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Sustainability strategy


What should your sustainability strategy look like?

Published 12 April 2021 in Sustainability ‚ÄĘ 5 min read

Blurring the details on sustainability is easily done without clear definitions, but this comes with a cost attached. Applying clear parameters to enable a clear sustainable agenda is vital to business, societal and planetary needs. Here are six simple recommendations for your business to become more focused on sustainability.  


Whenever we speak to executives about sustainability, they often express a sense of frustration around the lack of clarity. Many ask for more tangible markers as with those around health and safety, for example.  

Their confusion stems from the dual definitions of sustainability; because the topic does have two faces. First, sustainability is about business longevity. Secondly, sustainability is about how companies create combined business strategies that serve people, profit and planet.  

When we took a close look at business longevity, our research offered up some interesting lessons on how to ensure long-term success. We investigated 50 global companies that had managed to remain among the 50 most valuable traded companies over a period of 50 years; some had even enjoyed a 100-year horizon.   

We found they all managed to achieve a balance between exploration and exploitation. Exploration refers to their ability to look into future trends that they innovated around to maintain their market relevance. Exploitation refers to their precision in maintaining an internal focus on productivity, clarity of direction and discipline.  

The most durable companies seemed to be able to be outsidedriven even when they were successful. They didn’t become introverted; instead they learned, they developed new capabilities and they quickly sought the next frontier.  

Sustainability is also about the ability of firms to find positive trade-offs between economic, environmental and social issues, to balance profit, people and planet. Often, companies do this by taking a long-term perspective on their businesses, for example, by moving on megatrends that are fully predictable. Umicore, for example, reoriented itself from an extraction to a recycling business. DSM moved from mining and chemistry to sustainable life sciences.  

Seeing that sustainability is the way to go in business success terms, the real question now is no longer why?, but how? 

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So, what does credible sustainability involve?  

In a complex world, sustainability needs to be made easy, otherwise it will not gain traction. Here are our six simple recommendations for your business to become more focused on its sustainability agenda by setting clear, measurable targets and then ensuring they are delivered on.  

  1. Make sure your strategy is aligned with the megatrend

It is not enough to reduce¬†your carbon footprint or manage risks.¬†In today‚Äôs world, you must¬†make sure the strategic direction you are moving¬†in¬†is aligned with the ESG and sustainability megatrend. This is a paradigm shift, so it¬†is not going to go away. One example of¬†an¬†aligned sustainability strategy is¬†Danish multinational power company¬†√ėrsted, which¬†pivoted from fossil fuels to renewables as a¬†business¬†shaping strategy.¬†In 2016, the company completed its IPO, transforming itself from fossil fuels to a renewable pure player¬†under its new name.¬†In doing so, it¬†guaranteed¬†its¬†potential for¬†longevity.¬†

  1. Make sure you walk the talk 

Promises are not enough. Discussions with financial institutions¬†and investors confirm that they are more interested in what you do rather than what you say you do.¬†So, make sure your¬†sincerity is reflected in credible, measurable actions.¬†A good example¬†of¬†this sort of¬†commitment¬†is the Belgian¬†multinational material technology¬†company Umicore,¬†which¬†not only went¬†from¬†the¬†mining to¬†the¬†recycling¬†of¬†metals and rare earth materials¬†(often called ‚Äėurban mining‚Äô)¬†but also¬†cleaned¬†up¬†its¬†former¬†mining sites, as a¬†mark¬†of how¬†serious¬†it was¬†about sustainability.¬†¬†

  1. Make the business case for sustainability

Just as with everything else you do; the business case is required here, too. Without it, you cannot scale on promising sustainability opportunities. Boston Consulting Group (BCG) found that only 25% of executives reported that their firms had made a clear business case for their sustainability strategies which signifies lost chances. Be inspired by the success of others in the field. For example, IKEA provides a great lesson in how the business case for sustainability has helped drive its success.  

  1. Focus on the material issues

Sustainability can easily be¬†made to¬†mean all things to all people, but¬†this should not be the case.¬†As¬†with all other¬†important strategic functions (business development, HR, R&D, marketing, product development), you need to define what is most critical.¬†We have seen how the materiality assessment can unlock improvement ‚Ästand commitment ‚Äď in large organizations.¬†Schneider Electric, for example, used one to make¬†huge leaps in terms of¬†its¬†sustainability performance.¬†This led to Schneider becoming¬†the topranked company in 2021‚Äôs¬†Corporate Knights sustainability ranking. Aided¬†by a systematic assessment of¬†its¬†impacts on external and internal stakeholders, Schneider¬†Electric¬†realized and acted on the assessment‚Äôs conclusion that¬†climate action¬†via the¬†decarbonization¬†of its¬†value chain¬†was¬†essential.¬†

  1. Include sustainability in all key functions

Sustainability is today the domain of all key business functions. The chief financial officer (CFO) needs to determine how to best report on ESG and how to respond to investor pressures. The chief marketing officer (CMO) needs to recognize and address new customer demands. The head of operations needs to reduce waste, create circular solutions and be lean in terms of carbon footprint. The chief human resources officer (CHRO) needs to address the how to offer support to employees and local societies where the company operates. Every function today should have a stake in sustainability.  

  1. Align sustainability with purpose 

The essence of purpose is to succeed through acting for something greater than selfinterest.¬†For¬†Swiss multinational food and drink processing conglomerate¬†Nestl√©,¬†the concept of¬†‚Äėshared value‚Äô¬†was the way to connect sustainability to purpose. For¬†Danish global pump manufacturer¬†Grundfos,¬†it is the¬†UN‚Äôs Sustainable Development Goals (SDG).¬†By aligning sustainability with your¬†purpose,¬†you not only reveal the positive societal contributions that you are making, but you also realize how easily you could do more.¬†¬†

In the final part of this series, we will take a closer look at how to embed sustainability into your organization. 


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Knut Haanaes

Knut Haanaes

Lundin Chair Professor of Sustainability at IMD

Knut Haanaes is a former Dean of the Global Leadership Institute at the World Economic Forum. He was previously a Senior Partner at the Boston Consulting Group and founded their first sustainability practice. At IMD he teaches in many of the key programs, including the MBA, and is Co-Director of the Leading Sustainable Business Transformation program (LSBT) and the Driving Sustainability from the Boardroom (DSB) program. His research interests are related to strategy, digital transformation, and sustainability.

James Henderson

James E. Henderson

Professor of Strategic Management at IMD

James E. Henderson is Professor of Strategic Management at IMD, Program Co-Director of the Leading Sustainable Business Transformation program, and Program Director of the Strategic Partnership course. He helps companies achieve and sustain their competitive advantage either at a business unit, corporate, or global level through directing custom specific executive programs, facilitating strategy workshops, or teaching MBAs and executives.


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