Why companies are putting sustainable business strategies first
To embed sustainability, an organisation has to align operations, culture, leadership engagement and communications
Every t-shirt that gets purchased, every coffee ordered, every car driven has an impact on the planet. To be sustainable – in the long term as a business – a company must put sustainability strategy at the heart of its brand.
While only 34% of companies discuss ESG at every board meeting, according to research by Diligent Institute earlier this year, 71% say it is integrated into their overall company strategies. This encouraging development indicates a growing alignment of ESG objectives across the breadth of the company’s operations.
At a recent roundtable, corporate leaders discussed the ways in which sustainability is affecting each and every part of a business. “For longevity of a business, you need to have sustainability at the heart. You need to have very clear strategies on what you’re trying to achieve. It’s understanding that if you start from a set of principles and you’re actually building something for the long term, you’re more likely to be around for the long term,” says Jon Lane, CEO of fashion brand Passenger. He adds that sustainability can mean both environmental consciousness and the long-term success of a business. “You’ve got to be building [a company] that keeps going, that’s not going to get knocked out of the market because it’s gone past it’s sell-by date.”
To do so, though, requires companies to consider how sustainability is integrated into every part of their business, from operations to corporate culture to communications and marketing.
“Customers are interested in sustainable solutions,” says DS Smith’s chief procurement officer Alex Jennings. “So, there’s a commercial reason for doing it,” he adds, even if the sustainable solution incurs an added cost. For the packaging manufacturer, sustainability is infused throughout its operations, from design to production. To achieve that integrated approach, all 700 of DS Smith’s designers undertook circular design training. Not every ‘recyclable’ good is actually able to be recycled. To combat that, DS Smith’s design principles are founded in sustainability and focused on improving recycling.
Similarly, at Passenger, design, sourcing and manufacturing all adhere to the company’s sustainability principles. The company uses recycled fibres and sustainable textiles to reduce fashion’s carbon footprint. For both businesses, selecting the right suppliers and deploying sustainable procurement strategies are key. Lane says: “We’re trying to change people’s mindset because people are just doing things because that’s what they’ve always done. Part of our role is to come along and be the awkward bastard who basically says, ‘Well, why are you doing that. You need to change that.’”
Ideas for how to improve internal processes have come from everywhere across the business. “I’d much rather be in a position where there’s a lot of marginal gains happening in sustainability, rather than too many ‘big bang’ approaches,” Lane says, indicating that the company’s culture embraces sustainability and innovation.
Jennings agrees that culture is essential in getting sustainability right across a company’s operations. “You need to make sure that you’re getting the right people to help. Embedding it is such a big cultural shift in an organisation that employs 30,000 plus people. It has to start from the top.”
But for both, it comes back to commercial relevance. If the business doesn’t make money, sustainability is neither here nor there. Both have found that sustainable practices can not only attract great talent and offer a competitive advantage with customers but can improve efficiencies and encourage investment.
For growing businesses, the talent pipeline is a key audience when it comes to sustainability. Dr Anjana Basnet, a business lecturer at Arden University, sees all the institution’s business students take a CSR and business ethics course as part of their degree. She says sustainability is of huge importance to her students: “I personally feel that this is where students are. They have ideas that they will take into the real world.”
Those students will eventually become the workforce populating companies like DS Smith and Passenger. Jennings says: “We have to create safe environments for people to feel comfortable being creative and being innovative and challenging products and processes and thinking. We have to make sure that the students understand that there is a commercial connection between this drive, and not just a moral duty.”
Once that culture is in place, however, it still must be communicated out to the company’s various stakeholders. Basnet’s research took her to Nepal to examine sustainability reporting in listed companies. She found that even though companies had strong CSR activities in place, they were not communicating it to the investment community through sustainability or annual reports. While UK plcs are required to report, SMEs and non-listed companies are not. “It’s not that it is not being conducted,” Basnet says of sustainability, “But it’s not communicated externally.”
Lane’s experience at Passenger has echoed Basnet’s findings. “We’ve never done a big sustainability report. We just don’t have the headcount to do it,” he says. “If we went away and wrote a report, it would take our eye off the ball of actually making small, incremental changes.” That said, the company does use its marketing and consumer touchpoints to communicate its sustainable purpose. Part of the customer journey is to engage with initiatives like Passenger’s tree-planting programme or its use of recycled fibres.
At DS Smith, which does report annually on sustainability, the communications extend beyond just that one touchpoint. He says the company does work “up and down our supply chain to challenge our customers and challenge our suppliers around circular thinking around sustainability.”
Diligent Institute’s research shows that the full board is now responsible for environmental issues in 38% of companies. This marks a drastic shift from 2019, when only 20% of businesses saw the full board engage with environmental oversight. Similar percentages of companies engage the full board in ESG and sustainability strategies, supply chain risk and sustainability reporting.
It takes strong leadership and an engaged corporate culture to encourage sustainable business practices throughout an organisation. Alignment across a company’s operations is crucial to the success of sustainable business strategies. But then those ideas must be acted upon through supply chain and procurement changes, manufacturing process updates or educational programmes. And for those initiatives to really make a difference, the organisation has to then share them with the wider organisation and world through an integrated communications strategy.
“If we can tell the story about where the products are from or how we’re doing things, that’s the point of engagement with the customer. It’s all around narratives and storytelling,” Lane says. “What we want to do is inspire ourselves and people externally to know that you can make small changes and they’re going to make a difference. But also, to expect better and to ask questions.”
Those that do ask questions and do challenge processes may find they make the crucial difference to embedding sustainability at the heart of the brand.