Sustainability is increasingly becoming a key management process that is required to be carried out within organisations. While most organisations understand the tangible benefits that come about by monitoring non-financial sustainability data, many companies face challenges in implementing a relevant and robust management process to drive and entrench sustainability within its business strategy.
While companies may have various management information systems to drive its financial performance, only few companies have implemented comprehensive systems to obtain, analyse, and monitor the large amounts of non-financial environmental and social impact data of a company. Obtaining non-financial data involves the introduction of new organisational processes, the implementation of changes to existing management processes, and the establishment of organisational structures to manage such a system.
For an organisation’s sustainability drive itself to be sustainable, the sustainability drive needs to be akin to any of the other processes within organisations. The usefulness of sustainability to provide critical non-financial management information for decision making, is what makes a sustainability management framework a much needed management process in driving an organisation’s vision and strategy.
This sustainability management framework can be utilised to track information ranging from procurement practices, material usage, energy, carbon footprint, water footprint, waste management, effluent discharge, biodiversity impacts, environmental damage, employee data, attrition, occupational health and safety incidents, pay levels, diversity of management, maternity and return to work rates, gender diversity, human rights practices, ethics and corruption, risk management, corporate social responsibility initiatives data, quality control, and other product stewardship performance.
As with any management process, the start point is in the identification of the issue at hand. Here, both internal and external stakeholder engagements come into play to identify the most important topics pertaining to the organisation’s operations. The topics that are prioritised for sustainability performance tracking, is identified at this point.
The development of policies and management approach of the above identified material topics come next. These act as the ‘rules’ by which the organisation strives to manage the impacts it causes. While the policies communicate the stance of the organisation to its stakeholders of how it intends to manage triple bottom line risks, the management approach defines the methodology, path and management controls the organisation adopts in managing these material topics. Monitoring sustainability data or undertaking sustainability initiatives without implementing this step leads to a sustainability journey similar to that of a rudderless flight.
With the material topics identified, and the ‘rules’ established within the organisation, it is now time for the performance to be monitored. It is here that sustainability Key Performance Indicators (KPIs) are established. While few organisations have developed their own KPI for the material topics identified, use of frameworks such as Global Reporting Initiative (GRI) Standards, the United Nations Global Impact (UNGC) Framework, the International Finance Corporation (IFC) Performance Framework, the UN Sustainable Development Goals (SDG's), enable companies to not only track their performance, but also easily self-assess their performance against peers.
In most instances the journey of sustainability data collection begins on a humble MS-Excel Spreadsheet. However, as companies mature, locations increase, the need for realtime data increases, requirement arise for audit trails, data verification and development of customised reports etc, organisations soon realise the need for enterprise wide sustainability IT systems. This is where the true value addition starts to kick in.
Companies that have implemented a sustainability management framework benefit more in terms of holistic and quality decision making in comparison to their counterparts who do not track sustainability data. However, companies that have implemented a sustainability IT system to track such data benefit more in terms of timely and speedy decision making in comparison to their counterparts who rely on spreadsheets and manual data analysis processes. The digitisation of sustainability also begins at this point.
With sustainability performance being tracked on a timely basis, the organisation now has the ability to compare its own performance with that of its peers. Here, benchmarking of performance on a ‘per intensity factor’ assists companies to establish where it is, and where it strives to be, within a given number of years.
This gap analysis is what then leads to the selection of a company’s sustainability initiatives. In many instances, sustainability initiatives are chosen by organisations based on a fad, or feel good factors, for purposes of PR, because the area is a pet area of its management team, and unfortunately, also for purposes of green washing. This leads to organisations spending good money on sustainability initiatives that will yield less value in terms of managing its material impacts, and therefore will be less effective in managing its triple bottom line risks.
However, organisations that choose its sustainability initiatives based on the gap in its current sustainability performance, and its internally established targets (either through benchmarking, or to achieve its stated vision), will immediately see itself investing its funds that take the organisation on a journey of meeting its strategic goals. Thus an organisation will be able to land the ‘biggest bang for its buck’ in terms of creating positive impacts to the material topics identified.
Reporting is the final stage in the sustainability management framework, where, with all the previous stages now complete, the report becomes a by-product of the framework. In most cases, the annual report drives the sustainability agenda in organisations. While this is possibly a motivator for organisations to commence its sustainability journey, it is by no means the best approach to obtain the true value addition that sustainability brings about. Reporting at the end of this management process, based on globally established frameworks, gives the organisation the ability to not only show case its initiatives, but disclose its entire sustainability drive and how sustainability within the organisation is aligned to the organisational strategy.
The author is Goodera Country Representative: Sri Lanka.