness to act from key stakeholders throughout your organization.

As you continue your path towards sustainable impact, you should build further capacity by establishing a sustainability manager or department (depending on your organization’s size), create co-creation engagement platforms to collect ideas for sustainability measures and enable team members to contribute, and offer regular training and workshops to unleash the innovation and engagement potential sustainability holds for your entire organization. If you are in Germany, you can for instance take your team members to the Klima Arena so they can deepen their understanding of climate change and come up with ideas for sustainable actions.

While starting to collect ideas for measures, it is pivotal that you take the time to analyze your status quo, assess your corporate carbon footprint, and conduct a materiality analysis to identify your biggest levers in terms of sustainable impact regarding ESG (Environmental, Social, Governance). You can then determine which measures to prioritize, the impact you hope they will have, the budget you need to implement them, and your goals for the future. To ensure alignment with the overarching corporate strategy, you should harmonize your sustainability objectives and key performance indicators (KPIs). Employing specific methodologies like SWOT analyses and cost-benefit analyses becomes instrumental in effectively monitoring progress, facilitating strategic decision-making, and providing a visual representation of outcomes. The goals and roadmaps you develop should be specific, measurable, achievable, relevant, and time-bound (SMART) and linked with SMART KPIs.

Your sustainability measures should align with your risk and quality management, take interdependencieswith other measures into account, fit your corporate identity, be holistic instead of addressing only one area of sustainability or a single SDG, and be integrated into the overall corporate strategy to avoid conflicting goals and processes. You can make use of existing management systems, such as EMAS or certifications(such as DGNB for buildings), but what matters the most is that you at all times maintain effective stakeholder management and inclusive and effective internal communication to build momentum within your team. If you succeed at motivating people and integrating their thoughts and perspectives into your sustainability strategy, they will identify with the described measures and much more likely implement them in their day-to-day activities. Consequently, your strategy will not only look good on paper but also be lived and continuously improved in your business practices.

This goes hand in hand with project evaluation and reporting, as transparent and effective project management, precise impact measurement, and structured sustainability reporting according to international standards, such as DNK, GRI, or ESRS, help to boost your internal transformation process and lay the groundwork for your external communication measures.

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