What Sustainability Capabilities Matter (Part 1) – Not just carbon

[This was originally published as part of the Future Planet State of Sustainability Study.  
To request your copy of that report please email eva.]

Because sustainability touches every part of a company, traveling from strategy to execution, it can be hard for companies to determine where they should focus.  The point of entry is often determined by the scale, capability, experience and sophistication of the business and whether the company’s leadership has encountered business transformations or significant change management programs in the past.  In other cases, some possible points of entry are missed, because the participant did not realise that the possibility existed.  “I never thought about it that way” is not an uncommon refrain as companies try to understand the spectrum of capabilities required to fully embrace sustainability as an integral part of business strategy.

We listed six main capability areas and asked participants about the importance of each capability.

“In the context of Sustainability, how important is each of the following to your company?”

> Materiality Assessment (what topics are most critical?)
> Maturity Analysis (where are we on each topic?)
> Improvement Plan (how do we improve?)
> Execution management (how do we track progress?)
> Measuring Emissions (what is our C02 number?)
> ESG Reporting (how do we publish ESG reports? )

When addressing this question, the respondents’ priorities clustered about the action-oriented capabilities. Rather than classify Materiality Assessment or Maturity Analysis – both situational analysis capabilitiesas Essential or Very Desirable, it is as if the urgency of the situation is compelling people to act, sometimes before understanding what they should act upon, or what actions they should take.

Improvement Plan and Execution Management were joint-first in the Essential category, with nearly half (47%) of participating company ranking these at the top of the list.

The desire to get better, be more sustainable, to reduce negative impact on the planet and people, is both palpable and welcome, although we still hear the echo of “We want to get started, what should be do?” reverberating at the top of the priority list.  We fully appreciate the concern.

It may well be that these companies know their benchmark, have baselined their capabilities and indeed just “need to get better, or get it done.” But in some cases, more experienced participants have remarked that it is the “Unknown Unknowns” that caught them out. Avoiding that pitfall is best achieved by informed situational analysis, assessing current capabilities against peers and best practice, and determining the “gap-to-good”.  This is the purpose of the Materiality Assessment and Maturity Analysis capabilities discussed later.

In some cases, when sustainability is discussed, people think only about energy and emissions.  This is understandable given the popular media coverage of the matter.  Readers of this report will understand that sustainability is broader than that and should address all of the areas covered by the UN Sustainable Development Goals.

However, it is still unsurprising to find Measuring Emissions as the third most popular answer to this question. Measuring Emissions is ranked as Essential or Very Desirable by about two-thirds (65%) of the participants in our study.

Following the emissions measurement capability in the list is ESG Reporting, the latest reporting burden for companies – a necessary reporting practice, but nevertheless a burdensome one.

ESG Reporting is ranked by nearly two out of five companies (38%) as Essential. Interestingly, and probably reflective of their greater financial and compliance reporting obligations, nearly all (89%) of the largest companies view ESG Reporting as Essential or Very Desirable.

To be continued … Part 2 will follow over the coming days.

[This blog post was originally published as part of the Future Planet State of Sustainability Study.
To request your personal copy of the study please email eva.]
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