“Sustainability is part of our business’s strategy to a point, but it must become a normal part of how each function works,” said the Sustainability Director of a consumer business on a recent conference call with Sustainability Leaders. “If you take any sustainability target – for example, CO2 reduction – it affects every part of our business, from supply chain to R&D to product development. For us to make progress, CO2 management must be built into how those functions work.”
This same scenario exists in every industry. For many businesses, impacts on environmental and social sustainability are concentrated not in their own direct operations, but in their value chains. For one healthcare company that Sustainability Leaders spoke to, for example, only 5% of its carbon footprint exists in its direct business. The remaining 95% is upstream in its supply chain and downstream in its consumer base.
Effecting change in these parts of a company’s value chain cannot be done within a corporate sustainability function alone. Among others, it requires that procurement and supply chain teams factor sustainability into purchasing decisions; that product development and R&D consider the environmental impact of what is designed; and that finance invest in the people and structures that enable these changes.
But while many sustainability leaders will champion this more decentralised model of managing sustainability, they will also acknowledge it is not without its challenges. As responsibility for improving sustainability spreads out across the organisation, it becomes more difficult to coordinate and track the different pockets of work that exist. Projects from different functions may overlap or undermine one another, or may not contribute to larger ESG targets.
To ensure sustainability is successfully integrated across the business, formal management and engagement practices must be put in place. Sustainability Leaders’ research shows there are several ways that Chief Sustainability Officers and their teams achieve this, with three standing out:
Translate corporate sustainability targets into specific functional goals
While many businesses now set corporate ESG targets, it is less common for those targets to be turned into separate functional goals, and for those functions to be incentivized to meet them. Translating corporate targets into specific functional goals and building them into each function’s performance metrics helps embed sustainability into regular workflows.
Appoint functional sustainability leads to coordinate work
To address the risk of sustainability work becoming uncoordinated and disparate, some companies appoint dedicated functional sustainability leads who work between the function and corporate sustainability. For example, at one food and beverage business, a Sustainable Sourcing Director role was created to ensure procurement and supply chain sustainability contributes to broader ESG targets. The same principle can be applied to different functions.
Introducing sustainability collaboration forums
As responsibility for sustainability is spread across the organisation, it becomes increasingly important for information to be shared. To do so, companies often organise collaboration forums where cross-functional leaders meet to provide updates on their sustainability work. This could cover anything from updates to the corporate sustainability strategy, to how changes to product development affect sourcing decisions, to how a particular sustainability project is being communicated externally. As the Sustainability Director of the consumer company noted: “People around the business understand how to make sustainability a part of their job if they are better informed about it.”