But perhaps more important today is the speed at which the picture in B2B markets is changing. As organizations move toward net zero, they are increasingly focusing on Scope 3 emissions, including supplier emissions. Suppliers who can offer lower-carbon solutions now have a sharp competitive edge. The same is true of other aspects of sustainability, such as reducing plastic usage, and increasing circularity via reuse and recycling.
The result is that suppliers who are unable to help their customers meet their sustainability goals – on carbon or anything else – are likely to be left behind as new opportunities emerge.
Refocusing on opportunity
There are four key areas to consider when promoting the mindset shift from risk to opportunity.
1. Make sustainability a core part of strategy and culture
Despite the apparent increase in interest in sustainability on the part of senior leaders, it is rarely a core part of strategic narrative. Many boards have maintained a traditional view of what creates value for businesses and how sustainability ought to be managed. Rather, sustainability considerations should shape organizational culture and inform the priorities that leaders define for the business as a whole.
2. Define opportunities via a materiality framework
To understand the opportunities unique to their businesses, leaders should follow a rigorous, structured governance process: a materiality framework. Start with a robust model, such as the GRI or SASB Conceptual Framework, to identify materially relevant issues. Then, engage with the full spectrum of stakeholders to understand which area has most resonance with each stakeholder group. Using this information, give a weighting to each area based on the contribution that each factor makes to business growth. This will allow each business to identify its own priorities, and then investigate the opportunities – as opposed to simply the risks – for each. This will support businesses in directing their resources towards their areas of greatest strength and that will have the greatest positive repercussions both for their finances and for the societies of which they are a part.
3. Inspire creativity through a positive vision
Businesses have been selling a negative message about sustainability, focused on the reduction of harmful impacts – a criticism that can be levelled at the wider environmental movement. To unleash creativity and tap into the problem-solving capacity of their organizations, leaders should spread a positive message about sustainability opportunities.
When Unilever announced its aim of halving its social and environmental footprint while doubling growth, for instance, it was eye-catchingly bold. That got people excited and changed the discussion for everyone in the company. The conversation was no longer about what to do – it was about how. An ambitious yet consistent strategic vision can provide both impetus and a sense of direction, prompting employees to ask: “How am I, in my role and my department, going to contribute to this must-win battle?”
4. Identify the opportunities and embed sustainability across the organization
Sustainability opportunities will present themselves in almost every business unit. For HR, it could be a way of attracting and retaining talent; for marketing and sales, it could be about selling new products; for product and service innovation, sustainability principles should define the parameters for innovative, sustainable new solutions. Each unit should identify and own their opportunities. Aligning KPIs and incentive structures, including performance-related remuneration, will ensure a focus on achieving them.
As sustainability challenges become more acute, the businesses that thrive – and contribute most to society – will be those that have the foresight to identify the new opportunities most relevant to them, and the courage, creativity, and agility to pursue them.
This is the third in our Sustainability Toolkit series. To read the previous articles click here and here.