Sustainability involves considering the environmental, social, and economic impacts of our actions and seeking to minimise negative impacts while maximising positive ones. This can involve making changes to the way we live, work, and consume resources, as well as adopting technologies and practices that are more environmentally friendly and socially responsible.
For example, sustainability efforts might include reducing energy consumption, conserving natural resources, reducing waste, protecting biodiversity, and promoting social and economic equality. To be truly sustainable, these efforts must be ongoing and adapted to meet the changing needs and challenges of the world.
On this journey, consider three ‘states’ of being for an organisation:
There are three perspectives or scales on which this journey unfolds:
1) the operation.
2) the organisation.
3) the system
These perspectives correspond to the three states of being of the organization, respectively.
Like the ‘agile’ mindset, this journey is about creating the vision and following it through in different ‘layers’ of implementation, in an iterative manner, not unlike what Van Eyck did with his paintings.
We first ground ourselves in the here and now, and with the status quo of ‘business-as-usual’ as our current state of operating by default.
Business-as-usual is focuses on economic maximisation for shareholders. It is typically done at the cost of ESG considerations and is focused on short-term gain with competitiveness for profit as the primary vector of strategic direction. Operations are geared toward efficiency (operating cost minimisation) and revenue maximisation (endless growth orientation) and with no consideration of ESG factors except to meet legal and regulatory requirements. This is an archetype business that is either unaware of ESG considerations or has made a conscious choice of not incorporating them into their envelope of considerations. Such organisations typically do not look beyond their operating boundaries toward the larger ecosystem and configure their organisations, or only do so for opportunistic gain or leverage.
A company under pressure, either from external forces or internal stakeholders, begins to see the importance of ESG (Environmental, Social, Governance) principles. This phase includes initial steps like attending webinars, reading relevant articles, and understanding ESG through various sources.
The company starts by defining materiality—how its actions impact the world and vice versa—and begins reporting on ESG efforts. The focus is on quick wins, raising awareness, and setting the stage for integrating ESG into business strategy and operations. Data gaps are identified, and new systems or tools may be explored to meet reporting needs.
The focus shifts from shareholders to a broader range of stakeholders. Reporting becomes more frequent and detailed, and ESG principles are embedded into the business strategy. This involves acquiring new skills, updating processes, and realigning organisational structures.
The business model is redefined to support ESG goals. The company embarks on a long-term journey of ESG transformation, evolving to incorporate best practices and address new challenges.
The company now prioritises stakeholder well-being, not just financial gains by addressing inequality, providing education, and developing skills . ESG is integrated into every aspect of the business, with dynamic reporting on regenerative practices. Business processes highlight ESG issues, and leadership aims for lasting impact. ESG becomes standard practice, influencing the entire ecosystem through education and transparent governance.
We envision this journey in a stepwise manner, with a distinct scope for each step, to make the journey logical and manageable for an organisation.
The entry point for this journey for any company that is considering beginning its road to sustainability is identifying the stakeholders and defining its scope of materiality. Since the standards developed by the EU and other governments is so broad and generic, it will be up to each company to define its materiality scope. This is the on-ramp onto the highway to ESG 1.0.
As the company goes through toward being in the realm of ESG 1.0, the next on-ramp to ESG 2.0 is toward the definition of the business strategy touch-points, where the ESG objectives begin to be mapped to the business strategy with the aim of tying in these objectives to a corporate mandate that is not isolated or restricted to any specific, functional domain but on the transformation agenda and led by with the full sponsorship and buy-in of the C-suite.
The next on-ramp to ESG 3.0 comes in through the digitalisation agenda, as the systems and data become more prevalent in the ability of the organisation to sense changes in the marketplace and corporate environment, and its ability to seize the opportunity to react to those changes and transform itself toward its ESG ambitions.
Please don't hesitate to contact us to assess your status and draw up an ESG roadmap.
