From Peripheral to Pivotal: The Drive to Generate Value from Sustainability Strategies
- Jun 13, 2024
- 3 min read
Welcome to a three-part series from Pimlico Strategy & Insights exploring the evolution of the sustainability strategy landscape. In recent years, the corporate approach to sustainability has undergone a significant transformation, shifting from focusing primarily on enhancing reputation to becoming a strategic driver of value.
As companies invest in alignment with new reporting standards and climate initiatives, an important question is what tangible impacts can be seen? An influential article published in the Harvard Business Review in 2023 highlights the considerable gap between aspirational sustainability rhetoric and its tangible implementation within business operations.
Historically, Chief Sustainability Officers (CSOs) were confined to roles that primarily boosted corporate image. Today, these officers are becoming much more crucial to strategic decision-making and the alignment of sustainability efforts with financial and operational goals. This shift underlines the need to embed sustainability deeply within corporate strategies, transforming it from a compliance checkbox to a driver of financial performance.
Despite growing recognition of its strategic importance, a recent survey from Globescan shows how progress on actual sustainability integration continues to face obstacles in the following areas:
Capital Gap: Although 90% of executives acknowledge the commercial importance of sustainability, only about half report their sustainability initiatives receive the necessary funding. This disparity limits the potential to address environmental risks and capitalise on green opportunities effectively.
Implementation Gap: Many organisations continue to view sustainability as a tool for reputation enhancement rather than a contributor to operational value. This perception needs to shift towards recognising the direct benefits of sustainability on areas like sales growth, cost efficiencies, and supply chain resilience.
Integration Gap: Only 37% of companies feel that sustainability is 'very integrated' into their core operations. There is a critical need for enhanced collaboration across sustainability, finance, and technology sectors to ensure sustainability considerations are embedded in all business decisions.
Data Gap: High-quality data is essential for informed sustainability decisions, yet remains a substantial shortfall, with only a minority of firms having access to robust sustainability data. This deficiency hampers the ability to comply with new standards like the ISSB and CSRD and stifles the capacity to measure real impact effectively.
To elevate sustainability from a secondary concern to a central business strategy, companies should work to increase the following strategic actions:
Increase Investments: Allocate appropriate funds to sustainability initiatives to ensure they have the resources needed to make a tangible impact.
Enhance Collaboration: Foster deeper cooperation across various business functions to ensure sustainability is considered in all aspects of business operations.
Improve Data Management: Invest in robust data systems to provide accurate sustainability tracking and compliance, facilitating better strategic decisions and transparency.
The journey to fully integrate sustainability into business strategy is fraught with challenges but offers substantial rewards. By addressing these gaps and embedding sustainability at the heart of corporate strategy, companies can transform their efforts into key drivers of business success and societal benefit.
In the second article of our series, we will delve into the dynamics within the teams responsible for sustainability, exploring how internal politics and cross-functional collaborations influence the successful integration of sustainability initiatives.
_______________________________________________
At Pimlico Strategy & Insights, we harness our proprietary FASTER™ and TRACK™ frameworks for sustainability to empower clients to gain visibility and navigate an increasingly dynamic market. We help companies drive their sustainability agendas through bespoke insights and consultancy strategies that position companies for success and growth.
Let's make sustainability move FASTER™ together.
Get in touch for a demo today!
Comments