Leading into the Future with Sustainability as a Value Engine
Reframing Corporate Sustainability Programs

/ Leading into the Future with Sustainability as a Value Engine

/ To achieve true corporate sustainability, businesses must view ESG as a strategic opportunity rather than just a compliance risk. By embedding sustainability into their core value-creation processes and orchestrating transformation across all functions, companies can drive innovation, long-term value, and positive societal impact.

Dec 07, 2023 | by Carsten Linz

While there is no question that states must play a central role in climate action and social equality, we must mobilize all available resources – including the power of the private sector. ESG are key drivers of sustainable stakeholder and shareholder value, innovation, and change.

Too often, however, CEOs, Chief Sustainability Officers and investors perceive ESG and sustainability through a risk perspective rather than an opportunity lens. By focusing on risks and reporting obligations rather than opportunities and possibilities, they are missing out on a corporate approach that is increasingly focused on sustainability.

Successful ESG transformation programs include legal compliance, but do not stop there. They view it as an opportunity to create new value and expand the program into innovative ways to develop and market sustainable product. Therefore, sustainability should be conceptualized as a strategic initiative that goes well beyond ‘sustainability balconies’ and nice integrated reports that look great from the outside, but nothing happens behind the curtain, towards an ambitious program approach that makes sustainability an integral part of the company’s system for creating value, delivering value, and capturing value. If sustainability is only about regulations and compliance, it will not be transformative, only adaptive.

Such an approach consists of the following steps: Start with identifying the company’s own ESG-related topics and filter out those where positive impact and value can be created. For a company in the production heavy industry, this can be done by evaluating its own resource use such as of energy and water and finding opportunities for saving production resources and applying new technologies for the resources needed. The next step is to set up an entrepreneurial program with identification of value levers along the entire value chain. For example, the company above might note that it has well known and longstanding customers and could therefore establish a circular economy model for its products and thereby save resources and costs as well as bind its customers to its products even longer. Integrating ESG value drivers into the business model(s) ensures sustainable value creation in the literal meaning of sustainability. Lastly, measure the impact with the goal of ramping up what works and stopping what doesn’t.

/ SOME OF THE WINNING PATTERNS IN REFRAMING A CORPORATE SUSTAINABILITY PROGRAM INCLUDE:
  • Reframe what ‘success’ actually means for the organization: Instead of aiming to be the best industrial company and partner for retailers, a company can aim at being the best end customer partner across all channels and leader in science-based carbon footprint for their products. If such a higher purpose mission is in place as a guiding north star, the degree to sustainability is strategically embedded, which will differentiate the ‘leaders/trailblazers’ from the ‘followers’. Strategic embedding is also critical to achieving a broader mindset shift and creating a movement throughout the organization.
  • Orchestrate across all business units and functions: In most companies, the ‘muscle’ for transformation is not trained because the main focus in day-to-day business is on retention and optimization and not on change and transformation. We all know the situation when you ask, ‘Who is responsible for transformation?’ and there is silence in the room or in the conference call. That’s why some level of centralized steering is pivotal to implement a portfolio of impact projects across divisions.
  • There is no one size fits all: Regardless of the organizational archetypes chosen, comprehensive orchestration is required in the early stages of transformation to offset the typical organizational antibodies that resist change. As the transformation progresses and permeates the various functions and departments, the orchestration usually leaves more room for decentralization.

Figure 1

/ Winning Patterns in Reframing a Corporate Sustainability Program
Winning Patterns in Reframing a Corporate Sustainability Program

Source: bluegain Analysis [2023]

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Ultimately, action comes before reporting, which is why CEOs and ESG Officers should not create ESG Programs for raters or reporting agencies, but rather for their company’s sustainable business success and the positive impact on society and the environment, thereby satisfying investors, customers, employees and civil society.

 

/ ABOUT THE AUTHOR
  • Dr. Carsten Linz is the CEO of bluegain. Formerly Group Digital Officer at BASF and Business Development Officer at SAP, he is known for building €100 million businesses and leading large-scale transformations affecting 60,000+ employees. He is represented on boards including Shareability’s Technology & Innovation Committee and Social Impact. A member of the World Economic Forum’s Expert Network, Dr. Linz is also a published author who shares his expertise as an educator in executive programs at top business schools.

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